Categories
mobile

Apple hit hardest as phone sales fall

Research company IDC reports that year-on-year phone sales dropped 6.6 percent in the first quarter of 2019. It’s the sixth quarter in a row to see a drop and the rate of fall is picking up. This time last year sales were down 4.1 percent over the same time in 2017.

Samsung remains the leading phone brand albeit with a falling market share. It has been the top-selling brand for each of the last four quarters. During that period Apple jockeyed for second place with Huawei. The Chinese phone maker is now back in second place.

It’s been tough for everyone. Only two of the top five brands sold more phones in the last 12 months than in the earlier twelve months. Huawei and Vivo, which is not visible in New Zealand, both saw sales increase.

Samsung in the driving seat

Samsung accounts for about one phone in five sold. It’s share nudged down a tick as it sold 6.3 million fewer phones than in the previous year. While the company’s premium phone models, notably the Galaxy S10 and S10+, remain popular, Samsung is losing ground lower down the market.

Huawei is the big winner. The company continued its surge that has propelled it past Apple in terms of unit sales. Year on year sales are up 50 percent. In the twelve months to March 2019 Huawei moved to 19 percent market share. That is closing on Samsung’s 23 percent and comfortably in front of Apple’s 12 percent.

This strong growth took place before sales of the recently announced P30 and P30 Pro models could influence numbers. Based on a comparison of the P30 Pro and the Samsung S10 , Huawei may get nearer to Samsung’s share in the coming months.

Worldwide phone shipments

Company1Q19 vol1Q19 share1Q18 vol1Q18 sharechange
1. Samsung71.923.1%78.223.5%-8.1%
2. Huawei59.119.0%39.311.8%50.3%
3. Apple36.411.7%52.215.7%-30.2%
4. Xiaomi25.08.0%27.88.4%-10.2%
5. Oppo23.17.4%24.67.4%-6.0%
5. Vivo23.27.5%18.75.6%24.0%
Others72.123.2%91.927.6%-21.5%
Total310.8100.0%332.7100.0%-6.6%
Figures from IDC, numbers in millions

Apple phone sales fall

Apple’s four percent fall in market share represents something of a sea-change, but is not as dramatic as it is viewed in some quarters. The company’s share price actually rose after it announced its annual results overnight. Apparently iPhone sales were not as dire as expected. The company aims to make up some of the lost revenue from selling services.

We don’t see much of the fourth and fifth brands in New Zealand. Samsung and Apple dominate the New Zealand market with Huawei challenging for a place at the top table. After that, it’s all rats and mice.

For the record Xiaomi’s market share dropped almost half a percent to eight percent. Vivo added two percent of market share taking it to 7.5 percent. Oppo, which is active in New Zealand, was flat and is now in sixth place with a 7.4 percent market share.

Most of the analysts commenting on the results focused on the way consumers are no longer as quick to upgrade phones to the latest models. This makes a lot of sense. A phone should last from three to four years and, advances in photography aside, today’s phones are often not much better than three-year old models.

When new people enter the phone market, they are no longer coming in at the top, but are buying lower priced models from Chinese brands.

Categories
telecommunications

Spark brings first eSim to New Zealand

Spark is the first New Zealand carrier to support embedded Sim or eSim cards. It’s a version of the Sim card that, instead of slotting in, is hard-wired into some of the latest phones and smart watches.

If you bought a 2018 iPhone, you have an eSim. Likewise it is there in the recent iPad Pro and Apple Watches. There’s also an eSim in the Samsung Galaxy Watch 4.

The list of eSim-equipped devices is growing fast, but for now Spark only supports a handful of devices: Samsung Galaxy Watch 4 and iPhone XR, XS and XS Max. Owners of other suitably equipped devices will need to wait.

eSim in Galaxy Watch 4

Spark timed today’s launch to coincide with the launch of the Galaxy Watch 4. Spark offers what it calls the Unlimited Wearable Plan to customers buying the watch but they must also have a Spark phone plan.

The Unlimited Wearable Plan gives customers data, calls and texts for $15 per month. Spark says unlimited data, calls and texts which means after you’ve downloaded 22GB  Spark will drop the data speed to a lower rate.

If you manage to get through more than 22GB of data on a watch you deserve a medal, especially as you must already have a phone to get the Spark plan.

New iPhone owners can activate their eSim with Spark using a QR code. If you already have a suitable iPhone, you’ll need to visit a Spark store to have your current mobile number and plan switched to the eSim. This leaves the card slot free to take another number or plan. It doesn’t have to be with Spark.

This is a beach head for the eSim in the New Zealand market. Spark’s move will spur its rivals to get a move on with their plans. Vodafone has already hinted it has something on the way.

Lots of reasons to like eSims

One advantage is that there’s no need to stuff around removing and installing fiddly little cards. This is handy for phone owners, but essential in tiny devices like smart watches. It’s also important for industrial users and others wanting to use cellular connections in their Internet-of-Things devices.

Another feature of the eSim is that it allows a phone owner to add a second account, possibly from another carrier. This would be useful if you often travel overseas or if you need to work in a part of New Zealand only serviced by one carrier that’s not your first choice. Some people use this to keep separate work and private connections on a single device.

Spark’s eSim press release.

Categories
mobile

Galaxy Fold woes deepen for Samsung

Samsung has postponed high-profile Galaxy Fold launches in Hong Kong and Shanghai. That’s after review phones sent to journalists had screen failures.

Samsung can ill-afford a second major phone launch disaster. In 2016 the company’s Galaxy Note 7 had battery problems that caused the phone to explode. There were two product recalls. Samsung had to withdraw the phone.

The most humiliating aspect of this came every time an airplane took off. Cabin crew would remind passengers of the explosion danger.

Lasting brand damage

If the Galaxy Fold fails on the same scale, and it looks as if it could, there could be long-term damage to Samsung’s brand.

This is a pity. Folding phones were the star attraction at this year’s Mobile World Congress. If they work as promised, they will give the business the biggest shake up since Apple’s first iPhone.

When folded, folding phones look much like today’s premium phones. The difference is they can fold open to give you a much bigger, tablet-like screen. This makes reading and working on a phone far easier.

Galaxy Fold expensive

Foldability comes at a high price. When, or if, they hit the market the early models will cost the thick end of NZ$4000.

Samsung and Huawei both had models on show at MWC. Some other brands demonstrated folding phones that are still in the pipeline.

Huawei gave New Zealand journalists a brief Mate X demonstration. It was long enough to get a feel for how the phones look. The display is impressive, but you do have to live with a slight crease or line down the centre of the larger screen. The hands on session wasn’t long enough to test the phones in any meaningful way.

Across the aisle, Samsung displayed its Galaxy Fold phone in a glass cabinet. There was no opportunity for the adoring crowds to get closer.

Samsung Galaxy Fold, part folded

Folding phones are impressive

At first sight both phones looked impressive. When folded they are at the large end of the phone spectrum. You could fit one in a jacket pocket. They weigh a few grams more than premium other phones. Opened, they are about the size of an iPad mini.

Most modern phone have toughened glass screens. Samsung covered the Galaxy Fold screen with a protective, flexible layer of plastic. The idea is that this stops the screen from getting scratched. If necessary, Samsung can replace this without the need to replace the rest of the screen.

In some cases review devices failed because journalists pulled off this protective layer. This left the screens vulnerable and easy to break.

Battle of the Galaxy Fold bulge

Yet that only accounted for some of the review screen failures. Journalists reported other screen problems. Some has models where half the unfolded display stopped working. At the Verge, Dieter Bohn’s review phone developed a bulge. This broke the screen.

Samsung cranked its communications machine into damage control mode. It issued a statement saying it durability tested phones to withstand 200,000 folds. It also said the problems were with a limited number of early samples.

If that’s true, the company still has a sizeable public relations disaster on its hands. Sending out half-finished breakable products is, at best, irresponsible. Remember, this is the company that once risked airplanes with exploding phones. Samsung should have learned to take extra care with launches.

Huawei Mate X

Meanwhile Huawei is prepping its Mate X for sale. If the company is prudent it will give the first batch extra testing before sending phones out. After all, Huawei has its own publicity problem caused by incompetence to deal with.

It’s starting to look as if Samsung could have a serious cultural problem. It’s not clear if the problem is engineering, marketing or management. One criticism is that management is rigid and unwilling to listen to warnings when things aren’t going well. Staff fear being punished for “disloyalty” and say nothing.

The company is capable of delivering stunning products. Every so often it can claim to have the world’s best phone. Yet, the Galaxy Fold and the Galaxy Note 7 have not been the only missteps. They happen to be bigger and more noticeable.

Otherwise impressive

The incident is disappointing on another level. Folding phones are amazing technology. They are a sight to behold.

I’m a hardened old campaigner when it comes to new products. Often at product launches I’m the grouchy one who isn’t impressed by demonstrations of slight improvements. Nothing makes me more uncomfortable than an enthusiastic employee inviting me to praise a product when I’m working hard to stifle a yawn.

Folding phones weren’t like that. They charmed and impressed me. Sooner or later I’m going to want to own a folding phone.

It’s a cliché in the tech business to say that Apple is often late with the newest ideas, but that when it moves it gets things right. Yet, if Huawei’s Mate X fails to take off, we may have to wait for the iPhone Fold before folding screen technology is ready for prime time.

Categories
mobile

Changing face of worldwide phone market

Certain western governments might be uneasy about buying Huawei kit, but phone buyers flock to the brand.

The latest phone sales data from Gartner shows Huawei has won market share from Samsung and Apple. In the fourth quarter of 2018 Huawei sold a shade over 60 million phones. This compares with Apple’s 64 million and Samsung’s 71 million units.

The fourth quarter is usually the most important period for phone sales.

Huawei growing fast

Huawei sales grew nearly 40 percent compared with the same period a year earlier.

Perhaps the most remarkable aspect of Huawei’s success is that it is, in effect, locked out of the USA.

Gartner senior research director Anshul Gupta says; “Beyond its strongholds of China and Europe, Huawei continued to increase its investment in Asia-Pacific, Latin America and the Middle East, to drive further growth”.

Much of the company’s success came from lower price phones. Gupta says: “Huawei also exploited growth opportunities through continued expansion of the Honor series in the second half of 2018, especially in emerging markets, which helped Huawei grow its market share to 13.0 percent in 2018.”

Both Samsung and Apple sold fewer phones in the period than the same time a year earlier. Both companies had falling market share.

Samsung, Apple stumble

Apple suffered a year-on-year fall in sales of almost 12 percent. The company previously said this was largely due to falling sales in China, although numbers fell everywhere except North America and the wealthier parts of Asia-Pacific.

Samsung’s high-end phones failed to turn buyer’s heads. The company strengthened its mid-range models during the period.

Chinese brand Oppo, also enjoyed growth. It is now the world’s number four phone brand by unit sales. It has a market share of 7.7 percent.

The phone market has stopped growing. In the fourth quarter sales were 0.1 percent higher than a year earlier, essentially flat.

Gartner says the mature Asia-Pacific markets (which includes Australia and New Zealand) declined 3.4 percent.

While raw unit numbers excite many phone industry observers, the more important question is which brands are making money.

Categories
mobile

Premium phone price rise well ahead of inflation

Galaxy Note 9 sets new bar for Android phone price

This year a lot of people will pay NZ$2000 or more for a phone.

Apple set the tone at the end of last year with an NZ$2100 iPhone X. Now Samsung has joined the party with an NZ$2000 Galaxy Note 9.

You can pay less. A basic iPhone X with 64GB of storage costs NZ$1800. The more expensive model has 256GB.

Samsung has an NZ$1700 Galaxy Note 9 with 128GB of storage. The NZ$2000 model comes with 512GB.

Whether you need that much storage when cloud storage is plentiful and mobile data is cheaper is beside the point.

Inflationary

These are two examples of how New Zealand’s Consumer Price Index or CPI is the nearest thing to an official measure of inflation. In the most recent year, it was 1.5 percent.

That means consumers paid 1.5 percent more for a typical basket of goods and services in the year to June 2018 than a year earlier.

Expensive

At NZ$1700, the Samsung Galaxy Note 9 is $100 more than last year’s Note 8. That’s 6.25 percent higher: more than four times the CPI increase.

Apple’s iPhone X doesn’t have a year earlier model to compare.

Instead, we’ll look at the iPhone 7 and iPhone 8. When it launched the iPhone 7 was NZ$1200. A year later the iPhone 8 went on sale at $1250.

That’s a four percent increase. Apple’s markup is smaller than Samsung’s, but still well ahead of the CPI.

Everyone is at it

It’s not only Samsung and Apple. The prices of Huawei phone models climbed over the years.

Even Oppo, where the phone’s low price is the most important feature, has increased prices.

If anything, Huawei and Oppo’s price increases have been steeper than Samsung and Apple’s because they come off a lower base price.

But don’t phones get better

You might argue that the newer phones are better so phone makers can expect to sell them for more money. There’s something in this, see below.

Phone prices were stable during for years while annual upgrades meant huge leaps in functionality. Today’s upgrades are incremental while prices leap.

Apple shows the way

Apple has always lead the way on phone prices. It’s no accident it is the world’s biggest company and enjoys large profit margins. That trillion dollar valuation didn’t come by chance.

When it launched the iPhone X last year, Apple showed it could push phone prices above the NZ$2000 mark without denting sales. That opened the door for its rivals to charge more. They won’t admit it in public, but the iPhone acts as their benchmark.

Apple sells fewer phones than Samsung or Huawei.

The iPhone makes up around 20 percent of the handset market worldwide. It accounts for around 80 percent of profits from phone sales. Almost all the remaining profit from phone sales goes to Samsung.

Profits

It’s not clear how profitable the other main phone brands are. It’s not even clear if they are profitable. The companies don’t break out figures in the way that Apple and Samsung do. Yet it’s clear they are not making big margins.

Until a couple of years ago the Android phone market taken as a whole ran at a loss.

Things have changed. In part that’s because phone makers have pushed up handset prices ahead of inflation. It helps that some of the big names have either gone to the wall or wound down their operations.

Price rises have two sides

Inside the phone business, people talk about the average selling price or ASP.

According to IDC’s Worldwide Quarterly Mobile Phone Tracker:

…”climbing ASPs continue to dampen the growth of the overall market”

…”Consumers remain willing to pay more for premium offerings in numerous markets and they now expect their device to outlast and outperform previous generations of that device which cost considerably less a few years ago.

IDC says worldwide phone ASPs are up 10 percent in the last year.

Sharper prices lower down the market

Phone makers love to tell investors they have managed to increase the average selling price of their phones.

In some cases, they have done this by bumping up prices on their flagship models while fighting tooth and nail further down the market.

You can still get bargains. Spend NZ$500 to NZ$600 and you can end up with something great. It won’t have the latest camera or tonnes of storage, but not everyone needs those features.

High prices could be here to stay

New flagship phones are expensive to make, but the cost of building a phone is a fraction of the selling price.

Putting more lenses and more camera sensors may cost a phone maker a dozen or so dollars. OLED displays, curved glass add to costs. Perhaps the biggest extra cost is the memory chips needed to boost a phone’s storage, there is a trend towards higher storage in phones.

Higher phone prices are unlikely to go away soon. The glory days of fast-rise phone sales are over.

People are now holding on to phones for longer, squeezing more value from the money they have already spent. So it becomes important for each sold phone to contribute a little more profit.