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Getting more New Zealanders online is the government’s goal with its Digital Inclusion Blueprint. The plan is to bridge the digital divide and make sure people don’t miss out as more and more vital services move on to the internet.

Government Digital Services Minister Megan Woods launched the blueprint on Friday.

She says: “Some people can’t easily apply for jobs as many recruitment processes start online. Kids may be prevented from doing their homework.

“Others could feel isolated from more digitally savvy friends and family who communicate using social media. We want to ensure no one is left out or left behind as more and more of our lives move online.”

Life hard without a connection

She is right. It is already hard to do simple everyday things without an internet connection. It will get harder.

Even something as simple as arranging for a council rubbish pick-up or buying insurance is difficult without an internet connection.

We tend to underestimate the number of New Zealanders without internet access. In part that’s because of the way government collects official information. Much of it is now done through the web.

When it isn’t, officials often collect data by phone. The problem here is that people without home internet connections are often the same people who don’t have mobile phones.

More offline than you might think

At the 20/20 Trust, Bill Dashfield says at least 11 percent of the population do not use the internet. This group is likely to include older, poorer, rural and non-Pākehā New Zealanders. That makes for a digital divide.

Woods says: “Access to online service is a key priority is one of my priorities and an area Government has already invested in. For example, the Prime Minister recently announced $21 million funding for Regional Digital Hubs (RDHs) in towns to connect local people and businesses to digital services.

This is a good start. It helps that the government supported ultra-fast broadband programme now extends further into rural New Zealand. Eventually about 85 percent of the country will get fibre. Almost everyone else will have better broadband, either in the shape of fixed wireless or improved copper connections.

InternetNZ Jordan Carter zoomed in on one aspect of the divide in a press release.

Call for action on digital divide

He says; “We welcome, in particular, the development of Te Whata Kōrero. It’s a call to action for tāngata whenua to work alongside the government to provide leadership on digital inclusion”.

Moreover, he nails the biggest problem: funding.

Previous governments managed to find close to $2 billion to build UFB and the other broadband improvement projects. Now it has to earmark money to make sure everyone can reap the benefits of fibre and other fast broadband technologies.

The good news is it won’t cost anything like $2 billion. Even five percent of that will pay for a lot of small local initiatives. Small projects are the best way to get people across the digital divide. It will be a lot cheaper than maintaining offline government services for jobs that are better done online.

Let’s hope there are funds in the budget to pay for this.

Zuckerberg Facebook F8 2019

Facebook used its F8 developer conference to tell the world about plans to build a private social media service. Speakers, including chief executive Mark Zuckerberg, hammered home a conference slogan about the future being private.

Zuckerberg did nothing to redeem Facebook’s tarnished reputation.

Instead he undermined the message that he and his company wanted to send.

That joke isn’t funny any more

After promising users a more private feature he went on to joke about it with the audience.

He said:

“Now look, I get that a lot of people aren’t sure that we’re serious about this, I know that we don’t exactly have the strongest reputation on privacy right now, to put it lightly. But I’m committed to doing this well.”

One of the things I often tell people about these speeches is that you have to, metaphorically, listen to the words and the music.

Written down the words look plausible. If you see a video of the speech you’ll see Zuckerberg laughing. At least it made him sound insincere. You might worry that this young billionaire is laughing at his company’s users. He has publicly disrespected them in the past.

Zuckerberg’s jokey delivery certainly fell flat with the audience. That video clip could be set to echo down the years if Facebook’s privacy plan goes sour.

Zuckerberg tone-deaf

It’s another example of a tone-deaf response from the leader of a company that has swung elections and been accused of stirring up hate crimes.

If Zuckerberg didn’t think Facebook had a problem when he made his speech. It has one now. He did nothing to address the biggest question hanging over Facebook: why should anyone trust the company?

There’s another question arising from the F8 conference keynote. Facebook is a huge business. It’s worth about half a trillion US dollars. It doesn’t make things. It’s not really a software company in the traditional sense.

Switching focus from inserting targeted advertising in a user’s social media feed to helping them communicate privately is a huge jump. There is a relation between the two, but it doesn’t map well.

Appy talk

Facebook already has a lot of messaging. There’s the Facebook Messenger. There’s also WhatsApp and the messaging feature in Instagram. Integrating the various messaging tools and building them into a new, useful service isn’t going to happen overnight.

Making messaging private means using encryption. Facebook says it will use this technology. Yet encryption is something governments don’t like. Given that a lot of governments also don’t like or trust Facebook that could see the company tied up in complex regulations.

My other fear about the news from F8 is there is too much focus on cosmetic changes to the business. Take the site makeover that was revealed. This may be intended to send a message that Facebook has changed, but it’s more a case of the leopard changing his spots.

Likewise Facebook’s Secret Crush feature. It could turn out to be creepy if poorly implemented. But you can’t help thinking it’s main purpose is to distract people.

Judging by the latest IDC phone sales report, Apple has now found the point where iPhone prices rises meet customer resistance.

The last two product cycles have seen Apple raise iPhone prices faster than the rate of inflation.

A few anomalies like the troublesome Samsung Galaxy Fold aside, Apple prices have also gone up faster than phones from rival manufacturers. The gap between Apple’s most expensive iPhone and the most expensive mainstream options from the likes of Samsung and Huawei is higher than ever before.

In New Zealand the Apple iPhone XS Max with 512Gb of storage costs NZ$2800. Huawei’s P30 Pro, with 256GB of storage costs NZ$1500. That’s a fraction over half the price of the top iPhone.

Samsung’s Galaxy S10 with 512Gb of storage is $2100. Three-quarters the price of the iPhone XS Max.

Quality?

You can argue Apple’s phones are better than Huawei’s or Samsung’s. Although many readers would dispute that. You can also argue that an iPhone has greater value than an Android for people who have invested in iOS.

Even so, it can’t be an accident that Apple’s sales have dropped both in absolute terms and relative to the market since those price rises.

That fall is not trivial. IDC’s latest phone sales report shows iPhone unit numbers dropped 30 percent in a year. The report says: “The iPhone struggled to win over consumers in most major markets as competitors continue to eat away at Apple’s market share.”

Apple’s iPhone revenues dropped 17 percent.

Third place

IDC says Apple is now firmly in third place behind Samsung and Huawei. The report says the total phone market dropped 6.6 percent year on year. Apple accounted for two-thirds of that drop.

There is evidence much of this drop was in China.

We can’t know for sure there is a direct link between Apple’s recent rounds of faster than inflation price rises and the drop in sales. But it is a plausible working thesis.

Buoyant

For a while Apple’s faster than inflation price rises meant that the company’s phone revenue remained buoyant as unit numbers fell. In effect Apple users were trading up to more ritzy phones. If that was a strategy, it only worked in the short-term.

One aspect of this is that although Apple’s iPhones are more expensive, they contain more technology and more functionality. This might justify the higher price in some cases.

In recent years Apple’s gross margin has been around the 38 percent mark. That sounds huge, but it’s not unusual in the technology sector. Software companies tend to do better.

The most recent result shows the gross margin has fallen from 38.3 percent a year ago to 37.6b percent. In other words, those higher phone prices are not a simple case of Apple cashing in.

Problems everywhere

Samsung and Huawei both face enormous problems. The Galaxy Fold is a potential disaster for Samsung. Meanwhile Huawei is at the centre of a nasty political row. At some point that could affect the company’s handset sales, at least outside of China.

Apple faces a difficult year. If the folding phones from Samsung and Huawei turn out hits, Apple will be on the back foot in technology terms. There’s also the 5G problem. Apple committed to buying Intel 5G chips. It turns out these don’t work, so Apple has turned back to Qualcomm.

For all these reasons, observers are going to judge the 2019 iPhone launch more carefully than any Apple launch over the past three to five years. It might also pay to take a close look at what Apple does with prices later this year. Another big rise would ring alarm bells.

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.

Spark esim Samsung Galaxy Watch 4

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.