China’s Xiaomi Inc has nudged it’s way into being the world’s third-largest smartphone vendor just three years after first hitting the market, trailing only Samsung Electronics Co Ltd and Apple Inc, according to a new industry study.
Strategy Analytics said Xiaomi accounted for 6 percent of all 320 million smartphones shipped during July-September. Samsung made up 25 percent, down from 35 percent a year earlier due to rising competition from several directions.
Apple’s share also fell slightly to 12 percent.
“Xiaomi was the star performer,” Strategy Analytics Executive Director Neil Mawston said in a statement.
“Samsung continues to face tough competition from Apple at the higher-end of the smartphone market, from Xiaomi and Huawei in the middle-tiers, and from Lenovo and others at the entry-level.”
Xiaomi has been the top seller in its home market of China and recently entered India, where it sells phones exclusively through e-commerce site Flipkart.
Vice President Hugo Barra told Reuters in Bangalore last month that the company aimed to sell 100,000 phones a week in India in October when the country celebrates Diwali.
Microsoft Corp introduced a device called “MicrosoftBand” that will allow users to monitor their fitness and exercise regime, marking the world’s largest software company’s foray into the wearable technology market.
The wrist-worn device has sensors that monitor pulse rate, measure calorie burn and track sleep quality, Microsoft said in a blog post. Microsoft said the device will be available in the United States in limited quantities from Thursday for $199.
Apple Inc unveiled a smart watch on Sept. 9 that will combine health and fitness tracking with communications and will go on sale in early 2015, while Samsung Electronics Co unveiled its Galaxy Gear smart watch in September 2013. The Apple Watch will be priced at $349.
Microsoft also launched a health app called “Microsoft Health” that includes a cloud service for users to store and combine health and fitness data.
The Microsoft Health app will collect data from the fitness band and will work on iPhones and Android smartphones, as well as its own Windows Phone.
IBM will help businesses predict trends in the marketplace and consumer sentiment about products and brands and will train 10,000 employees to consult businesses on the best use of Twitter data.
IBM chief executive Ginni Rometty has been trying to shift the 100-year-old company’s focus away from commoditized hardware to higher-value cloud and data analytics products.
In July, IBM announced a partnership with Apple Inc to offer iPads and iPhones loaded with applications geared toward enterprise clients.
“Here we are seeing an alignment of old tech and new tech companies. It is the second such deal that IBM has announced in the last couple months. They realize they don’t have all the answers and a lot of other companies have asset offerings that can be matched well,” said Scott Kessler, analyst at S&P Capital IQ in New York.
In April, Twitter acquired social data provider Gnip to burrow into the 500 million tweets sent daily on its network.
Enterprise clients will now be able to filter the data based on geography, public biographical information and the emotion expressed in the tweet.
The company previously allowed third-party companies such as Gnip, Datasift and Dataminr to buy access to tweets and re-sell that data to corporate clients.
For the three months ending Sept. 30, Microsoft recorded $908 million in revenue for the Surface tablet line, an increase of 127% over the same quarter in 2013. The nearly one billion in revenue was a one-quarter record for the Surface, and beat the combined revenue of the previous two quarters.
Using information in Microsoft’s filing with the U.S. Securities and Exchange Commission (SEC), as well as data from earlier quarters, Computerworld calculated the quarter’s cost of that revenue at $786 million, leaving a gross margin of $122 million. Cost of revenue is the cost to make and sell a product, but excludes expenses such as advertising and R&D.
Microsoft said that the Surface line posted a positive gross margin — implying that outside estimates of prior losses were correct — but did not disclose a dollar figure.
According to Computerworld‘s estimate, the margin was small, about 13.4%. That’s more than the average for a Windows personal computer, but less than half or a third of the margins on tablets like Apple’s iPad.
It was even smaller by the figuring of Jan Dawson, principal analyst at Jackdaw Research, who has also used Microsoft’s SEC filings to estimate the Surface’s cost of revenue. He pegged the September quarter’s cost of revenue at $825 million, the gross margin at $83 million, and the margin rate at just 9.1%.
“That’s a gross margin … which is not earth-shattering and in fact about half the gross margin of the phone business at Microsoft. But it’s progress,” Dawson wrote on his blog, where he published his analysis of Surface’s financial performance.
Since its October 2012 introduction, Surface has been a money pit for Microsoft, in the hole to the tune of $1.73 billion through its first seven quarters. With the September quarter in the black, those overall losses have been reduced to about $1.6 billion.
Over the last four quarters, Surface also remained in the red, with losses of $325 million on revenue of $2.7 billion. Put another way, for each dollar Microsoft earned on Surface sales, it lost about 12 cents.
After several years of accelerated growth, the U.S. market is feeling the effects of market saturation and smartphone ownership that’s lasting longer than once expected, Ramon Llamas, an analyst IDC, said in an updated forecast.
IDC’s five-year forecast issued for October significantly undercuts its April forecast, dropping expectations for U.S. smartphone and feature phone shipments by manufacturers to retailers. IDC now expects 1.7 million fewer phones shipped in 2104 than it had expected in April; it predicts 174 million phones will ship this year, with that figure declining gradually to 169 million in 2018.
Smartphone shipments alone will grow just slightly through 2018 in the U.S., but about 5% less than earlier expected, rising from 150 million in 2014 to 160.5 million in 2018. Feature phones shipments have dropped off faster than earlier expected.
Llamas said the signs of decline started in late 2011, prompting carriers in the past year to try to get customers to replace phones more often with easy trade-in plans and relaxed contracts.
It’s too soon to say what effect the early trade-in plans will have on the market, Llamas said. The life of an average smartphone still lasts about two years, but that could be changing.
Paying on installment plans “could really change the market,” Llamas said in an interview. “But if people pay off their devices and then realize they don’t have to pay the carrier as much [at the end of the payoff period] and only pay for wireless service, they might just hold onto their phones. I think people will hold onto their phones as long as they can after they are paid off. If this plays out and they hold on and don’t update, we’ll see flattening of sales volumes year after year, or even declines, all in the name of saving money.”
Realizing what’s happening in the U.S. and among other major economies, both Apple and Samsung have concentrated heavily on selling their new smartphones in China and other areas where smartphone sales are still strong.
Google didn’t elaborate on the price increase after announcing the Nexus 6, but several analysts said Google may be intending to push the Nexus as a premium brand that can compete with the iPhone 6 and other high-end phones.
Google originally developed Android to be inclusive and global, and indeed, it is the world’s largest OS by far. The company developed the Nexus line in 2010 to show Android phone manufacturers, and the public, how a pure Android phone could look and feel without the added features and bloatware installed by phone makers.
Meanwhile, the four national carriers are expected to sell the Nexus 6 with a subsidized price of as low as $200 with a two-year contract, and separate pricing for installment plans. AT&T will be a Nexus provider for the first time, and Verizon Wireless will carry the phone despite a spotty history with the Nexus line.
Such a carrier push to sell Nexus 6 phones with a subsidy seems to indicate that Google is intent on spreading wider adoption of its pure Nexus line that it so far hasn’t achieved. Google has long described Android as an operating system for all, but Google also wants to promote a more refined Android device, which it is trying to do with its Nexus line.
The $649 Nexus 6, which will run Android 5.0 Lollipop with support for 64-bit architecture, is a better phone than the $349 Nexus 5 that runs Android 4.4 KitKat. Nexus 6 also starts with 32 GB storage, double the capacity of its predecessor the Nexus 5. (A 64 GB Nexus 6 will run $699 unlocked on Google Play.)
But all the enhancements in the new Nexus 6, including its 5.96-in. Quad HD display and Snapdragon 805 quad-core processor, still don’t fully account for the 86% increase in starting price for the unlocked model, analysts said.
Sundar Pichai, senior vice president of Android at Google, noted in a blog post that wireless carriers will offer the Nexus 6 on monthly contracts or installment plans. A number of industry sources predicted the two-year contract price will start at $200, a common industry price for high-end smartphones, including the new iPhone 6.
The four major carriers, Google and Motorola, which is the Nexus 6 manufacturer, all refused to discuss the prices that carriers will charge. They also would not disclose the November release date.
Gartner and IDC both recently dramatically lowered their tablet shipment and sales estimates for 2014 and coming years, citing primarily the longer-than-expected time customers keep their existing tablets. (That phenomenon is called the “refresh rate.”)
Gartner said it had originally expected 13% tablet sales growth for the year globally; it has now lowered that growth rate to 11%. IDC’s forecast change was even more dire: In June, it predicted shipment growth this year would be 12.1%, but in September it cut that number to 6.5%.
In the U.S., things are worse, because more than half of households have a tablet and may hold onto it for more than three years, well beyond analysts’ earlier expectations.
IDC said in its latest update that tablet growth in the U.S. this year will be just 1.5%, and will slow to 0.4% in 2015. After that, it expects negative growth through 2018. Adding in 2-in-1 devices, such as a Surface Pro with a keyboard, the situation in the U.S. improves, although overall growth for both tablets and 2-in-1′s will still only reach 3.8% in 2014, and just 0.4% by 2018, IDC said.
“Tablet penetration is high in the U.S. — over half of all households have at least one — which leads to slow growth…,” Mikako Kitagawa, an analyst at Gartner, said in an interview. “A smartphone is a must-have item, but a tablet is not. You can do the same things on a laptop as you do with a tablet, and these are all inter-related.”
Tablets are a “nice-to-have and not a must-have, because phones and PCs are enough to get by,” added Carolina Milanesi, chief of research at Kantar Worldpanel.
In a recent Kantar survey of 20,000 potential tablet buyers, only 13% said they definitely or probably would buy a tablet in the next year, while 54% said they would not, Milanesi said. Of those planning not to buy a tablet, 72% said they were happy with their current PC.
At IDC, analyst Tom Mainelli reported that the first half of 2014 saw tablet growth slow to 5.8% (from a growth rate of 88% in the first half of 2013). Mainelli said the meteoric pace of past years has slowed dramatically due to long device refresh cycles and pressure from sales of large phones, including the new iPhone 6 Plus. That phone has a 5.5-in. display, which is close to some smaller tablets with 7-in. displays.
Juniper Research now estimates smartwatch shipments will hit 100 million by 2019. The firm expects several high-profile products to launch over the next year or so, helping boost mainstream awareness.
However, the figures are anything but encouraging.
The report, titled ‘Smart Watches: Market Dynamics, Vendor Strategies & Scenario Forecasts 2014-2019′, expects growth will decelerate from 2016 onwards. The first batch will ride the hype, but moving forward it won’t do much for mainstream adoption.
However, the forecast also examines the possibility of sustaining 2014-2015 growth in the long term.
If consumers discover a ‘key use case’ or cases for smartwatches, backed by more product releases on the back of higher demand, higher growth could be sustained. In plain English, if people actually find a use for smartwatches, they will see more growth.
Unfortunately the case is hard to make at this point. Smartwatches face a number of hardware limitations and software support is still limited, which means they are not very useful at the moment. Juniper expects more vendors to integrate GPS, NFC and other technologies, but the downside is that smartwatches are not expected to become very cheap. The firm estimates premium branding and high functionality to keep prices at $200+ until the end of the decade.
Europeans not too keen
One possible application that could generate more demand comes in the form of mobile payments. Apple Pay is coming to the Apple Watch, but the service will be limited to the US for quite a while and Apple won’t have an easy time launching it in other markets, where it enjoys a much lower market share.
The problem with mobile digital wallets is that they have not taken off yet. What’s more, new research indicates that Europeans are not sold on the idea of smartwatch wallets.
The survey, carried out by German market research firm GfK, found that just 20 percent of Germans and 27 percent of Britons are interested in contactless payments built into a watch. However, Chinese and American consumers are more open to the idea, with 40 and 54 percent saying they are interested.
Most consumers said they are interested in health applications and many said they would store identification data on their smartwatches.
Gartner is warning that tablet sales could fall to the power of the cheaper and bigger smartphones. Gartner’s Q3 and annual figures for device sales worldwide — covering smartphones and tablets as well as PCs of all sizes — shows that tablet sales in 2014 will only see 11 per cent growth over last year, compared to growth of 55 percent the year before.
This works out to a projected 229 million tablets selling in 2014, or 9.5% of overall worldwide device sales, which will total 2.4 billion devices for the year, and 2.5 billion in 2015. In short the novelty is wearing off and tablets are getting a good kicking from Android smartphones. Devices built on Google’s mobile operating system will see sales of 1.2 billion devices this year, working out to more than half of all devices sold.
Ultramobiles, the not-quite-PC and not-quite-tablet and not-quite-phone category, will remain niche but continue growing: there will be 37.6 million of these sold this year, and as befits a fast-growing but still-small category, ultramobiles will grow the fastest, doubling in sales in 2015 while the other categories continue to see only modest rises. Ultramobiles are also suffering from the same issue as tablets. People are simply not replacing them as much.
“In the tablets segment, the downward trend is coming from the slowdown of basic ultramobiles,” Gartner concludes.
The life cycle of tablets and ultramobiles is around three years and buyers this year won’t replace devices until 2018. Gartner says it projects 83 million less new tablet purchasers in 2014-2015 and 155 million less tablet replacements through 2018.
Roberta Cozza, a Gartner analyst and co-author of the report said there are too many solid devices out there and users don’t have a reason to upgrade to the new units. Cozza also confirmed Samsung is heads and shoulders above all other OEMs.
If you look at PCs, ultramobiles and phones, Samsung is still number one, with around a 20 per cent share this quarter. Samsung’s fortunes are driven by Android and its share in the PC category is “tiny.”
With Apple in second place at around 10 percent, Nokia in third just behind it and Lenovo in fourth in the overall category.
GT Advanced relied on Apple and it appears that made it vulnerable. Apple had withheld the last $139 million payment to the company and no one is sure why. This meant that GT Advanced had spent $248 million in cash in one quarter and had no money coming in.
That may have led to the company’s filing, since its cash, at $85 million, was below a $125 million trigger point that would allow Apple to demand repayment of about $440 million in loans it had advanced. Apple had agreed to lend GT a total of $578 million to help get a large sapphire factory in Arizona up and running. The tech giant reportedly withheld the last $139 million payment it was due to make.
While it might be normal in the cut and thrust business world, does look like Apple might turn out to be the bad guy in this story. We would not be surprised if it offers the bankruptcy accountants a deal to buy the company at a knock down price. After all most of the company debts seem to be owned by Jobs’ Mob.
Mobile metrics firms Mixpanel and Fiksu, which monitor the activity of iPhone owners via the analytics embedded in clients’ apps, have both noted an improvement in the ratio of the iPhone 6 Plus to iPhone 6 smartphones.
As of Sunday, for example, Mixpanel pegged the iPhone 6 at 6.02% of all iPhones, with the iPhone 6 Plus representing 1.34%. The ratio — 4.5:1, or 4.5 iPhone 6 handsets for every one iPhone 6 Plus — was an improvement for the iPhone 6 Plus from the 6.8:1 of two weeks prior.
Fiksu, another mobile app metrics provider, recorded a similar trend.
On Sunday, Fiksu’s ratio was 3.9:1 in favor of the iPhone 6, a stronger showing for the iPhone 6 Plus than two weeks before, when the ratio was 6.5:1.
In other words, about 18% to 20% of all iPhone 6 smartphones monitored by Mixpanel and Fiksu were iPhone 6 Pluses.
Apple still shows a delay between ordering and shipping for both models, but the lag for the iPhone 6 Plus — at “3-4 weeks” on its e-store — remained substantially longer than the iPhone 6 (“7-10 business days”) by a large margin.
But the increasing share of the iPhone 6 Plus in the usage data indicates that, even though it is harder to find than its smaller sibling, customers are acquiring it in larger numbers. That, in turn, hints that sales — or at least usage — of the iPhone 6 Plus are increasing faster than for the iPhone 6.
Most analysts expect the iPhone 6 Plus’s share to jump even more once the 5.5-in. smartphone goes on sale in the People’s Republic of China (PRC) on Oct. 17. Customers in mainland China can pre-order the iPhone 6 and 6 Plus from Apple’s online store starting Friday, Oct. 10.
While the iPhone 6 Plus is out of stock on Apple’s online market, some of the Cupertino, Calif. company’s brick-and-mortar stores have devices to sell, according to iStockNow.com, a website that tracks iPhone retail availability.
Coated with white rubber, Yubi Navi looks a bit like a game controller or TV remote. It can link to a smartphone via Bluetooth and contains small actuators that twist it left or right or make it bulge slightly in the middle.
When used for navigation, it can guide a user to a destination by prompting him to turn left or right at a given intersection. When the goal is reached, it vibrates.
The idea is to free people from the need to keep looking at a map displayed on their smartphone.
At the Ceatec tech expo outside Tokyo, DoCoMo did demos of prototypes of the device, which were linked to a power source via wires. A screen displayed a 3D animation of the streets of a town through which attendees could virtually navigate with the help of Yubi Navi.
Aside from avoiding the dangers involved in not paying attention to one’s surroundings, this can help people enjoy a location more by noticing new shops and other attractions,” said Koji Okamoto of DoCoMo’s strategic marketing department. “In Japan, walking with smartphones is a big problem and we want to solve it.”
The device can also be used to send tactile “nudges” to other people as a form of communication, much like the haptic messaging functions of the Apple Watch.
DoCoMo also demonstrated one of its own wearables on Monday, a credit card-size sensor that straps on your forearm to tell you how much fat you’re burning.
The 54-gram prototype is a semiconductor-based gas sensor that can detect acetone molecules, which are emitted from the skin when fat is being burned.
DoCoMo managed to shrink the sensor from one that weighed 6 kilograms. It can link to a smartphone via Bluetooth and relay data on how much acetone it detects.
“We’d like to realize a healthier world just by wearing such a device that can measure various types of health indexes like fat burning,” said Satoshi Hiyama, an engineer with DoCoMo’s Frontier Technology Research Group.
The device could be further miniaturized to fit into fitness bands or smartwatches, Hiyama said.
The move, the first announced by a major insurer, allows Humana customers to more easily manage fitness data and other personal health goals, the company said in a statement.
Humana’s wellness program, called HumanaVitality, rewards members for hitting these goals, which include being more active, eating better or losing weight, with items such as movie tickets and fitness equipment.
Apple’s HealthKit gathers data such as blood pressure and weight from various applications, enabling it to be viewed by consumers and doctors in one place. Its ease of use is expected to increase the data sharing between doctors and patients.
Apple delayed the launch of HealthKit earlier this month when it pulled back its iOS 8 operating system for iPhones and iPads. HealthKit and the new Humana application, which has about 3.8 million eligible members, launched lastFriday.
Quick law enforcement access to the contents of smartphones could save lives in some kidnapping and terrorism cases, FBI Director James Comey said in a briefing with some reporters. Comey said he’s concerned that smartphone companies are marketing “something expressly to allow people to place themselves beyond the law,” according to news reports.
An FBI spokesman confirmed the general direction of Comey’s remarks. The FBI has contacted Apple and Google about their encryption plans, Comey told a group of reporters who regularly cover his agency.
Just last week, Google announced it would be turning on data encryption by default in the next version of Android. Apple, with the release of iOS 8 earlier this month, allowed iPhone and iPad users to encrypt most personal data with a password.
Comey’s remarks, prompted by a reporter’s question, came just days after Ronald Hosko, president of the Law Enforcement Legal Defense Fund and former assistant director of the FBI Criminal Investigative Division, decried mobile phone encryption in a column in the Washington Post.
Smartphone companies shouldn’t give criminals “one more tool,” he wrote. “Apple’s and Android’s new protections will protect many thousands of criminals who seek to do us great harm, physically or financially. They will protect those who desperately need to be stopped from lawful, authorized, and entirely necessary safety and security efforts. And they will make it impossible for police to access crucial information, even with a warrant.”
Representatives of Apple and Google didn’t immediately respond to requests for comments on Comey’s concerns.
BlackBerry Ltd reported a smaller quarterly loss on Friday and is showing encouraging signals about its endangered smartphone business as well as its software and services sales, spurring a more than 4 percent jump in its shares.
The Canadian company, a smartphone pioneer pushed to the margins by Apple’s iPhone and devices running Google’s Android software, is now focusing more on software and services than on hardware as it works through a long turnaround.
On the services front, the company reported a huge number of conversions in its second quarter to its heavily promoted new device management platform. But BlackBerry’s hardware unit also offered hopeful news, posting an adjusted profit for the first time in five quarters, helped by lower manufacturing costs and strong demand for its low-end Z3 handsets in emerging markets.
“This is the first time in a long time that we have actually made money on hardware,” Chief Executive John Chen told reporters, while hinting at plans to unveil new phones at Mobile World Congress in Barcelona in 2015. “We think we can continue on that track, so hardware is no longer going to be a drag to the margin and the earnings.”
The Waterloo, Ontario-based company’s revenue in North America rose from the previous quarter, but sales slipped elsewhere. Its total revenue was down more than 40 percent from a year earlier.
“They’re taking all the right steps, which is great. It’s encouraging to see,” said BGC Partners analyst Colin Gillis. “Now we’ve got to see what Chen can do about the revenue decline.”
BlackBerry shares were up 5.2 percent at C$11.45 on the Toronto Stock Exchange and up 4.6 percent at $10.26 on Nasdaq.