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.
The company is expected to make more job cuts this month, including from other locations in the U.S., further lowering the ranks of its 33,000-person work force. Since January, the company has cut its ranks by about 5,000, from 38,000.
The latest headquarters cuts were in IT and portfolio management and Sprint’s network, technology and product areas, according to a statement by spokesperson Roni Singleton. Some employees will work their last day on Nov. 7 and others will finish Nov. 14.
“Sprint is focused on competing aggressively in the marketplace,” Singleton said. “We want our customers to pay less for a better value on a new networks. As part of this plan, we have to more closely align our cost structure with that of our competitors.”
CEO Marcelo Claure signaled there would be job cuts in August shortly after taking on his new role. Claure also inaugurated a round of pricing reductions.
Even so, analysts expect the company to lose more subscribers and fall into fourth place among the nation’s top carriers, behind T-Mobile.
An earnings call is expected in late October, although the date hasn’t been scheduled, Singleton said.
Sprint’s more than 5,000 job cuts in 2014 put it behind Cisco, with 6,000 job cuts (8%) announced for the year and Microsoft, with 18,000 job cuts (14%) planned for the year.
Nosey Google has updated its search engine algorithms in an attempt to restrict piracy web sites appearing high in its search rankings.
The update will mean piracy sites are less likely to appear when people search for music, films and other copyrighted content.
The decision to roll out the search changes was announced in a refreshed version of a How Google Fights Piracy report, which was originally published in September 2013.
However, this year’s updated report features a couple of developments, including changes to ad formats and an improved DMCA demotion search signal.
The move is likely to be a result of criticism received from the entertainment industry, which has argued that illegal sites should be “demoted” in search results because they enable people to find sites to download media illegally.
The biggest change in the Google search update will be new ad formats in search results on queries related to music and movies that help people find legitimate sources of media.
For example, for the relatively small number of queries for movies that include terms like ‘download’, ‘free’, or ‘watch’, Google has instead begun listing legal services such as Spotify and Netflix in a box at the top of the search results.
“We’re also testing other ways of pointing people to legitimate sources of music and movies, including in the right-hand panel on the results page,” Google added.
“These results show in the US only, but we plan to continue investing in this area and to expand it internationally.”
An improved DMCA demotion signal in Google search is also being rolled out as part of the refresh, which down-ranks sites for which Google has received a large number of valid DMCA notices.
“We’ve now refined the signal in ways we expect to visibly affect the rankings of some of the most notorious sites. This update will roll out globally starting next week,” Google said, adding that it will also be removing more terms from autocomplete, based on DMCA removal notices.
The new measures might be welcomed by the entertainment industry, but are likely to encourage more people to use legal alternatives such as Spotify and Netflix, rather than buying more physical media.
Amazon, which had been in discussions with Simon & Schuster since July over pricing, confirmed the deal first reported by the Business Insider news blog that the two had reached an agreement.
Amazon had been locked in a months-long standoff with publisher Hachette Book Group, the fourth-largest U.S. book publisher owned by France’s Lagardere, over digital book pricing. That has led to numerous issues for authors.
Industry experts had expected other publishers eventually to be drawn into negotiations as well, as the Internet retailer tries to set new benchmarks for the e-book market.
Negotiations with Simon & Schuster took about three weeks and closed two months before Amazon’s contract expired, according to Business Insider.
Simon & Schuster made its original offer and an agreement was reached after a few changes by Amazon, the source told Business Insider.
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.
Twitter Inc will allow users to play podcasts, music and other audio clips direct from their timelines, or message feeds, by using a new feature designed in partnership with Berlin-based audio-streaming service SoundCloud.
The online messaging service introduced what it dubbed “Audio Card,” through which users can listen to a variety of content whilst browsing their timelines.
For starters, Twitter has promised audio from SoundCloud’s partners, which include such diverse sources as NASA, the Washington Post, CNN, David Guetta, Coldplay and Warner Music.
But it’s trying to snag more content partners in future, Twitter said in a recent blog posting.
Twitter didn’t say how Audio Card might evolve, except to stress that it offers musicians a chance to post exclusive clips.
“Many more musical artists and creators will be able to share exclusive, in-the-moment audio to millions of listeners on Twitter,” the company added.
Twitter’s new feature comes after rivals from Apple Inc to Google Inc have jumped into the business of music-streaming, considered the fastest-growing segment of a music market dominated by iTunes.
Twitter had reportedly been in discussions to acquire audio-sharing website SoundCloud, which has been called the Youtube of music, as far back as June.
The credit-card company showed a prototype of the card in London on Friday along with Zwipe, the Norwegian company that developed the fingerprint recognition technology.
The contactless payment card has an integrated fingerprint sensor and a secure data store for the cardholder’s biometric data, which is held only on the card and not in an external database, the companies said.
The card also has an EMV chip, used in European payment cards instead of a magnetic stripe to increase payment security, and a MasterCard application to allow contactless payments.
The prototype shown Friday is thicker than regular payment cards to accommodate a battery. Zwipe said it plans to eliminate the battery by harvesting energy from contactless payment terminals and is working on a new model for release in 2015 that will be as thin as standard cards.
Thanks to its fingerprint authentication, the Zwipe card has no limit on contactless payments, said a company spokesman. Other contactless cards can only be used for payments of around €20 or €25, and some must be placed in a reader and a PIN entered once the transaction reaches a certain threshold.
Norwegian bank Sparebanken DIN has already tested the Zwipe card, and plans to offer biometric authentication and contactless communication for all its cards, the bank has said.
MasterCard wants cardholders to be able to identify themselves without having to use passwords or PINs. Biometric authentication can help with that, but achieving simplicity of use in a secure way is a challenge, it said.
Amazon.com Inc is add more territory to its online grocery delivery program to Brooklyn’s well-heeled Park Slope neighborhood, giving the No. 1 U.S. online retailer a foothold in one of the wealthiest and densest markets in the United States.
The AmazonFresh program, which offers same-day or next-day delivery on more than 500,000 items including fresh and frozen groceries, will soon expand to other areas in Brooklyn.
The move is part of Amazon’s slow build-out of its “Fresh” program, targeting one of the largest retail sectors yet to be upended by online commerce. Amazon declined to say if it will expand to Manhattan or other parts of the New York metro area.
“Currently, we are offering AmazonFresh in Brooklyn and will continue being thoughtful and methodical in our expansion,” an Amazon spokeswoman said in an e-mail.
Groceries have proven to be one of the toughest sectors for technology companies to manage, and Amazon faces competition from established companies like FreshDirect as well as fast-growing startups like Instacart.
But a successful foray in Park Slope could help Amazon cement customer loyalty and boost sales, especially among wealthy and middle-class families, analysts have said.
The top 10 to 20 percent of wealthiest Americans spend between 3 and 4 times more on food than the average American family, according to Bill Bishop, chief architect at Brick Meets Click, a consulting firm focused on retail technology.
“They are the sweetest of shoppers so anybody who attracts that business is taking the cream of the market,” Bishop said.
Amazon could also use its Fresh program to experiment with its own delivery service, analysts have said.
The latest version of the cloud computing stack contains 342 new features, 3,219 bug fixes, almost 500,000 lines of modified documentation and a new Architecture Design Guide.
1,419 unique contributors including representatives from 133 companies made it all happen over six months.
Last month it was revealed that HP had overtaken Red Hat in terms of overall contributions to Juno, and is closing in on Red Hat’s overall lead.
However, Red Hat has shifted focus more towards the cloud market in recent strategy announcements, so that lead could widen again.
The new version adds storage policies, data processing provisioning for Hadoop and Spark and takes the initial steps towards being a platform for Network Function Virtualisation (NFV) in a future release, meaning that it would be capable of managing a number of functions currently fulfilled by expensive software.
Other new features include Nova Compute, a rescue mode improvement with the option to boot from alternative images via locally attached disks, update scheduling and internationalisation updates.
For networking, the Neutron module includes IPv6 and third-party driver testing, plug-ins, and migration support from Nova to Neutron.
The Keystone identity service allows users to share credentials for private and public OpenStack clouds.
The Heat engine, which manages orchestration, includes advanced rollback options in the event of failed deployment and the option for administrators to delegate creation of resources to non-admins.
The Horizon Dashboard now offers Hadoop deployment in a few clicks, enabling rapidly scalable data processing with custom parameters.
Finally, the Trove database allows users to manage relational database servcies in the OpenStack environment.
Of course, OpenStack waits for no-one. With this release safely out, work now begins on the next version, codenamed Kilo, which is due in April 2015.
U.S. Federal Communications Commissioner Jessica Rosenworcel, on Friday, stated that U.S. regulators will look “to infinity and beyond” to harness new technology that can help build a new generation of mobile wireless connections.
The FCC on Friday voted unanimously to open a so-called “notice of inquiry” into what it and the industry can do to turn a new swath of very high-frequency airwaves, previously deemed unusable for mobile networks, into mobile-friendly frequencies.
The FCC’s examination would serve as a regulatory backdrop for research into the next generation of wireless technology, sometimes referred to as 5G and which may allow wireless connections to carry a thousand times more traffic.
“Today we’re stepping in front of the power curve,” FCC Chairman Tom Wheeler said on Friday at the meeting.
In question are frequencies above 24 gigahertz (GHz), sometimes called millimeter waves, that have previously been deemed technically unweildy for mobile connections, though have the potential to carry large amounts of data and give the promise of lightning-fast speeds.
Millimeter waves work best over short distances and have required a direct line-of-sight connection to a receiver. They are now largely used for point-to-point microwave connections.
The FCC said it will study what technologies could help get around the technological and practical obstacles and what kind of regulatory regime could help a variety of technologies to flourish on those airwaves, including the potential for services other than mobile.
The U.S. wireless industry continues to work on deploying the 4G connections, though some equipment manufacturers, such as Samsung are already testing data transmission on the higher frequencies.
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.
A comprehensive security audit of its ads code was recently completed, but Facebook “would like to encourage additional scrutiny from whitehats to see what we may have missed,” wrote Collin Greene, a security engineer, in a blog post. “Whitehats” refers to ethical security researchers, as opposed to “blackhats” who take advantage of vulnerabilities.
According to bug bounty program guidelines, Facebook pays a minimum of $500 for a valid bug report. Until the end of the year, that has been increased to $1,000.
Greene wrote that the majority of reports it receives concern more common parts of Facebook’s code, but the company would like to encourage interest in ads “to better protect businesses.”
Facebook’s ad tools include the Ads Manager, the ads API (application programming interface) and Analytics, which is also called Insights, Greene wrote. The company also wants close scrutiny of its back-end billing code.
“There is a lot of backend code to correctly target, deliver, bill and measure ads,” Greene wrote. “This code isn’t directly reachable via the website, but of the small number of issues that have been found in these areas, they are relatively high impact.”
Greene wrote that Facebook typically sees bugs such as incorrect permission checks, insufficient rate-limiting, edge-case CSRF (cross-site request forgery) issues and problems with Flash in its ads code.
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.
Qualcomm wants to buy British Bluetooth expert CSR for $2.5 billion. The company is doing rather well in areas like automotive and wearable devices which is exactly where Qualcomm wants to be.
CSR has previously said no to any take-over, but the two had remained in talks to reach a deal, with a deadline imposed by UK regulators. There is a chance alternative bidders may emerge, but they might be put off by the huge amounts of cash that Qualcomm is paying.
Qualcomm Chief Executive Steven Mollenkopf said the addition of CSR would allow it to diversify into the markets for short-range, wireless Bluetooth chips and audio processing used in portable audio, automotive controls and wearable devices.
“Combining CSR’s highly advanced offering of connectivity technologies with a strong track record of success in these areas will unlock new opportunities for growth,” he said.
CSR Chief Executive Joep van Beurden said the two companies were a good combination something analysts appear to agree with. CSR, short for Cambridge Silicon Radio, specializes in connectivity, with its chips used in products such as portable audio speakers and Beats headphones.
It was a pioneer in the market for wireless Bluetooth technology, which is now mushrooming in popularity for use in wireless audio speakers, network-connected appliances in homes and for use in so-called “connected car” features in autos.
Taiwan’s contract chipmaker TSMC surprised Wall Street by doing much better than expected. The outfit made a killing from its smartphone customers to record net profit in the third quarter.
TSMC earned a net profit of (US) $2.51 billion in the July-September period, versus expectations of $2.41 billion analysts expected. It also helped the company notch a 26 percent on-quarter rise in revenue from communication devices, even as computer-related revenue fell 6 percent. TSMC had reported net profit of $1.96 billion in the second quarter and $1.71 billion in the same three months of 2013.
Overall revenue of $6.88 billion in the third quarter also hit a record, eclipsing the $6.02 billion from the previous three months. Apple orders contribute about 6 percent of revenue for TSMC. Other TSMC clients such as Qualcomm and Broadcom supply Apple as well and Yuanta Securities analyst George Chang estimates that such second-hand orders contribute as much as another 15 percent to TSMC sales.
Qualcomm rival MediaTek whose chipsets are popular among low-cost smartphone vendors in emerging markets such as China, also counts TSMC as its main foundry partner.