Tag: China

Qualcomm is in denial

bad-dogQualcomm, under investigation for possible monopolistic practices in China, said it had no direct financial links with an antitrust expert.

Zhang Xinzhu, a member of the Chinese Academy of Social Sciences (CASS) and one of China’s leading antitrust experts was sacked from a government advisory post after state media reported he had received payments from Qualcomm.

Qualcomm is being investigated by the National Development and Reform Commission (NDRC), one of China’s three antitrust regulators, over how the company licenses its patents and prices its chipsets.

The chipmaker did not hire Zhang directly. When it was investigated by the NDRC it hired Global Economics Group to produce an economic analysis for submission to the regulator. Global Economics Group employed Zhang Xinzhu.

The official Xinhua News Agency reported on Wednesday that Zhang had been fired from the State Council’s expert commission on competition issues for taking “huge rewards” from Qualcomm. The implication was that Qualcomm had been bribing Zhang to suggest that the regulators should be nice to the American chipmaker.

Qualcomm paid Global Economics its standard rates for the firm’s services,” Trimble said, and did not have “any financial dealings” with Zhang directly.

Qualcomm’s analysis was submitted to the NDRC in May and had three principal authors, including Zhang.

The Chinese said that Zhang had “contravened work discipline” and been removed from his position on the anti-monopoly committee.

The news agency said “certain multinational companies” had been attempting to delay antitrust probes, including spending money to gain support on experts groups and complaining of being picked on for being foreign.

“Against this backdrop, hiring relevant ‘experts’ from government departments to ‘speak on behalf of foreign companies’ is a violation of discipline … This matter should be gotten to the bottom of and bought to light,” Xinhua said.

The 21-member anti-monopoly academic experts group from which Zhang was dismissed was established in 2011. The group is seen to serve the principal role of providing the bureaucracy with the supporting arguments needed to justify its industrial policy aims.

But Zhang has been critical of the NDRC, and claimed that the regulator had acted outside of its jurisdiction and misused antitrust principles. It appears that the regulator, might just want him out of the way.

Xiaomi says sorry for spying

eclipse-chinaCheap as chips smartphone maker Xiaomi has said sorry for spying on its users address books.

The outfit said it has upgraded its operating system to ensure users knew it was collecting data from their address books.

Security firm F-Secure Oyg said the Chinese budget smartphone maker was taking personal data without permission.

Xiaomi said it was a terrible mistake and it had fixed a loophole in its cloud messaging system that had triggered the unauthorized data transfer and that the operating system upgrade had been rolled out on Sunday.

Part of the problem was that Xiaomi lets users avoid SMS charges by routing messages over the Internet rather than through a carrier’s network.  The way this is set up was similar to the system that got Apple into such hot water.

In a lengthy blogpost on Google Plus, Xiaomi Vice President Hugo Barra said sorry for the unauthorised data collection and said the company only collects phone numbers in users’ address books to see if the users are online.

He said the smartphone’s messaging system would now only activate on an “opt-in” basis and that any phone numbers sent back to Xiaomi servers would be encrypted and not stored.

Apple changed its iPhone operating system so that app developers would have to ask explicitly for permission before accessing address book data.

Microsoft’s bottom line stripped

spankingMicrosoft is being seriously spanked by people buying naked PCs and installing pirated versions of its operating system, particularly in China.

Vole said that too few people in emerging markets are willing to pay for legitimate copies and this is holding back the spread of its newest Windows 8 version.

Ironically analysts say even buyers of pirate software prefer older versions and more than 90 percent of PCs in China, are running pre-8 versions of Windows.

Microsoft is trying to tackle the problem by offering Windows 8 at a discount to PC manufacturers who install its Bing search engine as the default. And it’s giving away versions of Windows 8 for phones and some tablets.

However Reuters  thinks that masks the fact that Redmond never really worked out how to get people in emerging markets to pay for its software.

In 2011, then CEO Steve Ballmer told employees that, because of piracy, Microsoft earned less revenue in China than in the Netherlands even though China bought as many computers as the United States.

This hurts Microsoft because 56 percent of its global revenue and 78 percent of operating profit came from Windows and Office.

In China PC makers working on wafer-thin margins see the operating system is one of the costliest parts of the machine.

The result is that up to 60 percent of PCs shipped in the emerging markets of Asia, have no Windows operating system pre-installed and carry some free, open source operating system like Linux. However once the owners get them home they just download a hot copy of Windows and Office.

Some Chinese retailers even offer “bundles” of pirated copies of Microsoft software alongside the main sale.

Microsoft has had a job getting respected firms like Lenovo to stop shipping naked PCs, but the Chinese firm countered that its margins were too low. China announced a new law requiring PCs to be shipped with operating systems. That merely dented piracy rates, which fell to 79 percent in 2009 from 92 percent in 2004.

Lenovo has reached an agreement with Microsoft in June to ensure that Lenovo PCs sold in China would come pre-installed with a genuine Windows operating system.

The way Microsoft has done this is to push the price of Windows low enough to make it worth a PC maker’s while. The cost of a Windows license has fallen to below $50 from as high as $150.  So far it is not clear if that has worked.


China bans Symantec and Kaspersky

great wallThe Chinese government has banned anti-virus companies Symantec and Kaspersky Lab from working on government contracts behind the bamboo curtain.

A Chinese media report suggested Beijing is expanding efforts to limit use of foreign technology and Symantec, which is owned by the US and Kaspersky, which has Russian owners are no longer allowed to apply for government contracts.

The state-controlled People’s Daily reported that government procurement office had approved the use five anti-virus software brands, all from China: Qihoo 360, Venustech, CAJinchen, Beijing Jiangmin and Rising.

Kaspersky is apparently not giving up and is going to have a word with the Chinese authorities about this matter. It is too premature to go into any additional details at this time.

Beijing is keen on promoting use of domestic information technology products after leaks from former National Security Agency contractor Edward Snowden raised concerns about foreign surveillance programmes.

Symantec said that that China had banned use of one of its data loss prevention products and it was currently in talks about the ban. However, a Symantec spokeswoman said that there was no indication of a ban on the company’s flagship anti-virus software programs.

In May Chinese authorities had banned government use of Windows 8 “to ensure computer security after Microsoft ended support for its Windows XP operating system”, which was widely used in China.

Chinese regulators gun for Microsoft

microsoft-in-chinaIt seems that after claiming the rump of Qualcomm, the Chinese antitrust regulators want to take a bite out of Microsoft.

Apparently representatives from China’s State Administration for Industry & Commerce (SAIC) popped in for a quiet chat to the Microsoft offices in Beijing, Shanghai, Guangzhou and Chengdu.

No one is actually saying what the conversation was about, but it is not thought that the Chinese water torture was used at this point of the investigation.

SAIC is not just in charge of antitrust matters, it also takes the lead in any bribery and corruption investigations as well as intellectual property rights abuse cases,

A Microsoft spokeswoman said the company was happy to answer the government’s questions but did not say what those questions were.

Qualcomm is facing penalties that may exceed $1 billion in one such Chinese antitrust probe, following accusations of overcharging and abusing its market position.

Needless to say this is getting the US jolly cross. It favours letting businesses do whatever they like or senators are not going to get their usual Christmas presents from their favourite lobby group.

The US Chamber of Commerce earlier this year urged Washington to get tough with Beijing on its use of anti-competition rules, and warned that “concerns among U.S. companies are intensifying”.

Microsoft has been having a little bit of trouble in Big China lately. Earlier this month, activists said Microsoft’s OneDrive cloud storage service were being disrupted.

In May, central government offices were banned from installing Windows 8, Microsoft’s latest operating system, on new computers. This ban has not been lifted, as multiple procurement notices since then have forbidden the use of Windows 8.

Qualcomm is a monopoly – report

monoplyMobile chipmaker Qualcomm has been accused of running a monopoly by China’s antitrust watchdog.

The state-run Securities Times newspaper reported on Thursday that Qualcomm’s chief executive Steven Mollenkopf  held talks in China to see what could be done about the problem.

Watchdog, the National Development and Reform Commission (NDRC), snarled that the US chipmaker was suspected of overcharging and abusing its market position In wireless communication standards, allegations which could see it hit with record fines of more than $1 billion.

However the NDRC, did not say whether the regulator had determined that Qualcomm had abused its monopoly, just that it had confirmed it had one.

Qualcomm was charging lower royalties for patents to undercut competitors who have similar technology and maintain market share. The report also said that Qualcomm, as the only provider of chips for high-end phones, can dictate those licensing fees.

The Securities Times report said the NDRC was probing Qualcomm’s local sales data and that Qualcomm President Derek Aberle has been communicating with the NDRC over issues relating to the anti-monopoly investigation.

Under China’s anti-monopoly law, the NDRC can impose fines of between one and 10 percent of a company’s revenues for the previous year. Qualcomm earned $12.3 billion in China for its fiscal year ended September 29, or nearly half of its global sales.

Chinese couple sell kids for game apps

android-china-communistA Chinese couple has been arrested for selling its children to pay for its online game app addiction.

According to Guangdong TV, A Hui and A Mei were so severely addicted to online games and bankrupted themselves to pay for game items. When it came to a choice between their addiction and their children, they flogged off the kids to child traffickers.

Not only would this give them a windfall, but they would not have financial burden of supporting their children. A Hui told most of the problem was the fact his wife was “fond of” playing online games and likes to buy game items.

He also would not give up his in-app purchases and could not support his first son and they sold him to Fujian-based child traffickers. When the wife A Mei bore another son, they felt they would not be able to support their second child too. As they were both saw some interesting in-app items, so they him too.

Child trafficking is a big problem in China where kids are sold to street peddlers, street gangs and to couples from other countries who want to adopt Chinese children. The country executes those who are accused of the crime, but  several traffickers seem to get away with it.

It appears that A Hui’s father blew the whistle on the couple’s antics when he started to wonder what was happening to his grandchildren. He was so shocked when they told him, that he called the cops.

A Hui and A Mei are awaiting trial in the detention centre and will be sentenced soon for the crime.


Apple worried about partner’s pollution

gala_appleApple is worried about its manufacturing partners’ carbon emissions and its own rising water consumption.

The company has been doing its best to cut back sharply on greenhouse gas output with lots of solar power plants and other eco-friendly investments. . Observers say it has improved its practices and earned better scores from groups such as Greenpeace.

Apple released its 2014 environmental responsibility report, saying investments in renewable energy helped slash its carbon footprint from energy use by 31 percent from fiscal 2011 to fiscal 2013. That is despite power consumption soaring 44 percent over the same period.

Cynics said that it easy to do when you have outsourced most of your polluting manufacturing to China.

Apple agrees that its production partners Foxconn and Pegatron  for the largest portion of its carbon footprint.  It did not name them in the report of course.



US Senate committee approves company snooping

Despite fears about personal data, the US Senate Intelligence Committee approved a bill to encourage companies to exchange information with the government.

The move is supposed to help share information on hacking attempts and cybersecurity threats, the only problem is that you have to trust the US government not to misuse the situation.

Experts see the bill as the best chance for the current congress to pass some type of legislation to encourage better cooperation between the government and private companies to boost the cyber defences of critical industries.

It is a serious problem as cyber-attacks by a determined enemy could be the greatest threat to US national and economic security.

However, comprehensive cyber bills have been delayed by rows over liability and concerns about privacy. In the middle of it, came the news of the government surveillance programmes.

The bill must be approved by the full Senate and reconciled with similar legislation that passed the House of Representatives in April.

There are already signs that the measure has bipartisan support in the House. The Republican chairman and top Democrat on the House Intelligence Committee issued a statement on Tuesday backing the measure and urging the full Senate to vote quickly.

Under the bill, companies and individuals can monitor their own and consenting customers’ networks for hacking and voluntarily share cyber threat data, stripped of personally identifiable information, with the government and each other for cybersecurity reasons.

In return, the US director of national intelligence to increase the amount of information the government shares with private firms and the Department of Homeland Security to set up and manage a data-sharing portal.

The bill offers liability protections to companies that appropriately monitor their networks or share cyber threat data and limit the government’s ability to use data it receives.

However, privacy advocates are worried about giving companies any form of immunity and the long history of abuse of consumer data by both the private sector and the government.

Chinese worked out Siri first

ipad3Apple’s attempts to get the rights for its Siri voice activated search technology recognised behind the bamboo curtain have failed.

A Beijing court has ruled that a Chinese company invented the technology and this was copied by Apple.

This clears the way for the Chinese company to continue its own case against Apple for infringing intellectual property rights.

Zhizhen sued the US firm in 2012 for intellectual property rights infringement, saying Apple’s Siri used on devices including the iPhone violated Zhizhen’s own voice system patents.

Apple had sued Zhizhen Internet Technology and China’s State Intellectual Property Office to court to seek a ruling that Zhizhen’s patent rights to a speech recognition technology were invalid.
According to the People’s Daily state newspaper the Beijing First Intermediate Court ruled in Zhizhen’s favour.

Apple said it intended to take the case to the Beijing Higher People’s Court.
In a statement, Apple said it did not know about Zhizhen’s patent before it introduced Siri and it did not believe it was using it anyway.

Samsung smartphone sales slump

smartphones-genericThere are signs that the rise of electronic’s giant Samsung is losing its impetus after it issued unexpectedly weak quarterly earnings guidance.

It is looking as like the outfit is headed for its worst results in two years and that its plans to deal with cheaper Chinese rivals are not working.

The South Korean company said it saw better business conditions in the third quarter,  butit faces slowing market growth, intensifying price competition from the cheap and cheerful market.

While smartphones drove Samsung to record profits last year, the market is maturing. Research firm IDC predicts global shipments growth will slow to 19.3 percent this year from 39.2 percent in 2013, while average sales prices will also drop.

Some analysts said Samsung may have no choice but to slash prices for mid-to-low tier devices, where growth is stronger, and target Huawei and Lenovo.

That will help defend market share it would also hurt margins, curbing its earnings recovery in the short term.

Samsung said that it cautiously expects a better third-quarter outlook with the release of a new smartphone lineup, lower marketing costs and a seasonal lift in demand for its memory business. Its flagship Galaxy Note 4 is expected to hit the market in September.

Samsung estimated on Tuesday that its April-June operating profit likely fell 24.5 percent from a year earlier to $7.12 billion, the sharpest percentage drop since the first quarter of 2011 and the weakest level since the second quarter of 2012.

In a separate statement, Samsung said second-quarter earnings would be hit by slower global smartphone market growth, competition in China, inventory buildup in Europe and the strength of the won.


White box tablets make the grade

ipad3A report said that shipments of unbranded tablets amounted to 25 million in the third quarter of this year.

Digitimes Research said that figure is up by 56.3 percent sequentially and up 40.4 percent year on year.

Most of the shipments went abroad and seven inch screens accounted for most of the growth.

Yet the research outfit believes it won’t be all plain sailing for the white box suppliers because big brands will, and are, offering Android units at prices that compete with the white box units.

Mediatek continues to make progress in the sector, with its chips accounting for 70 percent of application processors.

Sales in Europe and the US of white box units often accompany other bundling deals, but the Chinese manufacturers of the tablets can expect to make headway in Eastern Europe, Southeast Asia and Latin America, according to the research.

Missing workers threaten notebook shortage

chinaflagA shortage of workers in China could cause a shortage in notebook shipments for the month of October, according to a report.

As the holiday season approaches, it is expected, according to sources in the supply chain, that a wider gap could occur later in the month.

China’s National Day holidays has seen factory workers go back to their home towns, but it’s suggested many never came back.

Unfulfilled September orders, Digitimes reports, were postponed to October, but client orders in October are similarly as short as September. Suppliers are struggling to meet demand.


Cheap tablets are getting even cheaper

cheap-tabletsNow that even grocers are targeting the 7-inch tablet segment, the dog eat dog of cheap tablets is getting even more brutal. Chinese white-box players are further cutting their prices, according to channel sources cited by Digitimes.

A quick glance at tablet prices in the UK and the continent reveals that there are already heaps of tablets priced at £99 or less, with some truly cheap models going for as little as £49.

What’s more, some big vendors like Asus, Acer and Lenovo also have products at or close to the £99 mark and let’s not forget Tesco’s impressive Hudl, which is priced at £119 yet it features a much better screen than similarly priced tablets.

Google and Amazon had a thing or two to do with this trend. The Kindle Fire and Nexus 7 series of tablets reinvented the £199 space last year, so quite a few companies introduced similar products and similar price points. As a result, the white-box crowd has no choice but to run for the hills, or in this case for the bargain bin.

This doesn’t appear to bode well for big brands. It was recently reported that Google was forced to slash orders for the second generation Nexus 7 due to soft demand. People who want cheap tablets seem to be going after even cheaper models and the £/$199 price point is now practically reserved for high-end 7-inch tablets.

In addition, the market share of small white-box outfits is going up, from 26 percent in Q2 2012 to 39 percent in Q2 2013. The top five brands are losing share, but if the prices of entry level Asus, Acer and Lenovo tablets are anything to go by – they are not far behind in the race to the bottom.

Carnegie: US PC imports stumble

pc-sales-slumpAccording to an analyst note from Carnegie, world chip sales are likely to be largely untouched between the June to July – at one percent seasonally adjusted month by month – and $24.9 for the month.

A May spike could have been thanks to Samsung’s latest Galaxy handsets, but a drop in June could be down to clearing previous inventories of previous phone and PC models ahead of new launches.

Carnegie’s early indicator for the three month moving average of chip sales for July suggests a “modest improvement slightly better than the normal seasonal pattern”.

Korean chip exports were better throughout July and August compared to June levels. Other tech production in South Korea was on the up after a long slump post the Q4 iPhone and iPad boom.

Taiwanese production improved over July thanks to electronic components and parts, however, overall it was held back by a weakness in high end smartphones and a drop in TV manufacturing.

Japan has been losing market share in semiconductors to other countries in the APAC region, in particular China and Vietnam. A sharp drop in chip segments was noted for Japan, with Carnegie adding an overall drop in Japanase consumer electronics market share and less production in Japan likely contributed.

Carnegie estimates world semiconductor sales will drop by one percent for the year.

Carnegie warned that US PC imports have been weak since March – and that the numbers could include tablet computers. Meanwhile, retail sales are sluggish for tech categories. Some of this is attributed to shopping patterns, as internet sales replaced buying through brick and mortar stores.

US inventory levels for electronics fell sharply, with leading retailers like Best Buy slashing their stock.

For the US telecom enterprise sector, it is expected that imports are flat, including Ericsson and Cisco equipment. Although the July numbers are not in, May and June imports were weak after a spike in April.