Shipments of budget smartphones are expected to see significant growth over the next five years, a report from ABI Research has found.
Low cost smartphones are defined as smartphones with a wholesale ASP below $200 and they are making significant inroads in OEM and carrier portfolios in emerging markets.
ABI expects shipments of such frugal smartphones to reach 238 million units. However, as emerging markets start to enter the fray, shipments will hit 758 million by 2018. Smartphone penetration in emerging markets, including BRIC countries, remains relatively low, so there is plenty of room for growth.
“Despite the low cost moniker, research has shown that the feature gap between low- and high-end smartphones is decreasing, making low cost smartphones a ‘good enough’ solution for price sensitive consumers in all markets,” says senior analyst Michael Morgan.
Oddly enough, big players don’t appear to be capitalizing on the trend. Much of the growth is coming from regional and Chinese OEMs, capable of delivering dual and quad-core phones below the $200 mark. Qualcomm is practically the only big name in the mobile industry to design a series of chips and reference designs for such phones. MediaTek is taking a similar approach and it’s making big gains.
However, cheap smartphones aren’t reserved for developing countries. Although most carriers and retailers in the west tend to place an emphasis on high-end devices, many users are going after cheap smartphones.
“We are increasingly seeing low cost smartphones appear as a solution for prepaid operators in developed markets,” adds senior practice director Jeff Orr. “By 2018, ABI Research believes low cost smartphones will account for 44 percent of all smartphone shipments as the market looks to capture the next billion smartphone users.”
Low cost OEMs like Alcatel, Huawei, ZTE and CoolPad stand to make a pretty penny on the trend, along with countless white-box outfits in mainland China.
It is starting to look like Nokia is about to be eaten by a larger player. Already software giant Microsoft considered buying Nokia, until it realised how much it would cost.
The Wall Street Journal claimed that Microsoft was in “advanced talks” to buy Nokia. According to the report, Microsoft would have used its substantial reserves of offshore cash for the deal. It’s estimated that Microsoft has about 89 percent of its cash parked abroad to avoid paying US taxes.
But it turned out this morning that Redmond could not get close to the price it wanted for Nokia, which is worth $14.3 billion and pulled out.
Ironically Microsoft was unhappy about Nokia’s weak market position and only wanted to buy the company if it was at a bargain basement price. Arguably Nokia is in a weak position because it packed in making Symbian phones to become a Microsoft only shop.
But if Microsoft does not buy Nokia there is a good chance that Huawei might. It is only a rumour but the Chinese company is said to be interested.
Huawei’s Richard Yu told the Financial Times this morning that it was considering these sorts of acquisitions but he did not confirm it.
One of the reasons that Huawei has not been rushing to Finland with its chequebook in its hand is because of the poor showing of Windows phones, and Nokia’s dependence on its deal with Microsoft.
Yu said that Huawei expected the industry to go through a period of consolidation. If he is correct than Nokia is almost certain to be for the chop.
Huawei, which sparked unwanted publicity yesterday when its chief security exec told reporters it was standard practice for governments to spy on each other, has apparently been pushed out in the planned acquisition of Sprint by SotfBank.
The £20.1 billion deal, which has been cleared by the US Committee on Foreign Investment, and is now awaiting the nod from one more US regulation body, has had a restriction on third-party supplier over allegations of Chinese spying.
According to Bloomberg this means that the pair involved in the deal had to reassure those above that they would limit the use of telecommunications gear made by Huawei as well as ZTE.
They also had to agree that they would remove “certain equipment” by Huawei and allow all American vendors to provide the tech instead.
The US is fearful that Huawei and ZTE use their gear for snooping.
Yesterday Huawei’s head of security operations and ex British government CIO John Suffolk claimed that governments had always embarked on such practices.
His comments followed claims that the company had gained access to secret designs of US weapons, which it had managed to steal from Australia’s new intelligence agency headquarters.
Smartphone wars are becoming rather predictable. Every quarter sales notch up and every quarter Samsung emerges as the big winner. The last quarter was no exception. However, growth is slowing as the market matures, although there is still plenty of room for growth in emerging markets.
Worldwide phone sales totalled 426 million units in the first quarter, up 0.7 percent year-on-year. Smartphones saw a lot more growth, with sales totalling 2010 million units, up 42.9 percent from a year ago, according to a Gartner survey.
Sales of feature phones are down in all regions except Asia, while smartphones accounted for 49.3 percent of all phone sales worldwide, up from 34.8 percent in Q1 2012. At the same time feature phone sales contracted 21.8 percent.
“Feature phones users across the world are either finding their existing phones good enough or are waiting for smartphones prices to drop further, either way the prospect of longer replacement cycles is certainly not good news for both vendors and carriers looking to move users forward,” Gartner analyst Anshul Gupta said.
Samsung saw its market share go up from 21.1 percent to 23.6 percent. Apple also did well, growing from 7.8 to 9 percent, while Nokia’s share dropped from 19.7 to 14.8 percent. However, looking at smartphone sales, Samsung’s share was 30.8 percent, up from 27.6 percent. It was trailed by Apple at 18.2 percent, down from 22.5 percent. LG grabbed the bronze, with a 4.8 percent share. Huawei also had a good quarter, upping their share to 4.4 and 3.8 percent respectively and outperforming former heavyweights like Nokia, Sony and HTC.
Android is still the dominant mobile operating system, with a share of 74.4 percent, up from 56.9 a year earlier. Apple’s iOS share stands at 18.2 percent, down from 22.5 percent a year ago. Just so it wouldn’t look like a two-horse race, Blackberry is still in the game with a 3 percent share, down from 6.8 percent last year. Apparently BB10 did not make a huge difference. Windows Phone has a 2.9 percent share, up from 1.9 percent last year. It is growing, but at a painfully slow rate.
Huawei CEO Ren Zhengfei has said in an internal note sent Sunday, and seen by Reuters, that the company will not go public in the next decade – and the incumbent CEO will not be related to Ren.
The boss of the humongous equipment manufacturer said that Huawei will not be going public in the next five to ten years, and plans to avoid entering capital markets. “We have not studied the issue of an IPO because we feel that listing is not conducive for our development,” he wrote.
In the letter, Ren also noted that his family won’t be taking his place when he steps down: “Huawei’s successor should not only have vision, character and ambition, like what we’ve said before, but also a good global perspective and the acumen to drive the business. My family members do not possess these qualities. Thus, we will never be in the running of the successor race.”
Both Ren’s son and and daughter have jobs at Huawei, however, they are not part of the CEO system that was created for when the chief exec steps down. Three big wigs at the company – deputy chairs Ken Hu and Guo Ping, plus veep Eric Xu – act as CEO for six months each. None of the three are related, Reuters reports.
On the same day as the leak, Huawei Enterprise published a statement outlining its five year plan for the enterprise, first given at the Huawei Global Analyst Summit, 23 April 2013.
According to the statement, Huawei plans to chase customers by bringing them increased total cost of ownership, or TCO. Huawei Enterprise Business Group’s William Xu boasted in a statement that the firm has the “industry’s most comprehensive product line”, and with continued investment in enterprise, expects Huawei Enterprise’s sales to meet $2.7 billion in 2013, and $10 billion by 2017.
Huawei keenly pointed out that in 2012, Huawei had over 3,500 channel partners worldwide – and expects this to swell to 5,400 by the end of this year.
Counterfeit iPhones, sunglasses and handbags have been around for years, but so have counterfeit IT products, and they tend to be a bit more dangerous and costly than a fake Gucci bag crafted from genuine imitation faux leather.
The Open Group has published a new technical security standard with the aim of improving supply chain safety and weeding out counterfeit products, or gear that has been tampered with. The Open Trusted Technology Provider Standard (O-TTPS) is a 32-page document containing a set of guidelines, requirements and recommendations that should mitigate the risk of acquiring counterfeit products, or products that were “maliciously tainted.”
The standard is being backed by the likes of IBM and Cisco. It should address concerns raised by governments and the US Department of Defense, which tends to be rather picky when it comes to networking gear. Junipar, Huawei, EMC, Raytheon, HP, Microsoft, the NSA, Booz-Allen Hamilton, Boeing and NASA are also on board, reports Network World.
It is still unclear when the group will start issuing accreditations, or how it plans to go about it, but the backers feel that the IT industry should get acquainted with the new standards. With such high profile names on board, the industry should listen closely.
Big outfits are expected to embrace the new standard first, but in doing so they will also reduce the risk for smaller businesses. Still, the best way of steering clear from dodgy routers and switches is to simply avoid buying gear from unknown companies altogether.
Huawei is moving to make money in war torn countries.
The Chinese behemoth has appointed regional value added IT distie Optimus to distribute its enterprise product range for networking, unified communications and security.
Under the deal Optimus will aim to grow Huawei’s channel network across Pakistan, Afghanistan and Iraq where it will also undertake regular marketing and channel development activities to help increase the vendor’s market share and reach in the region.
Meera Kaul, managing director of Optimus Technology and Telecommunications said the partnership was “very important” and would help it offer customers a “omplete range of technology.”
She added that the company also planned to take Huawei’s enterprise products including cloud computing, enterprise networking and wireless, as well as Unified Communication & Collaboration (UC&C), video conference and telepresence products, and partner them with
Optimus also claims it will promote this product range through focused channel development activities, which include training, certifications, skills development and consultancy services to help them sell the productsbetter.
“Over the last few years, our Enterprise Business division has been investing heavily in developing our Middle East customer base,” said Dong Wu, vice president, Huawei, Enterprise Business, Middle East.
He added Huawei would continue to invest in training, motivating and incentivising partners.
Global mobile phone sales declined in 2012 as a result of the economic climate and intense market competition Gartner has said.
In its latest report the analyst company said that 2012 mobile phone sales hit 1.75 billion units, a decline of 1.7 percent from 2011. And it was smartphones that bolstered this number with the fourth quarter of last year marking a record sale rate of 207.7 million units, up 38.3 percent from the same period last year.
The last time the worldwide mobile phone market declined was in 2009 and this year’s dismal results were as a result of tough economic conditions, shifting consumer preferences and intense market competition weakened the worldwide mobile phone market this year, the company said.
It added that feature phones were neglected with a 19.3 percent decline in 2012. And there was bad news for this sector with the company predicting that 2013 would continue to see a decline.
Smartphones were given a better future with the company claiming that sales of these would be close to one billion units in 2013, while overall mobile phone sales were estimated to reach 1.9 billion units.
And this market also bought in the bucks for manufacturers with Apple and Samsung both seeing their market shares in this sector rise. However, it was Samsung who had the last laugh ending up in first place for overall mobile and smartphone sales in 2012. Gartner said this was as a result of the company’s ability to build products based on broad needs.
But Samsung was warned that there could be trouble ahead with Gartner’s crystal ball predicting that competition would intensify in 2013 as players such as Sony and Nokia improved.
Huawei also had a good fourth quarter, helping it to take on third position for the first time in the smartphone sales race. The company sold 27.2 million smartphones, up 73.8 percent from 2011, while its Ascend D2 and Mate models were tipped to drive further sales for 2013.
Nokia’s handset sales improved from a good response to its Asha mobile phones and the launch of the latest Lumia Windows Phone 8 models.
However, this wasn’t enough to stop Nokia to lose further market share, totalling 18 percent, the lowest it has ever been. In 2012, Nokia reached 39.3 million smartphone sales worldwide, down 53.6 percent from 2011.
The chief executive of struggling telecom equipment maker Alcatel – Lucent is leaving the company. Ben Verwaayen took the helm four years ago and tried to return the outfit to profit. He failed.
Alcatel – Lucent posted a $1.85 billion loss for 2012, compared to a $1.49 billion gain in 2011, so Verwaayen’s departure should come as no surprise. Verwaayen announced his decision to step down in a statement Thursday, saying that now is the appropriate moment for Alcatel – Lucent to seek new leadership.
“Alcatel-Lucent has been an enormous part of my life. It was therefore a difficult decision to not seek a further term, but it was clear to me that now is an appropriate moment for the Board to seek fresh leadership to take the company forward,” said Verwaayen.
Philippe Camus, Chairman of the Alcatel-Lucent Board, said: “After due reflection, the Board has accepted Ben’s decision to step down as CEO.” Camus went on to thank Verwaayen for his efforts to stabilise the company over the past four years.
It remains unclear who will replace Verwaayen and he is likely to stay on until a successor is found. The company said it would consider in-house candidates as well as candidates from outside the company.
Although Verwaayen did not manage to turn things around, he can hardly be blamed for Alcatel – Lucent’s woes. The company was created following a $11.6 merger of Lucent Technologies and Alcatel in 2006. It has been downhill ever since. Verwaayen, the former head of the BT Group, joined the company in 2008, after the previous American-led management was ousted.
Alcatel – Lucent has been trying to restructure and reposition itself in the telecom infrastructure market, but so far it did not have much luck competing against the likes of Ericsson and Huawei.