Wireless Device Strategies

First to market each quarter with the most accurate and detailed data on handset strategies. The industry’s most timely, consistent and accurate tracking of device vendor KPI metrics, as well as handset market sales and shipment forecasts.

August 27, 2012 19:08 nmawston

A California court with a California judge and a California jury decided this week that California device vendor Apple should win most of its patent lawsuit against South Korean company Samsung. It was adjudged that Samsung infringed on 4 software patents and 2 hardware patents for up to 27 smartphone and tablet models in the US market between 2010 and 2012.

Assuming an appeal or retrial are unsuccessful, which companies won or lost from the verdict?

WINNERS: Apple, Nokia, Microsoft, Tizen, LG Display, Sharp LCD, Nuance, Cirrus, Largan, and Foxconn are among ten winners identified by our Wireless Device Strategies (WDS) and Wireless Smartphone Strategies (WSS) services. Nokia and Microsoft may eventually come to be viewed by carriers as more patent-friendly than Android. Component suppliers for Apple, like LG Display, could see a slight uptick in business. Apple will be seen by some consumers and operators as a patent bully, but its successful court case strengthens the iOS ecosystem by legal means and jabs rivals like Android and Samsung with a sharp stick. Apple must keep its fingers crossed that the stricter patent environment does not encourage disruptive innovation from competitors like Google in the longer-term. Difficult situations can inspire ingenious products.

LOSERS: Samsung, Android, HTC, Sony, LG, ZTE, Huawei, Pantech, Amazon and Universal Display are among ten losers identified. The cost of using Android is rising for Samsung and potentially other device vendors like Amazon. If Samsung is forced by the courts to stop selling some legacy models in the US in the near-term, a small amount of temporary volumes could be shed. The glowing halos surrounding the Android and Samsung brands have lost a little shine during the heavily publicized trial in recent weeks. And Google is going to have to work hard to ensure the Android ecosystem of hardware partners feels united and "safe" from further Apple patent attacks during 2013.

NEUTRAL: What about RIM and Motorola? They are neutral. RIM does not have a good enough touchphone portfolio to counter-attack Samsung while it is temporarily on the back foot. And Motorola is already holding its own in various IP battles being waged with Apple in US courts.

Of course, the surefire winners are lawyers and law firms. Patent wars have become the new normal in the global mobile industry. Almost everyone is suing everyone. For example, Nokia won a roughly half-billion-dollar patent lawsuit against Apple just last year. Apple squeezed at least a billion dollars from Samsung this year. There will surely be more juicy lawsuits to come from one or more major firms next year.

August 21, 2012 21:03 nmawston

The UK telecoms regulator, Ofcom, confirmed today that Everything Everywhere, the largest UK mobile operator, can switch on its LTE network from September 2012 onward. Assuming there are no last-minute glitches, EE will be the first major UK carrier to launch a live, commercial 4G network. The UK is Western Europe's biggest cellphone and dongle market by shipments.

Interestingly, the EE switch-on -- probably branded "4G Everywhere" -- will come right around the same time as Apple's rumored new iPhone 5 4G in September / October 2012. Is EE gearing up quietly for a big LTE iPhone 5 promotion in Q4 2012? If (a big if) this happens, if it is executed successfully, and if both phone and network support the correct 1.8GHz LTE band, then EE could potentially win a major coup over rival 3G carriers like Three. Moreover, established smartphone vendors at EE -- like Samsung, Nokia and RIM -- could find themselves under a serious competitive assault from Apple. This report -- published by our Country Share Tracker (CST) service -- tracks UK cellphone vendor marketshare by operator, and it shows several brands, like RIM, would have much to lose from an EE 4G plus iPhone 4G combo in the fourth quarter UK holiday season.

August 21, 2012 19:43 nmawston

Mobile phone shipments grew +4% annually in Japan during Q2 2012. Measured in revenue terms, Japan is the second most valuable country in Asia after China. The large size of Japan, and greater openness from local carriers like NTT Docomo, is drawing more international vendors into the market. Apple of the US has been wildly popular for several quarters, and Samsung of Korea is now making major gains with its Galaxy Android portfolio. Combined with the correction of a local inventory glut, those factors caused Fujitsu to lose a huge 6 points of handset-shipment marketshare in the second quarter. Fujitsu needs to act fast to prevent it going the same way as Sharp, which has all but collapsed in its home market over the past two years.

August 21, 2012 18:39 nmawston

If ZTE is to meet its goal to become the world’s third largest manufacturer of mobile phones within the next three years, it cannot rely only on its strategies that got it where it currently sits (i.e. fourth). Strength in its domestic Chinese market and success with low-cost 2G devices have been its pillars for growth from obscurity -- but the company’s trends over the past several quarters indicate it may never fully dominate the Chinese market, and the low-end is not where industry-leading brands are built nowadays. ZTE's share of the Chinese cellphone market has remained relatively flat over the past five quarters and its smartphone volume in China has slid over the past two quarters, dropping more than 2% from its Q4 2011 high. But positive trends return when examining its performance outside of China, indicating that ZTE can make the tough decisions to achieve its greater goals internationally, even if it means sacrifices at home. More analysis on ZTE can be viewed by clients of our Wireless Smartphone Strategies (WSS) service here.

August 21, 2012 18:27 nmawston

Our Country Share Tracker (CST) service estimates global smartphone industry revenues grew +24% annually in Q2 2012. Apple leads globally, but Samsung has recently gone top in Asia Pacific. Asia is by far the largest region for smartphone turnover, outperforming even North America and Western Europe. Asia is a huge and diverse territory, from mature Japan to gigantic India, making it a challenging region to conquer. How has Samsung come to lead Asia? Three main reasons: a hardware portfolio spanning most major price-bands; memorable sub-branding with Galaxy; and growing distribution in open-retail and closed-operator distribution channels.

August 21, 2012 16:35 nmawston

Giant retailer Best Buy, which accounts for roughly 2 in 10 of consumer electronics sales in the US, is having a tough time at the moment. Its same-store sales have been slipping about -2% annually in the US. But a closer look at the company suggests its mobile phone and tablet sub-divisions are actually growing slightly and performing relatively well. That growth trend in its mobile sub-division chimes nicely with our cellphone distribution report, which forecasts retailer-led distribution to grow approximately 10 times faster than operator-led distribution in North America this year. US consumers are purchasing more prepaid phones and prepaid tablets -- which can favor retailer channels like Best Buy -- while operators have been tightening their postpaid upgrade policies and deterring some shoppers. We forecast retailer channels for cellphones to grow by a fifth in North America over the next three years -- so, if handled right, Best Buy's US mobile phone sub-division will have more upside for several years to come.

August 20, 2012 23:20 nmawston

According to our Country Share Tracker (CST) service, mobile phone shipments fell minus-11% YoY in Brazil in Q2 2012. It was the country's weakest performance since 2009. Economic uncertainty and volatile commodity and food prices were among the causes of the decline. Samsung is the number one mobile phone vendor in Brazil, while Android is the most popular smartphone platform. Samsung maintained top spot this quarter due to flexible device pricing, wider distribution and robust demand for its 2G / 3G portfolio.

August 20, 2012 23:10 nmawston

According to our Wireless Device Strategies (WDS) service, global cellphone industry revenues grew +2% annually in Q2 2012, while total profits rose +7% as the product-mix tilted toward 3G and 4G models. Cellphone industry profitability is at its highest level for years. Apple and Samsung lead the value growth by supplying millions of high-priced iPhones and Galaxys. Apple and Samsung continue to control the lion's share of global revenues and profits, benefitting from mediocre competition from OEMs such as Nokia, Sony, Motorola, RIM, HTC and LG which are undergoing major strategic transformations.

August 20, 2012 20:11 nmawston

Our Wireless Smartphone Strategies (WSS) service forecasts global smartphone revenues to grow +28% over the next 5 years. Increasing smartphone volumes will be offset by decreasing average selling prices (ASPs), as vendors and operators penetrate deeper into the price-sensitive prepaid market. Falling component prices will enable sales expansion for brands like Samsung in lower price-tiers, particularly for emerging markets such as Asia and Latin America. Meanwhile, Apple and others will continue to target the subsidy-led premium category, because this is where the majority of global profit is found. They will surely be keeping their fingers crossed that operator subsidies stay firm in the next half-decade.