The biggest 3 challenges facing major Android OEM’s
There’s a fair bit of doom and gloom in the smartphone market right now. Samsung just announced its fifth quarterly drop in profits in a row as mobile division profits fell 37.6% compared to last year. HTC is posting a net loss of more $250 million. Sony’s mobile division lost $184 million. Even an apparent success like LG only managed a 1% sales increase in mobile.
You may imagine the difference is being swallowed up by the big Chinese players, but Lenovo’s net profit fell, even as revenue rose. It says that Motorola, acquired from Google last year, is on course to be profitable again by the end of the year or early 2016. Huawei and Xiaomi have increased market share, but it’s not clear how profitable they actually are. We know that Xiaomi’s margins are tight.
What’s the problem here? We just saw a report stating that worldwide smartphone shipments are up 12% year-on-year for Q2 of 2015. Why isn’t everyone making money? There are three major hurdles that are tripping everyone up right now.
Falling prices
This is the statistic that’s hurting everyone the most. We talked about the race to the bottom before, but the fall in prices is extreme. The average selling price (ASP) of an Android smartphone has been dropping every year and it’s lower than ever now. It was $441 back in 2010, and it was just $254 last year. This year it will be lower.
Margins are being squeezed. It’s impossible for manufacturers to make the same profit as before when the ASP is dropping, unless they can find some other way to cut costs. What has actually been happening is that costs have increased, but we’ll get to that in a minute.
How to differentiate
What makes one smartphone stand out over the others? Commoditization has led to a smartphone market where devices are broadly very similar, if not identical. Innovation has slowed to crawl, it may even be sliding backwards. What’s the last major feature that was added to a flagship smartphone that you had never seen before? Biometric security, waterproofing, a heart rate sensor? What we’re mostly seeing now is an incremental improvement on the last model, but in terms of feature set, we’re actually seeing some movement back the way – to reduce features.
The other way that OEMs can get noticed is to spend on marketing, but it’s hugely expensive and it’s difficult to accurately measure the return. It’s also ridiculously easy to get it wrong and blow a chunk of cash on an ineffective campaign. It’s hard not to mention HTC here. A double whammy of terrible advertising and releasing almost the same exact flagship phone as the previous year seems to have hit the company hard.
Most of the major Android OEMs have also been guilty of releasing loads of different models that aren’t all that different. It’s confusing. It may also hurt the brand for someone like Samsung, trying to sell at the high end, if a customer’s first experience is of a budget, entry-level device that’s less than perfect. When they renew and want a better phone, they probably won’t choose Samsung. Is it worth the small profit on a budget device if you lose the customer when they trade up?
Rising costs
The falling ASP would be okay if the cost of making smartphones also kept dropping, but it isn’t. OEMs have been adding features to try and differentiate and it has increased the cost of every handset made. Samsung is the best example here because it kept trying to pack in more and more features. The Galaxy S5 cost $256 to produce. The Galaxy S4 cost $236 to produce. Yet they were sold at the same price.
A few manufacturers have moved to cut costs, or they’ve been forced to ignore certain new features in order to keep costs down. The move to make smartphones tougher, for example, by adding waterproofing, has been reversed by Samsung and ignored by others. Is it possible to make a superphone that’s feature-packed and still turn a healthy profit?
While Samsung has been able to charge a premium for the S6 Edge, OnePlus had to cut features to meet a tight price envelope
The pace must be impacting here too. Samsung’s Galaxy S3 was able to keep selling for years after release. As the numbers ramped up Samsung will surely have managed to cut the cost of production. If new phones never achieve the numbers then those costs won’t fall, but discounting still has to kick in as a phone ages or nobody will buy it – they’ll just buy one of the latest releases instead.
Why is Apple different?
The WSJ reported on the latest research report from Canaccord Genuity which suggested that Apple took 92% of the total smartphone industry profits last quarter, which is actually down from 93% the quarter before. Samsung took 15% of the profits, and that fact they don’t add up is because many others made a loss. Samsung sold 20 million more smartphones than Apple, and yet made a fraction of the profit.
How is Apple doing it? If you look at our three major challenges, you can see how Apple is bucking every one of them. The ASP of an iPhone right now is $687. It’s heading towards three times the Android ASP. Apple stands out because it has a tiny all-premium range, runs its own exclusive platform, and has a strong brand. The cost of producing an iPhone 6, according to IHS, is around $200, just like the iPhone 5S and the iPhone 5 before it.
Not bad for us
There’s something else important that’s worth remembering in all this. What’s good for OEMs isn’t necessarily what’s good for us. We want the best smartphones we can get at the lowest prices we can get them and that’s exactly where Android has been going. But it might not be able to go much further down that road.
There’s still room for premium brands and niche markets with special feature sets. There are still profits being made. But the days of flagships hurtling towards ever more impressive specs and features without a jump in cost are surely numbered.
Apple reportedly wants to turn Siri into your receptionist
Apple is testing a service that will let Siri take your calls, record them and transcribe them to text, according to Business Insider. The company is reportedly referring to it as iCloud Voicemail, and it’s similar to the existing visual voicemail service. However, instead of playing a pre-recorded message to your caller when you can’t pick up, Siri will take over the chore. It can then let certain contacts know where you are and why you can’t take the call, provided you give permission. The voice message will then be shunted over to Apple’s servers and transcribed into text.
It works in much the same way that Siri transcribes your voice commands, but it’s unclear if the system would require carrier support. Currently, Apple’s visual voicemail service (which can also back up messages to iCloud) only works with select operators. It’s also not clear if it’d be free, as certain carriers charge extra for that. Nevertheless, it sounds like a good idea — as BI pointed out, lots of folks aren’t fond of voicemail, but the less tech-inclined still prefer to leave them. Employees of the company are reportedly testing the service, and if it’s reliable enough, it’ll be launch next year along with iOS 10. As always, however, take such rumors with a large chaser of skepticism.
Filed under: Cellphones, Internet, Apple
Source: Business Insider
Apple Expected to Launch New iMacs With Improved Processors and Display Quality This Quarter
Apple’s iMac line is set to receive a significant boost this quarter in the form of a refresh including new processors and improved display quality, according to KGI Securities analyst Ming-Chi Kuo. Display improvements are said to arrive in the form of greater color saturation, but Kuo makes no mention of whether Apple is planning to extend Retina display options to the smaller 21.5-inch iMac lineup.
We believe Apple will introduce new iMac models in 3Q15, which are expected to have key selling points such as more powerful processors and much better display quality. We predict the panel will use a LED phosphor material called KSF to notably boost color saturation.
While Apple has released several 27-inch Retina iMac models since last October, the remainder of the iMac lineup has not been updated since September 2013 as Apple has had to wait for Intel to release new desktop processors that could allow for a substantial update. With Broadwell processors starting to trickle out and Skylake right around the corner, it appears Apple will finally be able to offer a substantial upgrade for the entire iMac family.
Kuo believes that an inventory draw-down in the second quarter, the upcoming new iMacs, and promotions such as the current Back to School program will drive strong sequential growth in iMac shipments for the current quarter, perhaps doubling quarter-over-quarter to one million units. The third calendar quarter is typically very strong for Apple’s Mac segment with much of the world in the midst of back to school shopping.
Apple and BMW have been exploring partnerships on cars
Apple and BMW may eventually have more in common than just some features in your car’s infotainment system. Sources for both Reuters and Manager Magazin understand that the two companies have had “exploratory talks,” including a trip by Apple executives to Leipzig to see how BMW builds the i3. Apple reportedly likes that BMW rethought the conventional car manufacturing process for its electric vehicle, and might use what it learned to help make its own EV. While BMW claims that there aren’t any active talks about jointly developing a car, a Reuters tipster hears that the firms may revive talks (not necessarily to co-produce a vehicle) later on.
Not surprisingly, BMW is cautious about any deals. Research lead Klaus Froehlich says the doesn’t want to “open [its] ecosystems” to a potential rival. However, it’s hard to see the two avoiding each other when they could both use each other’s help. Apple knows a lot about user interfaces and integrating mobile technology into cars, but it’s a newcomer in creating the cars themselves — that’s part of why it’s hiring so many auto industry veterans. Meanwhile, BMW knows that it can only do so much to accommodate connected devices without collaborations. You probably won’t see an Apple-designed Beemer or an Apple car with loads of BMW-sourced parts, but there’s still lots of potential for the corporations to influence each other.
Filed under:
Transportation, Apple
Source:
Reuters, Manager Magazin (translated)
Tags: apple, autonomous, bmw, car, electricvehicle, ev, i3, partnership, self-driving, self-drivingcar, titan, transportation
New Aerial Video Shows Ongoing Apple Campus 2 Construction
Construction workers in Cupertino are making slow but steady progress on Apple’s spaceship-shaped second campus, according to a new aerial video shot by drone pilot Duncan Sinfield and shared with MacRumors. Shot just this morning, Sinfield’s video offers an updated look at the current state of construction.
The foundation of the ring-shaped building has been completed for several months now, with multi-level structural components now going up. Work on the parking structures is progressing, and the auditorium, where Apple will host events, is also taking shape. Much of the auditorium and the available parking will be below ground. Next to the parking structure and the auditorium, work on the Tantau development has begun, where research facilities will be located.
When completed, Apple’s campus will feature a massive 2.8 million square foot ring-shaped main building, an underground parking lot, a 100,000 square foot fitness center, a 120,000 square foot auditorium for hosting events, and as we learned earlier this week, a visitor’s center complete with an observation deck, cafe, and Apple Store.
The entire campus will be covered with hundreds of trees and orchards, and inside the ring, there will be a central garden with outdoor dining areas for employees. According to the most recent update from the City of Cupertino, Apple is still on track to complete construction at the end of 2016.
Claimed ‘iPhone 6s’ Display Assembly Revealed in New Photos
Chinese phone repair company GeekBar has shared a series of three photos today (via Nowhereelse.fr) showing what is claimed to be a display assembly for the upcoming “iPhone 6s”.
While the photos do not confirm that the device will be equipped with Force Touch sensing as has been rumored, they do appear slightly different from the corresponding parts for the iPhone 6.
Meanwhile, M.I.C Gadget shares a few photos of what it says is a prototype version of the iPhone 6s. The device is not shown turned on and the photos themselves do not reveal any differences compared to the iPhone 6, but the source claims the device measures 7.1 mm thick, slightly thicker than the 6.9 mm iPhone 6 and matching the 7.1 mm iPhone 6 Plus.
Rumors have suggested the iPhone 6s could be slightly thicker than the iPhone 6 in order to accommodate the new Force Touch technology in the display, but the slight difference would not be easily perceptible to users and could even allow many accessories to be compatible with both generations.
Apple Supplier Numbers Suggest Apple Watch Sales Are Below Analyst Expectations
We’re all curious about how many Apple Watches Apple has sold, but with the company opting not to break out its Apple Watch sales numbers, all we have to go on are analyst guesses, information distilled from third-party sources, and tidbits of data that Apple has provided.
The latest data that hints at how the Apple Watch has fared comes from The Wall Street Journal, citing shipment information provided by analyst Mark Li from Taiwan’s Advanced Semiconductor Engineering Inc. (ASE) most recent earnings call. ASE is the company that builds the S1 package housing the many chips and sensors used in the Apple Watch.
An ASE subsidiary reportedly failed to meet its “break-even volume” of two million units shipped per month during the second quarter and does not believe it will meet that target in the third quarter, either. The company’s failure to meet this target suggests the Apple Watch “is not selling nearly as well as some analysts expected,” says The Wall Street Journal.
“The shortfall of Apple Watch is a disappointment,” Mr. Li wrote in a note to clients. “We came in with a low expectation but below break-even still surprised us.”
In an interview, Mr. Li said it is unusual for a company like ASE not to reach break-even volume during a typically busy period like the third quarter, especially when dealing with a new product.
He said that he now expects ASE to fall short of his forecast of shipping 18 million units this year, peaking in June.
Ahead of Apple’s recent earnings call, analyst estimates of Apple Watch sales during its first quarter of availability ranged from 2.85 million to 5.7 million, averaging out to 4.07 million. After the call, many analysts adjusted their estimates, with the consensus largely changing to between 2.2 and 3 million units sold. Estimates continue to vary, however, with Strategy Analytics suggesting Apple sold 4 million units in a recent report.
During the call Apple CEO Tim Cook said Apple Watch sales “exceeded [Apple’s] expectations,” despite supply continuing to trail demand at the end of the quarter. “We feel really great about how we did,” he said. Apple CFO Luca Maestri hinted current revenue from the Apple Watch was “well over” $952 million, but he also did not provide insight into sales.
In the past, Tim Cook has warned against attempting to infer information from single data points from the company’s supply chain due to its complexity.
Buyer’s Guide: Discounts on Retina iMac, MacBook Air, Apple Accessories, and More
As Back to School approaches, we may see major retailers dropping the prices on Macs and tablets in an effort to draw people into stores. This week, there are no standout deals on iPads or iPhones, but there are a few Macs that are available for reasonable prices, including the 27-inch 3.3GHz Retina iMac, available for $1,799, the lowest price we’ve seen on that machine yet.
Last week, Apple launched its Back to School program. Instead of offering gift cards for the iTunes Store or Apple Store as it has done in years past, any Mac purchase through September 18 will net you a free pair of Beats headphones. If you’re buying a new Mac, that’s a deal worth checking out.
In this week’s deals post, we’ve also got some discounts on Apple accessories, including an external battery for the Mac, and a selection of iPhone and MacBook cases. As always, we’ve also rounded up deals on popular apps and games.
iPad Air 2
B&H Photo is offering a small discount on some of its iPad Air 2 models, dropping prices by $30 to $50. With the discount, 64GB model Wi-Fi only model in Space Gray is priced at $568 and the 128GB model in Gold is priced at $659. Prices vary somewhat by model, but there are slight discounts to be had on quite a few of the site’s iPads.
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IBM to Purchase Up to 200,000 Macs Annually, With 50-75% of Employees Ultimately Switching From Lenovo
A year after teaming up with Apple on an enterprise partnership to push iOS devices and apps for business users, IBM is moving forward with plans to rapidly move its own employees onto Apple’s platforms, MacRumors has learned.
While IBM announced in an internal memo several months ago that it was planning to purchase up to 50,000 MacBooks for employees by the end of 2015, chief information officer Jeff Smith has revealed in a new internal video released to employees yesterday that he believes IBM could actually end up purchasing 150,000-200,000 Macs annually.
In the video, Smith relates a conversation he had with Apple’s chief information officer Niall O’Connor about the possibility of a massive Mac deployment for IBM.
“I’d like to be able to offer these to everyone that can use it. We’ve got to find a way to make the overall cost the same or lower than PCs to make that happen. Would you be interested in helping me do that, because you guys know these devices”, and he said, “No, Jeff, we’d never do that…very secretive, we never allow anyone in. You know, we just don’t do that.”
And I said, “Well who’s your largest corporate customer?” And he said “Well, that customer has got about 25,000 MacBooks a year.” And I said, “Well we could be 150-200,000.” And he goes “Jeff, that’s a great idea! We’re gonna come here, you know, next week…you bring your whole team,” and that’s exactly what happened.
In a separate clip from the video, Smith describes a recent conversation between Tim Cook and IBM vice president Fletcher Previn in which Previn indicated the initiative could see 50–75 percent of IBM employees eventually converting to Macs from the Lenovo ThinkPads that are currently the company standard.
Apple and IBM, former rivals in the PC market, have been working increasingly closely together on both specialized enterprise-focused iOS apps and more recently on HealthKit and ResearchKit data management tools. With so many IBM employees now in line to switch to Macs for their work machines, the stage is setting up for even more collaboration going forward.
Elgato’s ‘Eve’ Smart Home Accessories Are Useful, But Hampered by Buggy HomeKit Platform
Elgato, with its Eve line of smart home products is one of the first companies to come out with home accessories that integrate with Apple’s HomeKit home automation platform, and it’s the very first company to produce a Bluetooth-enabled HomeKit product.
The Eve system, which consists of a weather station, an indoor room monitor, a door/window sensor, and a smart outlet, is one of five HomeKit-compatible products that became available for purchase in June. With the Eve components just now shipping out to customers, Elgato invited us to review the lineup to get a feel for what’s possible with Apple’s system.
HomeKit and Eve’s accessory lineup promise to make our homes smarter and our lives easier, but in its current incarnation, HomeKit is a service that feels unfinished. It’s limited in scope and even though I found many of the Eve accessories to be useful, the delays and bugs I ran into with the HomeKit system almost made the frustration outweigh the convenience.
Hardware Overview
As I mentioned above, Elgato currently manufactures four HomeKit-compatible products: Eve Room, Eve Weather, Eve Door & Window, and Eve Energy.
Eve Room – Eve Room is an indoor room monitoring sensor. It measures temperature, humidity, and air quality.
Eve Weather – Eve Weather is an indoor/outdoor sensor that’s simpler than the Eve Room, measuring temperature, humidity, and air pressure.
Eve Door & Window – Eve Door & Window is a two-piece sensor that detects whether a door or window is open or closed.
Eve Energy – Eve Energy is a power sensor and switch that can be used to turn an appliance on and off and detect how much power it’s using.
Each of the Eve products has a clean, unobtrusive design, integrating into any environment without standing out. The Eve Room and the Eve Weather are both small square-shaped sensors resembling an Apple TV, while the Eve Energy is a simple socket. The Eve Door & Window comes in two adhesive-backed pieces to fit on each side of a door or window, snapping together magnetically to detect whether it’s open or closed.
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