Digitimes Research Shows Growing Android Market; New Players in Chinese Market

by Holly Shoemaker

Digitimes Research reported on Friday that Android smartphone shipments will continue to dominate the market.

Overview of Findings
By the end of the year, the research indicates that the Android Market should garner 70 percent of the market share. For Q 2 2012, the research compared to IDC findings. IDC reported that the Android Market held 68 percent of the global smartphone market share in Q 2012, compared to Digitimes figure of approximately 60 percent. The IDC report attributed the growth to Samsung. Despite the current U.S. ruling against Samsung, it is likely that Samsung will continue to gain consumers as the ruling does not affect the popular Galaxy S
III.

Nokia should finally garner some attention with its Lumia phones.  The research shows that shipments of Windows Phones should double from last year to 21 million units.

Digitimes expects Apple shipments to surpass 125 million units. However, the growth is expected to be lower than the previous two years.

The Continuing China Factor

China continues to factor into the growing Android Market. Another Digitimes Research study estimated that China handset shipments will make up 430 million units in 2012. Smartphones should account for approximately 32 percent of the Chinese market, which is equivalent to 143 million handsets. There is also a growing number of entry-level handsets expected to debut in the China market.

Apple Bites Itself: Q2 Numbers Fall Short of Expectations

by Holly Shoemaker

On Tuesday, Apple reported its Q2 2012 numbers, falling short of analyst’s expectations.

Numbers at a Glance

• Apple posted revenue of $35 billion. While the figure shows an increase of 23 percent compared to Q2 2011, the figure fell short of expectations by $2 billion.
• The company said its net income increased by 21 percent from Q2 2011 to $8.8 billion. This fell short of expectations by approximately 10 percent.
• iPad sales increased 84 percent to 17 million units sold.
• Apple shipped 26 million iPhones from April to June 2012. While this showed an increase of 28 percent, analysts predicted the company would sell 28 to 29 million smartphones. Apple sold 35.1 million iPhones in the previous quarter. Tim Cook, Apple’s CEO, and many analysts attributed the drop to the upcoming iPhone 5 or new iPhone release.
• Sales in Greater China totaled $5.7 billion, which was an excepted drop of $2.2 billion from January through March.

The Continuing China Factor

China will continue to play a key role in the smartphone global market battle. The iPhone 4S has limitations for Chinese consumers as Siri does not speak Mandarin or Cantonese. The iPhone 5 will feature these languages and should boost sales.

The unexpected decline has resulted in many questioning if Apple products do not hold the same appeal in China as the new iPad launch in China last week failed to generate the usual excitement of an Apple launch.

Other companies have taken advantage of Apple’s gap in the market for Chinese consumers. The Samsung Galaxy S III and HTC One X have appealed to consumers because of their wider screens, enhanced camera feature and available apps.

Concluding Thoughts

Apple will continue to see a decline in iPhone sales as consumers will wait to purchase the iPhone 5. Apple generates more than half its revenue from iPhone sales and when the next iPhone debuts, Apple should recoup some of its losses. Samsung also continues to take away from Apple’s market share. Its move to launch the Galaxy S III earlier than the iPhone 5 paid off. However, Samsung will likely see a decline in some numbers after the iPhone 5 debuts as newer and popular brands generate demand, at least in the short term. The battle comes down to how long the hype lasts.

New iPad Launches in China without Chaos

by Holly Shoemaker

Weeks after settling its lawsuit with Proview Technology over then naming rights to iPad, the company launched the new iPad in China on Friday. Most noteworthy, was the absence of crowds and often chaotic nature that marks Apple launches in China. In January 2012, the police became involved, and Apple decided not open the doors of its Beijing Apple Store when it launched the iPhone 4S.

Concluding Thoughts

This time, consumers who showed up early to Apple stores noted the absence of long lines and a noticeable calmness surrounding the launch. After the iPhone 4S launch in January, Apple adopted an online reservation system to assist with crowd control. The system seemed to work as the new iPad launched in China without a hitch.

The demand for Apple’s products remains high throughout China. Reports indicate that Apple saw its profits increase in Q2 2012 threefold to $7.9 billion in Greater China.

China: The Ally in the Map App Battle

by Holly Shoemaker

Apple escalated the map app battle at its annual developer’s conference this past June with its decision to drop Google Maps as the default map application on its upcoming iPhone. Now, the company selected AutoNavi Holdings Ltd. as its map partner for future iPads and iPhones in China. AutoNavi has worked with Google since 2006.

Concluding Thoughts 

AutoNavi should profit on both sides and gain an edge over its competitor, NavInfo Co. Auto Navi announced last June that Samsung chose its navigation app for the Galaxy S III. For Apple, the move is strategic and makes sense for its Chinese customers. China remains Apple’s second largest market behind the United States. Its move to partner with AutoNavi, a company that also knows Google, should help Apple continue to build its consumer base in China.

China Mobile and Apple: One Step Closer to Offering Faster iPhone?

by Holly Shoemaker

China Mobile, Chinese largest mobile carrier, is actively talking to Apple to see how the two companies may better work together to offer the iPhone to its customers.

Earlier this year, China Unicom helped Apple launch the iPhone in China. This year, the ability to offer the iPhone spread to China Telecom.

Potential Challenges and Solutions to the China Mobile Issue

Apple and China Mobile have encountered compatibility issues. China Mobile uses custom technology that would require running specialized iPhone hardware to operate the network.

An upcoming wireless modem chip may solve the compatibility problem. That chip may allow the next-generation iPhone to run on China Mobile’s network. This would eliminate the need to build custom hardware.

The wireless modem chip seems like an ideal solution to help Apple continue to grow in the Chinese market. China Mobile has about 15 million iPhone customers. However, those customers may only operate on a 2G network.  

Concluding Thoughts

Apple will come to a solution with China Mobile. Apple understands the importance of the Chinese market when it comes to market share and profits. Apple also already committed to improving factory conditions and Apple understands how China impacts the company's revenue, especially when it comes to sales of the iPhone 4S.

Apple, Foxconn to Improve Factory Working Conditions

by Holly Shoemaker

On Thursday, May 10, 2012, Apple and Foxconn, the company’s main supplier, agreed to share the costs related to improving working conditions in factories that make iPads and iPhones.

 

Background Information

Apple and Foxconn have garnered media attention in the past months regarding working conditions in some of its Chinese factories. In April 2012, 200 employees threatened to commit suicide over low wages. The same factory dealt with a similar threat in January 2012 when 300 employees threatened to commit suicide over conditions related to working on Microsoft Xbox 360 consoles.

In January 2012, Apple entered into a partnership with the Fair Labor Association (FLA). As part of the partnership, Apple must uphold the FLA’s ethics code. Based on the FLA’s inspection of Foxconn, and now its recommendations, Apple has to make improvement by July 1, 2013.

At this time, the companies have not disclosed the exact breakdown of who will pay for what costs.

Concluding Thoughts

Apple had no choice but to publicly say it will remedy conditions because of media attention, its relationship with the FLA and its reliance on China to manufacture parts.

The improvements do not just benefit Apple and Foxconn. They will benefit companies such as Dell and Amazon who also rely on the same worker base  and plants to manufacture parts.

Nokia’s Lumia 800C Headed to China

by Holly Shoemaker

One of my blog’s last week discussed how China gained the number one spot in app sessions and activations. Now, Nokia has announced it will start selling smartphones that use Microsoft software in China come April.

Chinese consumers will have the ability to purchase the Lumia 800C without a contract for 3,599 yuan, approximately $573 dollars, in April. Nokia also plans to launch the 610C, a cheaper priced model, in the second quarter. This move also helps China Telecom, the country’s third-largest carrier. Nokia has said it hopes to market all four of its Windows smartphones using the company’s wireless technology. Eventually, all Nokia Windows phones will become available on all three of China’s mobile networks.

Concluding Thoughts

Nokia has already taken steps to win back North American consumers. It makes sense the company is now positioning itself in China. The timing also coincides with Apple’s CEO, Tim Cook, making an appearance in China this week to discuss labor violations and the trademark dispute.

As I previously mentioned with the Lumia release in the United States, Nokia and Microsoft have a lot at stake. Despite the ongoing issues with Apple in China, Nokia needs to compete. It also has to win back some market share from Samsung. In Q4 of 2011, Samsung overtook Nokia to become the number one mobile handset seller in China. Samsung had 24.3 percent of the market while Nokia captured 19.6 percent.

China Leads in App Sessions and New Activations

by Holly Shoemaker

Flurry Analytics has come out with data that shows China has become the world's leader in app sessions and new iOS and Android activations. Flurry defines an app session as launching and using an application in one sitting.

Numbers at a Glance

• The app session growth rate in China increased by more than 1,100 percent from Q1 2011 to Q1 2012. In Q1 2011, China ranked number seven.
  
• At the end of March, Flurry projects China will account for 24 percent of iOS and Android activations. In comparison, the United States is expected to account for 21 percent.
• Americans still purchase more smartphones and tablets. However, in February 2012, China, for the first time, activated more devices. In January 2011, the United States made up 28 percent of the world’s activations versus eight percent for China.

Analysis of the Data

I am not particularly surprised by this data. Yes, the large increase is noteworthy. However, China’s population and its consumer’s well-known interest in smartphones, tablets and apps explain the increase.

Concluding Thoughts

Both Apple and Google have issues to overcome in China. Apple awaits a court decision that could affect its overall brand, has dealt with claims of poor working conditions in its Chinese factories and delayed the opening of the Beijing Apple Store in January.

While Android activations are increasing, that does not necessarily mean Google sees the profits. For Android, the amount of app stores in China may become problematic. There are multiple rivals to Google Play in China, and users often download their apps from native app stores. The importance of China’s role in the app realm does not surprise anyone; the latest figures should assist app developers in positioning themselves.