17 ms·

China smartphone market suffers hard-landing, shipments decline 21% in Q1 2018

154 points by igravious 8y ago

nadioca 8y ago
market saturation ?
- killjoywashere 8y ago
  Read Hank Paulson's book, Dealing with China. The Communist Party can only extract so much value from to masses while corruption and opacity are the norm in government. Instead of looking at the economy as a virtuous cycle of re-investment making more resources available for collateral, they treat the economy like a well and wonder why it keeps running dry.
  - gressquel 8y ago
    Peter Navarros Death by China is a good read too
    - anizan 8y ago
      I enjoyed reading China's Great wall of Debt and The Hundred-year marathon.
  - dv_dt 8y ago
    I can't help but think the "The Communist Party" in your comment could be replaced with any small group of people with defacto power over a nation ...
- greglindahl 8y ago
  Market saturation means that everyone who wants a smartphone already owns one.
  - randyrand 8y ago
    and who can afford one.
    - greglindahl 8y ago
      Well, yes, but it's worth noting that smartphones are now down at the $40 and less level. And China doesn't have that many extremely poor people anymore.
      - randyrand 8y ago
        That's a good point!
dis-sys 8y ago
Smartphone maker Xiaomi is rushing to get its IPO done, the market is betting a $100 billion valuation [1]. This reminds me what its founder Lei Jun said a few years ago - "Even a pig can fly if it is in the middle of a whirlwind" [2]. Now the market has apparently reached its peak, I am wondering whether those who are thinking to buy Xiaomi shares will find their whirlwind and fly. ;) [1] https://www.telegraph.co.uk/technology/2018/05/03/xiaomi-plans-10bn-float-bid-become-chinas-apple/ https://www.telegraph.co.uk/technology/2018/05/03/xiaomi-pla... [2] https://www.economist.com/news/special-report/21663324-technology-offering-chinese-business-cornucopia-new-opportunities-its-all-go https://www.economist.com/news/special-report/21663324-techn...
- slezyr 8y ago
  Well, xiaomi produces not just smartphones. Laptops, TVs, Wearables, "Smart" Scales and other stuff.
  - visarga 8y ago
    I have an Xiaomi robovac. It's just amazing, smartest little thing. It's like the feeling I got when I bought my first iPhone.
diminish 8y ago
After relentless growth we're about to arrive at a plateauing smartphone market. I wish I could read insights from experts on what to expect in coming years in smartphone market in light of similar markets which entered a no growth zone. Specifically what will happen to prices, market shares , unit sales, pace of innovation, competition, international growth, developer ecosystems. Anyone?
- hugh4life 8y ago
  Hopefully a plateauing of the smartphone market along with China starting to produce memory will start to bring memory prices down. And then manufacturers will consider adding 8-16GB of memory... and at that point I wonder if more people will just use their phone docked to a monitor as their PC if Apple/Google/Microsoft do a better job facilitating it.
  - supertrope 8y ago
    I doubt they will inflate BOM by $100. Excessive RAM also hurts battery life.
    - seanmcdirmid 8y ago
      RAM and flash are different things. More of the latter won’t hurt battery life very much.
      - supertrope 8y ago
        I think parent poster is referring to DRAM. 8-16GB of NAND is low even for budget phones. Desktop-like docking implies the need for 64-bit worthy amounts of DRAM.
        seanmcdirmid 8y ago
        Considering that even the iPhone X comes with 3GB of RAM (the 8 only has 2), the other way doesn’t make much sense either.
anilshanbhag 8y ago
It sometimes amazes me that people switch their phones so often. I tend to have a phone for 3 years. Many of my friends change every year ! One step to towards reducing global warming is reducing consumption.
- GFischer 8y ago
  I have a Xiaomi phone. It costs less than 200 dollars after taxes in my country, and it's great. My cell phone company basically gives them for free in exchange for the 2 year contract, so after my 2 years are up, I'm definitely switching it for a newer model, or I'm leaving money on the table. Many people are way more careless than I am, or heavier users, and definitely switch every year (or even less!). Chinese phones make it much more feasible. OTOH, if you care about environment, these are no good - no user-swappable batteries for instance.
  - ZeroGravitas 8y ago
    They don't give them away free, they build the cost into your contract. If there's sufficient competition in your local market you'll be able to buy a sim-only deal that costs less and returns that money to you and let's you upgrade on your own schedule to a phone of your own choosing.
    - tboughen 8y ago
      I thought that too. However last Black Friday I found the best deal on an iPhone X was to pay £450 up front and then pay £29 per month for 2 years (totalling £1147 or £6.13 per month above the phone’s list price). The data and minutes I get would cost me at least £15 per month, making my deal absurdly good value!
      - distances 8y ago
        In UK? My expectation nowadays for a phone bill is 10€ per month, with data, calls and SMS included. Doesn't leave much room for subsidied phones
genefriend 8y ago
China’s growth fueled by massive debt is over(350% to gdp, government + corporate + individuals). it’s barely returning one yuan for every yuan debt it takes on. The Chinese consumer is weighed down by housing debt and credit card debt. And the tariff is going to hit the consumers hard; soy prices increases already has Chinese consumers screaming.
- htormey 8y ago
  I’d love to see an article summing up some of these concerns re Chinese debt. If you have a good one please post it. Thanks.
  - genefriend 8y ago
    “China's total debt surpassed 304 percent of GDP as of May 2017," the IIF noted.” https://www.google.com/amp/s/www.cnbc.com/amp/2017/06/28/chinas-debt-surpasses-300-percent-of-gdp-iif-says-raising-doubts-over-yellens-crisis-remarks.html https://www.google.com/amp/s/www.cnbc.com/amp/2017/06/28/chi... “the rate of growth is strong, rising more than 80 percentage points from January of the same year. The household debt-to-disposable income ratio is catching up to developed country levels, having reached 68.3% by the end of 2016.“ https://www.google.com/amp/s/www.forbes.com/sites/sarahsu/2018/02/26/chinas-household-debt-a-growing-concern-amid-rising-home-prices/amp/ https://www.google.com/amp/s/www.forbes.com/sites/sarahsu/20...
- rqs 8y ago
  Wonder where is your data is came from. According to an article[0] on Bloomberg, it's 266% of GDP. Anything I've missed? [0] https://www.bloomberg.com/news/articles/2018-04-03/china-s-alarming-debt-pile-seen-finally-stabilizing-this-year https://www.bloomberg.com/news/articles/2018-04-03/china-s-a...
- nopinsight 8y ago
  Interestingly, the US' total private and public debt amounts to 3.5 times the GDP as well but few seem to have as much concern over its debt as they do China's. Also, the UK appears to have a similar level of private debt as the US, and only a bit less public debt. On public debt alone, China:UK:US is 66:85:107 percent of GDP, according to the IMF. So what is the reason for major concerns over one but not others? Developed vs developing countries? Stronger vs weaker financial institutions/systems? Something else? Note that a key measure that the US and other developed countries tend to be ahead of most developing countries is national wealth, i.e. its assets minus liabilities, as a percentage of GDP. (This is unsurprising since they have much more time to accumulate assets.) "As of the first quarter of 2010, the Federal Reserve estimated that total public and private debt owed by American households, businesses, and government totaled $50 trillion, or roughly $175,000 per American and 3.5 times GDP." https://en.wikipedia.org/wiki/Financial_position_of_the_United_States https://en.wikipedia.org/wiki/Financial_position_of_the_Unit... https://tradingeconomics.com/united-states/private-debt-to-gdp https://tradingeconomics.com/united-states/private-debt-to-g... https://tradingeconomics.com/united-kingdom/private-debt-to-gdp https://tradingeconomics.com/united-kingdom/private-debt-to-... https://en.wikipedia.org/wiki/List_of_countries_by_public_debt https://en.wikipedia.org/wiki/List_of_countries_by_public_de... https://en.wikipedia.org/wiki/National_wealth https://en.wikipedia.org/wiki/National_wealth
bruceb 8y ago
Almost any $200+ phone made since 2015 has a pretty good camera, screen, speed for most people. Why upgrade when what you have is good enough? One used to check out gizmodo/engadget when a new phone came out but seems not anymore as "the new" is only incremental.
- Eyght 8y ago
  I've been using the same phone for almost 4 years now (oneplus one). It came with 3gb ram and 64gb storage and cost about $300, vat included. There are two tells that I'm using an old phone. The camera is really bad compared to the current ones, and it doesn't have any biometric unlock.
  - ddalex 8y ago
    I am still rocking the original OnePlus one, too. I appreciate the lack of a biometric sensor, and camera is actually better than a lot of newer phone cameras - the only cameras that outshine it are iPhones, top of the line Samsung's and OP5T. So pretty decent for a 4 year old phone?
    - distances 8y ago
      > camera is actually better than a lot of newer phone cameras I had OPO too. The camera was perhaps better than some of the current new phone cameras. In today's terms the camera is really, really bad though, and clearly loses to most new models.
  - larkeith 8y ago
    I'm still running my Galaxy S5 from when it first came out, and I've not found any problems with it yet - the camera is good enough for anything I need it for, and the battery can still run a good 4-6 hours active use. While it doesn't have biometric unlock, I would avoid any new phone that did like the plague regardless - I like having a minimal amount of security, thank you very much.
    - 8y ago
cs702 8y ago
Wow, a 21% year-over-year drop... and this makes the fourth consecutive quarter of annual declines (in the previous three quarters, shipments had dropped -3%, -5%, and -14% year-over-year). A hard landing indeed. The implications for phone makers are unpleasant: price competition is going to intensify and profit margins, which are already thin, will get squeezed even more and might even turn negative. (Only Apple, which makes exclusively high-end devices for style-conscious, less-price-sensitive consumers, looks well-positioned to avoid a profit margin squeeze.) The implications for mobile software applications and services are also unpleasant: the days of ultra-rapid user/subscriber/revenue growth are likely to end soon.
- reaperducer 8y ago
  >Only Apple, which makes exclusively high-end devices for style-conscious, less-price-sensitive consumers, This is a very tired cliche, and untrue to anyone who's ever seen any of the hundreds of ads where new iPhones are available for $0 from most carriers.
  - system16 8y ago
    > iPhones are available for $0 from most carriers. In the US maybe. This discussion is about China.
  - seanmcdirmid 8y ago
    That cliche isn’t true at all in China. When you only have to pay around 100RMB/month for your plan, there isn’t much room for phone subsidies.
  - 1123581321 8y ago
    This is about China, but even in the US a free iPhone is not a common carrier incentive. You can see a summary of deals here.* Promotions apparently range from $200-500 in value. Android phones and tablets are the ones routinely given away for free (e.g. T-Mobile currently offers a free Android tablet just for switching an existing prepaid account to post-paid), though again, not for the premium brands like Pixel. It may be tiresome to hear that iPhones cost more and are popular at the same time, but it’s still true. * https://www.tomsguide.com/us/iphone-x-iphone-8-best-deals,news-25833.html https://www.tomsguide.com/us/iphone-x-iphone-8-best-deals,ne...
chrisper 8y ago
I just bought my first Chinese phone: A Huawei P20 Pro. I am so amazed by this thing!
- ProAm 8y ago
  I really want that phone but find it too expensive. if Im going to spend that amount of money, I might as well get a Samsung or iPhone
  - chrisper 8y ago
    A Samsung S9+ costs way more and so does the iPhone X.
    - ProAm 8y ago
      Way more being around a hundred USD? Last I checked the P20 Pro was ~ $850 USD the Galaxy S9+ is $939 USD
      - chrisper 8y ago
        It's at least 200 CHF difference here.
        ProAm 8y ago
        Ahh yeah makes sense. I wish it was closer to being the OnePlus5T range of being $500-600USD vs what its priced at. Then it's a no brainer to purchase but now being so expensive and untested on US LTE bands its too risky (and our government says not to by Huawei for national security reasons).
        seanmcdirmid 8y ago
        I don’t think the government says not to buy huawei phones. They are more worried about routers and back end telecommunication equipment, which is their main market.
grizzles 8y ago
This is a good thing if you want a truly open source phone. Smartphones have become a commodity. Yet the solidarity among fabricators against a { us: hardware, you: software } business model has been remarkable. Margins have been razor thin for awhile, the business is incredibly cutthroat. Though it might come from Taiwan, I hope this is the straw that breaks the camels back. BTW I'm talking on the low end here. It's already being done on the high end by Fairphone, and a few others.
- reaperducer 8y ago
  "Razor thin" may be something of an exaggeration. Apple's margin on iPhones is 59-64%[1]. Samsung is 17%[0]. "Razor thin" would be the grocery industry, which is usually under 3%. [0]: http://fortune.com/2016/08/23/apple-samsung-smartphone-profits/ http://fortune.com/2016/08/23/apple-samsung-smartphone-profi... [1]: https://www.reuters.com/article/us-apple-iphone/apples-iphone-x-has-higher-margin-than-iphone-8-analysis-idUSKBN1D62RZ https://www.reuters.com/article/us-apple-iphone/apples-iphon...
  - lotsofpulp 8y ago
    Product with more volume (especially routine like groceries) usually have less margin due to lower risk than those with low volume and higher risk (of not selling in the necessary time period).
  - grizzles 8y ago
    Exactly my point. This market has winner take all type dynamics. Consider the textiles industry. There are brands selling expensive t-shirts for nice profit margins. And there are a ton of t-shirt exporters that can probably barely string a few dimes together. It's exactly the same in the smartphone market. There are ~50+ Chinese smartphone manufacturers that are barely profitable. They wholesale $20-$40 phones in the Indian market to stay afloat.
  - bitmapbrother 8y ago
    Your second link is broken. Your first link, from 2016, indicates that Apple made a 38% margin. >Apple's margin on iPhones is 59-64%. Samsung is 17% Apple does not make 59-64% margin on their phones. This highly inaccurate figure was likely extrapolated by taking the retail price of the phone and subtracting the cost of its parts. The real profit margin which is likely around 30-40%. As for Samsung, their flag ship phones also generate a profit margin that is similar to that of Apple's.
Johnie 8y ago
See: * Bass Diffusion Model: https://en.wikipedia.org/wiki/Bass_diffusion_model https://en.wikipedia.org/wiki/Bass_diffusion_model * Diffusion of Innovation Model: https://en.wikipedia.org/wiki/Diffusion_of_innovations https://en.wikipedia.org/wiki/Diffusion_of_innovations These models have been fairly accurate in forecasting diffusion of innovation. While many of the innovators have started to exit and move on, this leaves the imitators around in a slowing market. Apple has been surprisingly good at being the forefront of innovation entering a market. While people play catch up in smartphones, Apple has already moved onto the next technological innovation: Apple Watch and wearables. While one may argue that Apple is more of an imitator than innovator, they have a really unique strategy. They enter a market after the initial innovators have entered with a product that becomes the Dominant Design [1]. They don't focus on the Innovator or Early Adopter market, but more on the Early Majority and Late Majority and exit before the laggards arrive. The Innovator and Early Adopter market require the most capital in R&D and Marketing with lowest return on investment. [1] https://en.wikipedia.org/wiki/Dominant_design https://en.wikipedia.org/wiki/Dominant_design
- ajross 8y ago
  > Apple has already moved onto the next technological innovation: Apple Watch and wearables. Seriously? Are there any number at all to show that wearables are a growth bet at this point? The Apple Watch (which entered the market three years ago!) has had an uptake at least an order of magnitude lower than the iPad, the last "next technological innovation" that turned out not to be. Tablets were hot for a while, but at the end of the day the smartphone market remains an order of magnitude bigger. The watch has never remotely been that hot. Basically: innovation is hard. Wearables are not looking like the next big thing at this stage, and they are surely not going to save Apple from the expected downturn in smartphone sales.
  - dep_b 8y ago
    If iPhone sales growth would level to what the Mac is doing then there's not a real problem. Apple is pushing in Enterprise where it wasn't before, services and indeed wearables (I see AirPods everywhere). I think people will buy devices less often, like you saw with iPads. But keep buying Apple.
brody182 8y ago
if china wants to be more successful internationally they should open up their borders and let the west tech companies compete in their local markets
yuhong 8y ago
I wonder how much this is affecting battery prices.

154 points by igravious 8y ago

nadioca 8y ago

market saturation ?

killjoywashere 8y ago
Read Hank Paulson's book, Dealing with China. The Communist Party can only extract so much value from to masses while corruption and opacity are the norm in government. Instead of looking at the economy as a virtuous cycle of re-investment making more resources available for collateral, they treat the economy like a well and wonder why it keeps running dry.
- gressquel 8y ago
  Peter Navarros Death by China is a good read too
  - anizan 8y ago
    I enjoyed reading China's Great wall of Debt and The Hundred-year marathon.
- dv_dt 8y ago
  I can't help but think the "The Communist Party" in your comment could be replaced with any small group of people with defacto power over a nation ...
greglindahl 8y ago
Market saturation means that everyone who wants a smartphone already owns one.
- randyrand 8y ago
  and who can afford one.
  - greglindahl 8y ago
    Well, yes, but it's worth noting that smartphones are now down at the $40 and less level. And China doesn't have that many extremely poor people anymore.
    - randyrand 8y ago
      That's a good point!

dis-sys 8y ago

Smartphone maker Xiaomi is rushing to get its IPO done, the market is betting a $100 billion valuation [1]. This reminds me what its founder Lei Jun said a few years ago - "Even a pig can fly if it is in the middle of a whirlwind" [2]. Now the market has apparently reached its peak, I am wondering whether those who are thinking to buy Xiaomi shares will find their whirlwind and fly. ;) [1] https://www.telegraph.co.uk/technology/2018/05/03/xiaomi-plans-10bn-float-bid-become-chinas-apple/ https://www.telegraph.co.uk/technology/2018/05/03/xiaomi-pla... [2] https://www.economist.com/news/special-report/21663324-technology-offering-chinese-business-cornucopia-new-opportunities-its-all-go https://www.economist.com/news/special-report/21663324-techn...

slezyr 8y ago
Well, xiaomi produces not just smartphones. Laptops, TVs, Wearables, "Smart" Scales and other stuff.
- visarga 8y ago
  I have an Xiaomi robovac. It's just amazing, smartest little thing. It's like the feeling I got when I bought my first iPhone.

diminish 8y ago

After relentless growth we're about to arrive at a plateauing smartphone market. I wish I could read insights from experts on what to expect in coming years in smartphone market in light of similar markets which entered a no growth zone. Specifically what will happen to prices, market shares , unit sales, pace of innovation, competition, international growth, developer ecosystems. Anyone?

hugh4life 8y ago
Hopefully a plateauing of the smartphone market along with China starting to produce memory will start to bring memory prices down. And then manufacturers will consider adding 8-16GB of memory... and at that point I wonder if more people will just use their phone docked to a monitor as their PC if Apple/Google/Microsoft do a better job facilitating it.
- supertrope 8y ago
  I doubt they will inflate BOM by $100. Excessive RAM also hurts battery life.
  - seanmcdirmid 8y ago
    RAM and flash are different things. More of the latter won’t hurt battery life very much.
    - supertrope 8y ago
      I think parent poster is referring to DRAM. 8-16GB of NAND is low even for budget phones. Desktop-like docking implies the need for 64-bit worthy amounts of DRAM.
      - seanmcdirmid 8y ago
        Considering that even the iPhone X comes with 3GB of RAM (the 8 only has 2), the other way doesn’t make much sense either.

anilshanbhag 8y ago

It sometimes amazes me that people switch their phones so often. I tend to have a phone for 3 years. Many of my friends change every year ! One step to towards reducing global warming is reducing consumption.

GFischer 8y ago
I have a Xiaomi phone. It costs less than 200 dollars after taxes in my country, and it's great. My cell phone company basically gives them for free in exchange for the 2 year contract, so after my 2 years are up, I'm definitely switching it for a newer model, or I'm leaving money on the table. Many people are way more careless than I am, or heavier users, and definitely switch every year (or even less!). Chinese phones make it much more feasible. OTOH, if you care about environment, these are no good - no user-swappable batteries for instance.
- ZeroGravitas 8y ago
  They don't give them away free, they build the cost into your contract. If there's sufficient competition in your local market you'll be able to buy a sim-only deal that costs less and returns that money to you and let's you upgrade on your own schedule to a phone of your own choosing.
  - tboughen 8y ago
    I thought that too. However last Black Friday I found the best deal on an iPhone X was to pay £450 up front and then pay £29 per month for 2 years (totalling £1147 or £6.13 per month above the phone’s list price). The data and minutes I get would cost me at least £15 per month, making my deal absurdly good value!
    - distances 8y ago
      In UK? My expectation nowadays for a phone bill is 10€ per month, with data, calls and SMS included. Doesn't leave much room for subsidied phones

genefriend 8y ago

China’s growth fueled by massive debt is over(350% to gdp, government + corporate + individuals). it’s barely returning one yuan for every yuan debt it takes on. The Chinese consumer is weighed down by housing debt and credit card debt. And the tariff is going to hit the consumers hard; soy prices increases already has Chinese consumers screaming.

htormey 8y ago
I’d love to see an article summing up some of these concerns re Chinese debt. If you have a good one please post it. Thanks.
- genefriend 8y ago
  “China's total debt surpassed 304 percent of GDP as of May 2017," the IIF noted.” https://www.google.com/amp/s/www.cnbc.com/amp/2017/06/28/chinas-debt-surpasses-300-percent-of-gdp-iif-says-raising-doubts-over-yellens-crisis-remarks.html https://www.google.com/amp/s/www.cnbc.com/amp/2017/06/28/chi... “the rate of growth is strong, rising more than 80 percentage points from January of the same year. The household debt-to-disposable income ratio is catching up to developed country levels, having reached 68.3% by the end of 2016.“ https://www.google.com/amp/s/www.forbes.com/sites/sarahsu/2018/02/26/chinas-household-debt-a-growing-concern-amid-rising-home-prices/amp/ https://www.google.com/amp/s/www.forbes.com/sites/sarahsu/20...
rqs 8y ago
Wonder where is your data is came from. According to an article[0] on Bloomberg, it's 266% of GDP. Anything I've missed? [0] https://www.bloomberg.com/news/articles/2018-04-03/china-s-alarming-debt-pile-seen-finally-stabilizing-this-year https://www.bloomberg.com/news/articles/2018-04-03/china-s-a...
nopinsight 8y ago
Interestingly, the US' total private and public debt amounts to 3.5 times the GDP as well but few seem to have as much concern over its debt as they do China's. Also, the UK appears to have a similar level of private debt as the US, and only a bit less public debt. On public debt alone, China:UK:US is 66:85:107 percent of GDP, according to the IMF. So what is the reason for major concerns over one but not others? Developed vs developing countries? Stronger vs weaker financial institutions/systems? Something else? Note that a key measure that the US and other developed countries tend to be ahead of most developing countries is national wealth, i.e. its assets minus liabilities, as a percentage of GDP. (This is unsurprising since they have much more time to accumulate assets.) "As of the first quarter of 2010, the Federal Reserve estimated that total public and private debt owed by American households, businesses, and government totaled $50 trillion, or roughly $175,000 per American and 3.5 times GDP." https://en.wikipedia.org/wiki/Financial_position_of_the_United_States https://en.wikipedia.org/wiki/Financial_position_of_the_Unit... https://tradingeconomics.com/united-states/private-debt-to-gdp https://tradingeconomics.com/united-states/private-debt-to-g... https://tradingeconomics.com/united-kingdom/private-debt-to-gdp https://tradingeconomics.com/united-kingdom/private-debt-to-... https://en.wikipedia.org/wiki/List_of_countries_by_public_debt https://en.wikipedia.org/wiki/List_of_countries_by_public_de... https://en.wikipedia.org/wiki/National_wealth https://en.wikipedia.org/wiki/National_wealth

bruceb 8y ago

Almost any $200+ phone made since 2015 has a pretty good camera, screen, speed for most people. Why upgrade when what you have is good enough? One used to check out gizmodo/engadget when a new phone came out but seems not anymore as "the new" is only incremental.

Eyght 8y ago
I've been using the same phone for almost 4 years now (oneplus one). It came with 3gb ram and 64gb storage and cost about $300, vat included. There are two tells that I'm using an old phone. The camera is really bad compared to the current ones, and it doesn't have any biometric unlock.
- ddalex 8y ago
  I am still rocking the original OnePlus one, too. I appreciate the lack of a biometric sensor, and camera is actually better than a lot of newer phone cameras - the only cameras that outshine it are iPhones, top of the line Samsung's and OP5T. So pretty decent for a 4 year old phone?
  - distances 8y ago
    > camera is actually better than a lot of newer phone cameras I had OPO too. The camera was perhaps better than some of the current new phone cameras. In today's terms the camera is really, really bad though, and clearly loses to most new models.
- larkeith 8y ago
  I'm still running my Galaxy S5 from when it first came out, and I've not found any problems with it yet - the camera is good enough for anything I need it for, and the battery can still run a good 4-6 hours active use. While it doesn't have biometric unlock, I would avoid any new phone that did like the plague regardless - I like having a minimal amount of security, thank you very much.
  - 8y ago

cs702 8y ago

Wow, a 21% year-over-year drop... and this makes the fourth consecutive quarter of annual declines (in the previous three quarters, shipments had dropped -3%, -5%, and -14% year-over-year). A hard landing indeed. The implications for phone makers are unpleasant: price competition is going to intensify and profit margins, which are already thin, will get squeezed even more and might even turn negative. (Only Apple, which makes exclusively high-end devices for style-conscious, less-price-sensitive consumers, looks well-positioned to avoid a profit margin squeeze.) The implications for mobile software applications and services are also unpleasant: the days of ultra-rapid user/subscriber/revenue growth are likely to end soon.

reaperducer 8y ago
>Only Apple, which makes exclusively high-end devices for style-conscious, less-price-sensitive consumers, This is a very tired cliche, and untrue to anyone who's ever seen any of the hundreds of ads where new iPhones are available for $0 from most carriers.
- system16 8y ago
  > iPhones are available for $0 from most carriers. In the US maybe. This discussion is about China.
- seanmcdirmid 8y ago
  That cliche isn’t true at all in China. When you only have to pay around 100RMB/month for your plan, there isn’t much room for phone subsidies.
- 1123581321 8y ago
  This is about China, but even in the US a free iPhone is not a common carrier incentive. You can see a summary of deals here.* Promotions apparently range from $200-500 in value. Android phones and tablets are the ones routinely given away for free (e.g. T-Mobile currently offers a free Android tablet just for switching an existing prepaid account to post-paid), though again, not for the premium brands like Pixel. It may be tiresome to hear that iPhones cost more and are popular at the same time, but it’s still true. * https://www.tomsguide.com/us/iphone-x-iphone-8-best-deals,news-25833.html https://www.tomsguide.com/us/iphone-x-iphone-8-best-deals,ne...

chrisper 8y ago

I just bought my first Chinese phone: A Huawei P20 Pro. I am so amazed by this thing!

ProAm 8y ago
I really want that phone but find it too expensive. if Im going to spend that amount of money, I might as well get a Samsung or iPhone
- chrisper 8y ago
  A Samsung S9+ costs way more and so does the iPhone X.
  - ProAm 8y ago
    Way more being around a hundred USD? Last I checked the P20 Pro was ~ $850 USD the Galaxy S9+ is $939 USD
    - chrisper 8y ago
      It's at least 200 CHF difference here.
      - ProAm 8y ago
        Ahh yeah makes sense. I wish it was closer to being the OnePlus5T range of being $500-600USD vs what its priced at. Then it's a no brainer to purchase but now being so expensive and untested on US LTE bands its too risky (and our government says not to by Huawei for national security reasons).
        seanmcdirmid 8y ago
        I don’t think the government says not to buy huawei phones. They are more worried about routers and back end telecommunication equipment, which is their main market.

grizzles 8y ago

This is a good thing if you want a truly open source phone. Smartphones have become a commodity. Yet the solidarity among fabricators against a { us: hardware, you: software } business model has been remarkable. Margins have been razor thin for awhile, the business is incredibly cutthroat. Though it might come from Taiwan, I hope this is the straw that breaks the camels back. BTW I'm talking on the low end here. It's already being done on the high end by Fairphone, and a few others.

reaperducer 8y ago
"Razor thin" may be something of an exaggeration. Apple's margin on iPhones is 59-64%[1]. Samsung is 17%[0]. "Razor thin" would be the grocery industry, which is usually under 3%. [0]: http://fortune.com/2016/08/23/apple-samsung-smartphone-profits/ http://fortune.com/2016/08/23/apple-samsung-smartphone-profi... [1]: https://www.reuters.com/article/us-apple-iphone/apples-iphone-x-has-higher-margin-than-iphone-8-analysis-idUSKBN1D62RZ https://www.reuters.com/article/us-apple-iphone/apples-iphon...
- lotsofpulp 8y ago
  Product with more volume (especially routine like groceries) usually have less margin due to lower risk than those with low volume and higher risk (of not selling in the necessary time period).
- grizzles 8y ago
  Exactly my point. This market has winner take all type dynamics. Consider the textiles industry. There are brands selling expensive t-shirts for nice profit margins. And there are a ton of t-shirt exporters that can probably barely string a few dimes together. It's exactly the same in the smartphone market. There are ~50+ Chinese smartphone manufacturers that are barely profitable. They wholesale $20-$40 phones in the Indian market to stay afloat.
- bitmapbrother 8y ago
  Your second link is broken. Your first link, from 2016, indicates that Apple made a 38% margin. >Apple's margin on iPhones is 59-64%. Samsung is 17% Apple does not make 59-64% margin on their phones. This highly inaccurate figure was likely extrapolated by taking the retail price of the phone and subtracting the cost of its parts. The real profit margin which is likely around 30-40%. As for Samsung, their flag ship phones also generate a profit margin that is similar to that of Apple's.

Johnie 8y ago

See: * Bass Diffusion Model: https://en.wikipedia.org/wiki/Bass_diffusion_model https://en.wikipedia.org/wiki/Bass_diffusion_model * Diffusion of Innovation Model: https://en.wikipedia.org/wiki/Diffusion_of_innovations https://en.wikipedia.org/wiki/Diffusion_of_innovations These models have been fairly accurate in forecasting diffusion of innovation. While many of the innovators have started to exit and move on, this leaves the imitators around in a slowing market. Apple has been surprisingly good at being the forefront of innovation entering a market. While people play catch up in smartphones, Apple has already moved onto the next technological innovation: Apple Watch and wearables. While one may argue that Apple is more of an imitator than innovator, they have a really unique strategy. They enter a market after the initial innovators have entered with a product that becomes the Dominant Design [1]. They don't focus on the Innovator or Early Adopter market, but more on the Early Majority and Late Majority and exit before the laggards arrive. The Innovator and Early Adopter market require the most capital in R&D and Marketing with lowest return on investment. [1] https://en.wikipedia.org/wiki/Dominant_design https://en.wikipedia.org/wiki/Dominant_design

ajross 8y ago
> Apple has already moved onto the next technological innovation: Apple Watch and wearables. Seriously? Are there any number at all to show that wearables are a growth bet at this point? The Apple Watch (which entered the market three years ago!) has had an uptake at least an order of magnitude lower than the iPad, the last "next technological innovation" that turned out not to be. Tablets were hot for a while, but at the end of the day the smartphone market remains an order of magnitude bigger. The watch has never remotely been that hot. Basically: innovation is hard. Wearables are not looking like the next big thing at this stage, and they are surely not going to save Apple from the expected downturn in smartphone sales.
- dep_b 8y ago
  If iPhone sales growth would level to what the Mac is doing then there's not a real problem. Apple is pushing in Enterprise where it wasn't before, services and indeed wearables (I see AirPods everywhere). I think people will buy devices less often, like you saw with iPads. But keep buying Apple.

brody182 8y ago

if china wants to be more successful internationally they should open up their borders and let the west tech companies compete in their local markets

yuhong 8y ago

I wonder how much this is affecting battery prices.