IHS Markit 5G Smartphone Whitepaper; Analysts on Samsung’s Feb. 20 Galaxy 10 Launch?

IHS Markit 5G Smartphone Whitepaper:

In a new complimentary white paper, “Substance behind the Hype: 5G Smartphones Primed and Ready for Fast Rollout,”  IHS Markit explores how the global 5G transition is poised to take place at a faster pace than for any previous wireless generation transition.   “It is easy to paint the current momentum behind 5G as the usual pre-launch hype drummed up by vested stakeholders,” said Wayne Lam, principle analyst for IHS Markit and lead author of the white paper. “However, the mobile industry is fundamentally better prepared and more aligned with a common standard than at any previous technology transition.”

Industry uncertainly adds friction to development and discourages firms from making big bets when the outcome is less than certain. While past wireless technology upgrades had competing standards vying for industry attention, there is no doubt about the air interface standard that will be used for 5G. “The 5G electronic ecosystem is significantly more mature, at this point, compared to the same time during the LTE transition,” Lam said. “Key 5G chipsets have been tested, proven and designed into devices, and the industry is now poised to deliver their first 5G smartphone in early 2019.”

“As telecom companies embark on the start of another wireless generation transition, they are doing so with a robust and coordinated ecosystem of carriers, handset makers and component suppliers,” Lam said. “By and large, the industry is finding itself with an unprecedented opportunity to execute a wireless transition in the best position possible.”

To download the complimentary “Substance behind the Hype: 5G Smartphones Primed and Ready for Fast Rollout” white paper from IHS Markit, visit https://cdn.ihs.com/www/pdf/0119/IHSMarkit-Whitepaper_5G-Smartphone_Jan2019.pdf.

Update:  Global smartphone market ends 2018 on downturn
By Gerrit Schneemann, smartphones senior research analyst, IHS Markit; Wayne Lam, mobile devices and networks director, IHS Markit; and Jusy Hong, mobile handset devices director, IHS Markit

Global smartphone shipments recorded a negative year-over-year growth rate in the fourth quarter (Q4) of 2018, for a third consecutive quarter. According to IHS Markit preliminary smartphone data, global smartphone shipments reached 365.2 million units in Q4 2018, which is a 5.7 percent y/y decline. For the 2018 calendar year, shipments declined 2.4 percent compared to the previous year, from 1.44 billion units in 2017 to 1.41 billion units in 2018.

Following is an overview of the smartphone market leaders in 2018, based on unit shipments:

Samsung Electronics

Samsung Electronics maintained its shipment-volume lead, shipping 70.2 million units in Q4 2018. Samsung’s negative growth rate in 2018 continued, as shipments declined 5.5 percent compared to the same quarter of 2017. As a result, its market share fell to 19.2 percent in Q4 2018, which is flat compared to the previous year. Severe competition from Chinese rivals in many regions continued to impact Samsung’s business – and has led to Samsung changing its strategy for how new technologies are deployed in the company’s product range. For example, the first triple-camera Samsung device was a Galaxy A phone and, instead of a Galaxy S device, Samsung released the world’s first quad-camera smartphone – the Galaxy A9 — last year.

Overall Samsung smartphone shipment volume declined 8 percent, falling from 316 million units in 2017 to 290 million units in 2018. This is the first time Samsung shipped fewer than 300 million units in any year since 2014.

Huawei

Huawei shipped 60.5 million units in Q4 2018, rising 47.7 percent, year over year. The company continued its double-digit y/y growth for the fourth consecutive quarter, growing in most of regions, except North America where Huawei has little exposure. Fast growing markets for Huawei include Europe, Middle East and Africa. In 2018, Huawei was able to exceed Apple in unit-based shipments for three consecutive quarters, propelling the Chinese brand to second-ranked position in the market, unseating Apple from its perch. However, the network infrastructure side of Huawei has faced increased scrutiny from the United States and other governments around the world, due to potential security concerns in to roll out of 5G networks.

Apple

Apple shipped 64.3 million units in Q4 2018, down 16.9 percent from 77.3 million units in Q4 2017. The company’s performance faced significant challenges in China and in the overall global smartphone market in Q4 2018. Furthermore, Apple’s super-premium handset pricing seems to have stunted its unit growth potential in the quarter. Importantly, there is no quick fix for Apple to change fortunes in China or India. In China, local competition is fierce; while in India, Apple’s products are ill-equipped to fit into the country’s price-cautious market.

Xiaomi

The recent trend of high double-digit growth halted for Xiaomi in Q4 2018. The company shipped 24.8 million units, down 12.1 percent from 28.2 million units in Q4 2017.

Oppo and Vivo

Oppo and Vivo shipped 26.4 and 25.2 million units, respectively. Oppo shipments declined 3.6 percent, while Vivo shipments grew 7.2 percent.

Conclusions

Xiaomi, Oppo and Vivo were adversely affected by the continued negative growth of the smartphone market in China. On the other hand, Huawei strengthened its market leadership in China. Tension between the US and China stimulated a feeling of patriotism in China, leading smartphone users to choose Huawei over other brands. Moreover, Huawei boasts significant international business – which other brands are still working to establish – enabling the company to achieve tremendous success in the fourth quarter.

The combined market concentration on the top six companies continued to intensify in Q4 2018, accounting for 75 percent of global smartphone shipments. Most of the rest brands saw their shipments and market shares fall in the quarter.

Meanwhile, Nokia increased its shipments to 15 million units in 2018, up from 5 million units in the previous year. Finland-based HMD Global is operating its Nokia-branded smartphone business, by focusing on mid-range and low-end smartphones in Europe, Asia and Africa. The company will soon expand into North America.

Quarterly Global Smartphone Shipments (Millions of Units)

    Q4-18 Q3-18 Q4-17 QoQ YoY
Rank   Shipments M/S Shipments M/S Shipments M/S    
1 Samsung

70.2

19%

70.9

20%

74.3

19%

-1%

-6%

2 Apple

64.3

18%

46.9

13%

77.3

20%

37%

-17%

3 Huawei

60.5

17%

52.0

15%

41.0

11%

16%

48%

4 Oppo

26.4

7%

31.2

9%

27.4

7%

-15%

-4%

5 vivo

25.2

7%

28.9

8%

23.5

6%

-13%

7%

6 Xiaomi

24.8

7%

33.3

9%

28.2

7%

-26%

-12%

7 LG

11.1

3%

11.6

3%

13.9

4%

-4%

-20%

8 Motorola

10.1

3%

10.7

3%

11.4

3%

-6%

-11%

9 TCL-Alcatel

4.5

1%

5.7

2%

4.8

1%

-21%

-5%

10 Nokia

4.2

1%

4.5

1%

4.4

1%

-7%

-5%

  Others

63.3

18%

59.9

17%

81.3

21%

6%

-22%

  Total

365.2

355.6

387.4

3%

-6%

Source: IHS Markit – Smartphone Intelligence Service

© 2019 IHS Markit

Global Smartphone Shipments (Millions of Units)

Rank Company 2018 2017 YoY
1 Samsung 290 316 -8%
2 Huawei 206 153 35%
3 Apple 205 216 -5%
4 Xiaomi 120 92 30%
5 Oppo 115 118 -2%
6 vivo 104 95 9%
7 LG 45 56 -19%
8 Motorola 39 38 3%
9 TCL-Alcatel 17 21 -18%
10 Nokia 15 5 175%
  Others 254 334 -24%
  Total 1,410 1,444 -2%

Source: IHS Markit – Smartphone Intelligence Service

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About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

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Analysts Weigh-in on Samsung’s Feb. 20 Galaxy 10 Launch?

Avi Greengart, a mobile device analyst with GlobalData, said a big challenge with every new phone model release for Samsung and other vendors is that as phones have matured, users are holding onto their phones longer.

“As much as Samsung needs to compete with Apple, it needs to compete with the phone consumers already have – the S10 needs to be a phone that entices existing Android phone owners to upgrade,” Greengart told eWEEK. “We know what phones are and what they do – no single new feature is likely to be groundbreaking. However, design is definitely an area of focus; Samsung was actually the first vendor with an edge-to-edge display, but now that’s not enough.”

The new phones will almost certainly include 5G capabilities for each of the major mobile carriers’ networks as they come online, but more will be needed to make a sales impact, he said.

“There is a tricky balance that Samsung must hit – it needs radical designs and bleeding edge technologies like folding displays and 5G that push the envelope for early adopters, but it also must make more traditional 4G phones exciting enough to entice mainstream consumers to upgrade as well,” Greengart said. “It’s not enough to just cram massive amounts of technology into the phone for the wealthiest consumers. In the U.S., the competition really is focused around Apple and Samsung, but in Europe and Asia, Chinese brands like Honor and Xiaomi are attacking Samsung with premium phones at lower price points.”

Charles King, principal analyst with Pund-IT, agreed.  “At this point, Samsung is one of the two to three phone makers that can and do fight Apple to a draw,” King told eWEEK. “With phones like Samsung’s [current] Galaxy S9, it really comes down to the buyer’s operating system and applications preferences. That’s a significant contributor to Apple’s overall slowdown in iPhone sales growth over the last few months.”

For buyers, solid and noticeable improvements in cameras and displays in newer phones can help Samsung inspire more sales of its latest handsets, while a larger issue for many customers are the high prices of the devices, King said.  “I believe the emergence of $1,000 handsets last year clarified the ceiling of what the vast majority or consumers will pay for a smartphone.  So it’s important for Samsung to either deliver significant, compelling new features or performance capabilities, or to show greater flexibility in pricing.”

Tuong Nguyen, an analyst with Gartner, said a big issue that Samsung and other handset makers have to deal with when releasing new models nowadays is that for buyers, it’s tough to differentiate because all the major vendors have large screens, plenty of storage and all the rest.

For Samsung and other smartphone makers, there are no current “must-have” features that can be included in a handset to assure huge resulting sales of the phones, he said. “I think there are numerous features that are compelling, but they need to improve and come together in a way that increases the value proposition of smartphones in a significant way.”

What could boost sales for a phone would be the ability to use a smartphone as a hub or centralized device so users could control different aspects of their tech lives without having to open multiple apps or make other adjustments, Nguyen said. “I would categorize all this under learn, predict, surprise and anticipate. This is the type of step change we need to drastically attract users,” Nguyen said.

Another analyst, Rob Enderle, principal of Enderle Group, told eWEEK he expects the new Samsung flagship devices to include 5G, a bump in performance and features such as battery life and camera quality, as well as enhancements in wireless charging–including a rumored feature that enables the phone to charge another device wirelessly at the same time.  What Samsung will have to try to overcome, though, is that because wide deployments of 5G is still more than a year away many users may be satisfied to hang on to their existing handsets for now, Enderle said.

“Smartphones have been really good for years now, and the natural need to replace them has dropped sharply over time,” said Enderle. “In the current period, this behavior is likely more directly related to a reduction in effective demand-generation.”

https://www.eweek.com/mobile/can-we-expect-5g-at-samsung-s-feb.-20-galaxy-10-launch

 

Huawei’s growth due to increased smartphone sales (but not in U.S.); China to lead world in 5G handsets

In an annual business report meeting with journalists in late March at the company’s Shenzhen, China headquarters, Huawei reported that its total revenue grew 15.7%, to $92.5 billion, in 2017. More impressive, net profit grew 28.1%, to $7.3 billion, a huge improvement over 2016’s 0.4% rate.   Privately owned Huawei gets most of its revenue now from selling telecom/network equipment, which generated roughly $47 billion over the past year.  While that was only a 3% growth rate, the Chinese company enjoyed a 35.1% growth in its enterprise business unit, which includes cloud computing and big data, though the overall revenue of $8.7 billion is relatively small.

Until 2020 (or later), when”5G” is deployed by carriers using Huawei base stations, the company’s fastest growing and most visibly prominent area is and will be its smartphones.

Huawei’s Deputy Chairwoman and Chief Financial Officer Sabrina Meng, along with CEO Ken Hu, recently told reporters how the company managed to increase net profits and net profit margins at a rate higher than total revenue growth.   The company became more efficient at growing smartphone sales. “In 2016, one of the biggest areas that dragged consumer business group profits down were the high cost of components,” said Meng. “So we developed a better supply management chain and improved our working relationships with vendors.”  Hu added that whether it’s brand image with consumers or phone units sold, Huawei made significant improvements in 2017. According to data released to the media, Huawei and sub-brand Honor combined to sell 153 million handsets in 2017, generating $37.85 billion in sales.  The smartphone market is arguably the most competitive industry in all of consumer business with many players jockeying for a small market share behind kingpins Samsung and Apple.

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Ben Sin of Forbes recently wrote, “the Huawei P20 Pro is the new low light photography king (of smartphones), and it’s not even close right now.”  It’s even  better than the Samsung Galaxy S9+ which received excellent reviews from journalists that tested it.    The Huawei P20 Pro.  Photo courtesy of Forbes.com:

The Huawei P20 Pro has a 6.1-inch display with an 18.7:9 aspect ratio. The screen’s unusually tall aspect ratio makes the phone very easy to hold and reach across, and the panel is an OLED from Samsung, so it’s very good. The resolution here is just 1080p so technically it isn’t as crisp as the Quad HD found on other Android flagships, but frankly it doesn’t matter. What does matter is that the OLED panel on the P20 Pro just doesn’t get as bright as the panel on the Galaxy S9. I suspect Huawei’s Samsung OLED panel is a generation behind the ones used on the S9. The back of the handset is crafted out of glass, and it attracts fingerprints just as much as Samsung or LG phones. The P20 Pro ships in colors that are a bit different from the norm, including an eye-catching Twilight color with a gradient finish. The phone also comes in black or this pinkish gold color.

The triple camera set-up includes: a 40-megapixel RGB lens, 20-megapixel monochrome lens, and an 8-megapixel telephoto lens. Huawei has used the RGB+monochrome combo for its phones since 2016, so the new addition here is the telephoto lens, which offer lossless optical zoom. The optical lens is a 3X zoom compared to the Apple iPhone X’s 2X zoom.

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U.S. Market Difficult to Enter for Huawei, ZTE and other China based Companies:

As the U.S. government, and more recently AT&T and Verizon, have taken numerous steps over the years to prevent Huawei from entering its market.  Xiang Ligang, a telecom veteran and CEO of the industry website Cctime, said it has become increasingly challenging for Chinese telecom companies to do business in the U.S. amid heightened concerns over national security.

“The U.S. is a market Chinese companies must conquer if they want to become global players. But now politics rather than technology or products is playing a bigger role in their business prospects in the U.S.,” Xiang said.  He also opined that China’s handset producers have an edge in developing 5G terminal devices compared with their U.S. competitors.  “In terms of the research and innovation ability, the global top four telecom equipment suppliers are Huawei, Ericsson, ZTE and Nokia… two out of the four are Chinese technology giants and we could barely name a U.S. company,” he said. “Without 5G-capable terminal devices, you cannot access a 5G network.”   Xiang believes this year will be a watershed for China’s 5G technology development.  He thinks the final testing of “basic 5G” technologies will be completed (this author disagrees and things that won’t be before 2021), paving the way for the next phase of development – 5G products such as terminal devices (e.g. smartphones, other handsets, IoT devices, etc).

In addition to compatible terminal devices, China’s investment in 5G infrastructure also bodes well for its position in the intensifying global competition.  Under the guidelines of the National Development and Reform Commission, the country’s three State-owned network operators – China Mobile, China Unicom and China Telecom – have each announced plans to begin building 5G networks this year in at least five cities. China Mobile said in February that it may be able to offer a full 5G service by the end of 2019, a year ahead of the 2020 goal, thanks to a technology known as “slicing packet networks,” which help operators to manage network architectures, bandwidth, traffic, latency and time synchronization, said another Xinhua report.

Huawei, failed to get its smartphones sold in the local carrier retailing channel, which accounts for a majority of smartphone sales in the US. Verizon Communications Inc has dropped all plans to sell Huawei’ s phones, while AT&T Inc also walked away from a similar deal at the last minute under pressure from the U.S. government, according to a Bloomberg report.

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Sidebar:   Top Smartphone Makers

Currently, Chinese companies account for 7 of the world’s top 10 smartphone vendors (see top 10 below), but in the U.S., only one Chinese brand stood out – ZTE Corp grabbing a market share of 12 percent. “Such contrast is a result of multiple factors, and political concern is certainly one of them,” Xiang said.  As a result, Huawei will likely focus on increasing smartphone sales in Asia, Europe and Latin America.

According to marketing91, the top 10 smart phone makers in 2017 were:  1) Samsung 2) Apple 3) Huawei 4) Lenovo 5) Xiaomi 6) LG 7) ZTE 8) Oppo 9) Alcatel 10) Vivo

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Looking for Future Growth:

This year marks Huawei‘s 30th birthday.  Following the general Chinese idea that age 30 is when a boy truly becomes a man, the company is looking for new growth opportunities.

“As we look to 2018, emerging technologies like the Internet of Things, cloud computing, artificial intelligence and 5G will soon see large-scale application,” said Hu. “Throughout this process, Huawei will . . . pay special attention to the practical challenges that our customers face as they go digital. Our job is to help them overcome these challenges and achieve business success. Ultimately, we aim to bring digital to every person, home and organization for a fully connected, intelligent world.”

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