China Slowdown’s Next Victim: Asian Parts Suppliers

Aug. 30, 2015 2:35 p.m. ET

The combined effects of China's economic slowdown, a maturing smartphone industry and market volatility are sending jitters through Asian electronic-parts suppliers, which have relied on Chinese consumer demand and manufacturing muscle to power their growth in recent years.

After several years of torrid expansion, smartphone sales are slowing in China as stocks of unsold handsets are mounting in stores and warehouses. World-wide sales of smartphones grew at their slowest rate since 2013, research firm Gartner said this month, with sales in China falling for the first time in the second quarter.

The slowdown in smartphone sales is expected to hit Asian semiconductor giants such as Samsung Electronics Co. SSNHZ 0.00 % and SK Hynix Inc., HXSCF 0.00 % whose memory chips are widely used to store data in the devices. Some Japanese electronics suppliers that operate further up the industry's supply chain—like Fanuc Corp. FANUY -3.17 % , a maker of industrial robots and machine tools used by smartphone makers, and Tokyo Electron Ltd., a provider of chip-making equipment—recently lowered their forecasts for sales and earnings in the fiscal year ending next March.

"I don't think this is a bust, but we're going to have to work through the slowdown," said Amir Anvarzadeh, Japan equity strategist at BGC Partners. "Inventories will have to come down."

The slowdown in smartphone sales in China is also contributing to a decline in the price of liquid-crystal displays, exacerbating the woes of a leading supplier, Sharp Corp. of Japan. The company cited "increased competition in the China market" as a reason for posting an operating loss in its display division in the most recent quarter.

Smartphone sales in China more than doubled from 2012 through 2014, when they accounted for nearly one-third of the global total of 1.27 billion, according to Bernstein Research. But the firm expects sales in China to plateau at about 400 million over the next few years.

Some Chinese handset makers like Lenovo Group Ltd. LNVGY -5.00 % , which have risen in the global smartphone rankings despite only modest sales outside their domestic market, have already reported tepid earnings in the latest quarter. Lenovo Chief Executive Yang Yuanqing said earlier this month the past quarter was possibly the "toughest market environment in recent years."

In the second quarter, Lenovo had more than 12 weeks' worth of smartphone inventories, compared with about four weeks for Apple Inc. AAPL 0.22 % and seven weeks for Samsung, according to Bernstein. Apple Chief Executive Tim Cook assured investors last week that the company's sales in China remain strong.

As Samsung's industry-leading smartphone market share has eroded over the past two years, the company has grown more financially dependent on its semiconductor arm. Chip profits accounted for nearly half of Samsung's operating profit in the second quarter.

Over the past two years, Samsung and SK Hynix, the world's two largest manufacturers of memory chips, have ridden a cyclical upturn in pricing and solid demand for DRAM, or dynamic random-access memory, chips used in products including personal computers and smartphones. Profit margins in this area have risen in a range of 20% to 30%.

Both companies have, in recent months, announced plans to build more chip plants in South Korea to boost their manufacturing capacity. Samsung plans to spend 15.6 trillion won ($13 billion) on a cutting-edge plant to maintain its lead in memory chips, while SK Hynix intends to spend 46 trillion won over 10 years on three new chip plants.

But analysts warn that aggressive investment plans, coupled with the economic downturn in China, could lead to a supply glut in the industry, causing sharper-than-expected chip-price declines. Faced with the new softness in smartphones, the chip industry is getting no help from PCs or tablet computers, whose global sales have already declined. Gartner in July cut its growth forecast for world-wide chip sales this year citing, among other factors, softness in China's smartphone market.

"With an economic downturn, there could be a strong inventory correction for mobile DRAM toward the end of the year," said Lee Seung-woo, an analyst with IBK Securities in Seoul.

Mr. Lee estimates that SK Hynix sells 40% of its DRAM chips to China. He expects the impact to be less severe on Samsung's chip business as the South Korean company uses a chunk of its memory products for its own smartphones. Still, Samsung has faced significant hurdles in China, with smartphone sales slipping sharply in recent quarters because of stiff competition.

Samsung and SK Hynix don't provide a breakdown of sales by region. Spokesmen for Samsung and SK Hynix declined to comment.

Smartphone parts suppliers could be hurt by unfavorable comparisons with recent quarters, when demand for components and equipment was boosted by strong sales of Apple's iPhone 6 and 6 Plus. Apple designed those phones, introduced last September, with larger screens than previous generations of iPhones, in an effort to satisfy Asian consumers' preferences, and sales in China soared.

Shoji Sato, an analyst at Morgan Stanley MUFG, said the effect of the current slowdown will be uneven for electronics suppliers. Japanese companies such as Murata Manufacturing Co., which makes tiny capacitors for Apple iPhones, and Alps Electric Co., which makes a range of smartphone parts, could benefit from the increasing sophistication of handsets, which requires more expensive components. Some parts providers are also expected to increase sales to other industries, such as automobiles, mitigating weakness in demand from smartphone makers.

"Overall, the component makers' situation is getting tougher than two months ago, but premium suppliers will be OK," Mr. Sato said.

One smartphone parts supplier that continues to ramp up production is Sony Corp. SNE -0.02 % , which makes image sensors for digital cameras, including those in iPhones. The company said in April that during the current fiscal year it will invest ¥210 billion ($1.73 billion) to expand output of image sensors and ¥80 billion to lift production of camera modules.

Despite the slowdown in China, the company says it is struggling to keep up with demand.

"We are carefully monitoring the market because Chinese makers are important in mitigating risk from relying too much" on Apple, a Sony official said. "But the recent Chinese economic conditions have no immediate impact on our business because we are not able to supply enough sensors for customers in China."

Write to Eric Pfanner at eric.pfanner@wsj.com and Min-Jeong Lee at min-jeong.lee@wsj.com

Source: China Slowdown's Next Victim: Asian Parts Suppliers

Research and Markets: Chinese Smartphone Market Development, 2Q 2015

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Source: Research and Markets: Chinese Smartphone Market Development, 2Q 2015

Xiaomi Mi Edge Specs Surface, Curved Display In Tow

Xiaomi is one of the best-known Chinese smartphone manufacturers in the world. This company is actually China's number one smartphone OEM at the moment. THis company has already released a number of devices this year, including quite a few smartphones, various smart gadgets, and the new version of their Android-based UI, MIUI 7. That being said, Xiaomi is still expected to release their 2015 flagship, the Mi 5, before the end of the year, but that's not the only Xiaomi-branded smartphone to have been rumored lately. A while back we shared some info regarding a Xiaomi-branded device with a curved display, while the image that leaked was quite probably photoshoped, the rumor lives on to this day, read on.

New info surfaced regarding this device. According to a report from China, the handset might be called Xiaomi Mi Edge, and even its specs surfaced in China. According to the available info, the phone might sport a 5.2-inch QHD (2560 x 1440) display by SHarp, 3 or 4GB of RAM and it will reportedly going to be fueled by Qualcomm's Snapdragon 808 64-bit hexa-core processor. This handset will also sport a fingerprint scanner, and a 16-megapixel camera has also been mentioned in this leak. These are not exactly full specs of the device, but it's enough to get us started, and wonder is Xiaomi really developing such a device. Based on what we've seen thus far, it's quite possible. Xiaomi Mi 5 will definitely launch before the end of the year, and Xiaomi has also been rumored to be working on the Mi 5 Plus handset, which would essentially be a bigger variant of the Mi 5. The Mi Edge might be a Mi 5 alternative for those who want to differentiate, something similar to what Samsung did with the S6 Edge and S6 Edge Plus.

Another thing worth mentioning here, is the fact that this handset will almost certainly include some metal in its build, at least its frame will be made out of metal, if not the whole device. There you have it, another Mi Edge rumor. If anything else pops up, we'll make sure to let you know. We haven't exactly heard much about this device by now, but if it really exists, we ought to see some leaked images or something of the sort shortly, so stay tuned.

Source: Xiaomi Mi Edge Specs Surface, Curved Display In Tow

China’s Moves Won’t Help U.S. Tech Firms

Aug. 28, 2015 3:03 a.m. ET

China's moves to spur its slowing economy and restore investor confidence are having an important but less obvious effect on the tech sector: Strengthening Chinese companies that were already making life difficult for U.S. rivals, many of whom have staked their growth plans on the world's second-largest market.

The government's surprise decision in early August to devalue China's currency, in particular, could make it harder for U.S. companies to sell into the country by making their products more expensive to local buyers.

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At the same time, a cheaper yuan makes Chinese-produced goods less costly abroad—dovetailing with government policies that have been promoting foreign sales by Chinese technology vendors.

"We see the key driver [of government action] being exports," said Handel Jones, a consultant at International Business Strategies Inc. who has written books on China's high-tech sector. Chinese companies "will become more aggressive."

Once known mainly for its low-cost manufacturing, China became a prime target for many U.S. companies bent on growth owing to its huge population, which amounts to 20% of the global total. But the country is no longer merely a consumer and manufacturer of products conceived abroad. Local companies are coming up with homegrown designs for mobile devices, PCs and other products, and some are beginning to court global markets largely dominated by U.S. companies.

In smartphones, where China ranks as the world's largest market, Xiaomi Corp. and Huawei Technologies Co. have used attractively designed and priced products to take the No. 1 and No. 2 sales positions. Chinese brands, in fact, accounted for four of the top five brands in the country in the second quarter, researchers at International Data Corp. found.

Apple Inc., AAPL -0.40 % at No. 3, is still enjoying brisk iPhone sales and generating big profits in China. But Samsung Electronics Co. SSNHZ 0.00 % is no longer among the top five suppliers there, according to IDC. Troubles in its mobile unit have triggered declines in net profit for five straight quarters.

Slowing demand hasn't helped. Smartphone shipments in China fell 4% in the second quarter year on year, Gartner Inc. said, marking the first-ever decline there. IDC this week cut its forecast for unit growth in 2015 to 1.2% from 2.5%, down from 19.7% in 2014.

The flagging domestic market is encouraging some Chinese phone vendors to look abroad for sales. Xiaomi, for example, has begun selling smartphones in Brazil and India. Huawei, which has long operated around the world, sells half its smartphones outside of China and is making a particularly aggressive push in Peru and other South American countries.

"You walk around Lima and you see Huawei almost everywhere," said Ryan Reith, an IDC analyst.

The rise of Chinese brands extends to personal computers, server systems and networking devices. Chinese customers in many cases are shifting their buying to products from local companies, hurting U.S. companies like Hewlett-Packard Co. HPQ 0.43 % , International Business Machines Corp. IBM -0.24 % and Cisco Systems Inc. CSCO -0.92 %

Chinese vendors that once relied mainly on low-cost manufacturing have realized they can do better if they handle design and other chores themselves, said Sung Won Sohn, an economist at California State University Channel Islands. "The money is in design, distribution and marketing," he said.

In servers, for example, China's Lenovo Group Ltd. LNVGY 3.86 % reached No. 1 in its home country after completing the purchase of IBM's high-volume server line. Lenovo's server shipments in China more than doubled in the second quarter, IDC estimated. Huawei, which ranked second in China server sales behind Lenovo, posted a 30% jump in sales.

H-P, the world's largest server maker, grew just 9% in China in the quarter and ranked fifth in the market. Dell Inc.'s unit shipments in China fell 2.5%.

The sheer scale of the Chinese market makes such trends worrisome for foreign companies. The country is expected to spend about $211 billion this year on information technology excluding telecom services, IDC estimated before the recent economic gyrations. That is second only to the U.S., and accounts for about 10% of total global spending.

The stakes are high for startups as well. China has attracted a mob of Silicon Valley upstarts, some of which have been banking on money from Chinese investors or raising money on the prospect of sales in the country.

The Chinese affiliate of Uber Technologies Inc. is close to securing about $1 billion in new funding from investors in the region, part of the ride-hailing company's rivalry with deep-pocketed Chinese rival Didi Kuaidi Joint Co.

Investors have agreed to funding that would value UberChina at about $7.5 billion, according to a person familiar with the matter. The final paperwork has been signed but it could take several weeks for the round to officially close, the person said.

China also looms large for home-rental site Airbnb Inc., which has announced it would work with Sequoia Capital's China arm and China Broadband Capital to expand in the country. The Chinese investment firm Hillhouse led Airbnb's latest financing round, which valued the company at $25.5 billion based in part on big projections of future growth that may require substantial international expansion.

Developments in the Chinese market aren't all bad for U.S. companies. The declining yuan, for example, could reduce the costs of goods they buy or manufacture there, helping their profit margins.

And not all U.S. companies face credible local competition. Intel Corp. INTC 2.47 % and longtime rival Advanced Micro Devices Inc., AMD 4.21 % for example, are the only companies that supply the kinds of processor chips used in PCs.

But Chinese companies are developing expertise in other chips, including cellular modems and another variety of processor found in most smartphones. That trend could pose a challenge to Intel's attempts to penetrate the mobile market, and to mobile-chip leader Qualcomm Inc. QCOM -0.22 % 's effort to defend its turf.

"The Chinese government has been very open and public about wanting to reduce their reliance on foreign silicon," said Derek Aberle, Qualcomm's president, in a recent interview.

—Daisuke Wakabayashi, Douglas MacMillan, Shira Ovide and Rolfe Winkler contributed to this article.

Write to Don Clark at don.clark@wsj.com

Source: China's Moves Won't Help U.S. Tech Firms

Apple And Samsung To Benefit From The Changes In The Chinese Smartphone Market

Summary

Worldwide smartphone sales are expected to grow slower when sales in China shrink over time.

Current macroeconomic instability in China impacts low-end local vendors.

Market saturation expected to push Chinese consumers to seek premium devices for the next upgrades.

Apple and Samsung are best positioned among the players in China to benefit from these developments.

Over the last couple of years, many new smartphone OEMs have come into our lives, offering high-end devices for low prices. Manufacturers that were completely anonymous before, like Huawei, Xiaomi, OnePlus, and Meizu, became well-known brands and have competed fearlessly with Apple (NASDAQ:AAPL) and Samsung (OTC:SSNLF).

In an article published in November 2014, I described how Xiaomi, one of the rising stars of the Chinese OEMs, is trying to challenge Apple in every segment of the consumer electronics market. One of the main factors in Xiaomi's success is its low operating costs, which allow the company to run successfully with razor-thin margins. This strategy is, of course, not unique to Xiaomi, and most of the other Chinese OEMs are trying to do the same: generate fragile margins from every phone sold that is just enough for a small profit. In large volumes, when the economy grows, this model can work perfectly fine; however, when the global macroeconomic stability is tested, and the growth of the Chinese market slows down, many of the Chinese OEMs may not survive.

Chinese OEMs Market

The Chinese smartphone OEMs can be split into three tiers:

Tier 1: Largest vendors with exceptional market share or worldwide presence, like Xiaomi, Lenovo (OTCPK:LNVGY), Huawei, Asus, HTC (OTC:HTCXF), ZTE (OTCPK:ZTCOF), etc.

Tier 2: Mid-level vendors that are available globally but don't have an exceptional market share, like Meizu, OnePlus, CoolPad, etc.

Tier 3: Small, unknown vendors mostly active in mainland China, like THL, Nanho, Feipu, Yestel, etc. As shown in chart 1, below, three vendors from tier 1 have an exceptional worldwide market share, and they are the principal players that can theoretically take market share from Apple and Samsung.

Xiaomi, Huawei, and Lenovo currently account for 20% of the global smartphone market. Assuming that at least 30% of the "others" are Chinese vendors, the Chinese OEMs account for around one-third of the market, which is very close to the combined portion of Apple and Samsung. However, while Apple's and Samsung's combined share constitutes only two vendors that each control a significant market share, the Chinese OEMs' share constitutes dozens of players from the three tiers.

Slowdown in China and Global Smart Phone Markets

The slowdown in China lowers the demand and, consequently, the volume of shipment in the local Chinese market. If the global unrest continues, the consumers outside of China will re-think about upgrading their current devices. In a recent report, Gartner presented a first-time decline in smart phone sales in China, assessing the drop at 4% per year. Gartner explains that decline: "China has reached saturation - its phone market is essentially driven by replacement, with fewer first-time buyers. Beyond the lower-end phone segment, the appeal of premium smart phones will be key for vendors to attract upgrades and to maintain or grow their market share in China." As the Chinese smart phone market has ended its massive growth and reached a plateau, OEMs of premium devices, such as Apple, Samsung, and the Chinese tier 1 players, will compete for the crown.

In the long run, the total smart phone market is poised to slower growth as stated by IDC, in its recent Q215 smart phone report. The firm forecasts that the YoY growth in total smart phone shipments is going to decline, from 10.5% in 2015 to 5.1% in 2019, which is a sharp drop from the 27% in 2015. The share of the Chinese market also drops from 32% in 2015 to 23% in 2019, which reflects the decrease in demand by Chinese consumers for new smartphones as also described by Gartner.

These changes in the Chinese smartphone market and globally will have significant implications on all the players in the market.

Impact on Chinese OEMs

As described in the reports above by IDC and Gartner, demand for new smartphones in China reached a plateau and was expected to decline over time. As most consumers already own their first phone, it now becomes a game of upgrading and refreshing current devices. In this battle, premium vendors can attract customers by new, high-end, most advanced phones while low-end vendors can offer attractive prices. The Chinese tier 1 players could also attract more customers to their premium devices.

The problems start at tier 2 and tier 3 players. Tier 3 vendors are all small and unknown, mainly selling their products to the local market in China. As the demand for new smartphones is about to decline over the next five years, they are the first ones to experience real damage. If the current decline in China continues, most of these vendors will not be able to stand behind their low-cost model and will have to either merge or close down. As many of the tier 3 providers use white-label designs with tiny adjustments, it is unlikely that they will merge together or be acquired by a tier 1/2 vendor that has its own branded low-end devices. Most tier 3 vendors are likely to disappear in the long run, leaving only a few to offer low-end and extremely low-cost phones.

Tier 2 vendors are a different thing, as these vendors are rising stars in the global smartphone market and are making their first steps in the big league. It is very likely that these vendors will experience difficulties in the short-term but will be able to stabilize in the long run. As these vendors are in the middle of massive investments to go global, they are significantly hurt by the current slowdown and the Chinese smartphone market trend.

Impact on Apple and Samsung

As shown in chart 2 below, there are only two main foreign players in China's smartphone market: Apple and Samsung. Other leading brands, like Sony (NYSE:SNE), Nokia (NYSE:NOK), Nexus by Google (NASDAQ:GOOG) (NASDAQ:GOOGL), etc, have a really small market share, if any at all.

Apple and Samsung are the big winners of the smartphone market saturation and the current slowdown in China. These two rivals cannot compete with the prices that tier 3 players offer in the Chinese market (even Samsung low-end devices are not comparable in price). Their strengths emanate from high-end premium offering and a strong international brand. They can use this to their advantage over the tier 1 companies when the smartphone market shifts to revolve around features and technology instead of price, using leading-edge innovative technology to capture a larger share of the market.

As mentioned above, in the short term, the tier 3 players will be impacted by the current slowdown in the Chinese economy, and most of the vendors will probably disappear. Even though Apple and Samsung do not compete with these OEMs directly, they pressure the market down in terms of price and phone quality. Once most of these players are out of the market, coupled with the market saturation and decreased sales of new smartphones, the game will shift into Apple and Samsung's playground of innovation and quality.

As most of the leading Chinese vendors have reached their maximum available share in the Chinese market, they are looking to expand globally. Meizu, OnePlus, ZTE, Huawei, Lenovo, and Xiaomi are all working to strengthen their global presence, and each has a different issue to cope with. OEMs that will not be able to expand globally fast enough and survive the current macroeconomic situation in China will disappear and leave more room for Apple and Samsung to take over.

Conclusion

The worldwide smartphone market is experiencing a decline in growth mainly due to a saturation status in the Chinese market. Forecasts estimate that the worldwide smartphone sales will grow slower than they used to, and sales in the Chinese smartphone market are expected to decline over the years. These changes in the smartphone market, together with the current economic slowdown in China, will impact most of the Chinese OEMs. While some of these OEMs will not survive the short-term difficulties, and some may struggle to expand globally - Apple and Samsung are not exposed to these risks. As most of the Chinese first-time phone buyers already purchased smartphones, the Chinese market shifts to a game of features and technology to attract consumers to upgrade their devices. When moving to compete over features and technology innovation, Apple and Samsung have a distinct advantage on most of the Chinese OEMs. This, in my eyes, makes Apple and Samsung very compelling investments for t he long term.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Disclosure: I am/we are long AAPL. (More...)I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information provided in this article is for informational purposes only and should not be regarded as investment advice or a recommendation regarding any particular security or course of action. This information is the writer's opinion about the companies mentioned in the article. Investors should conduct their due diligence and consult with a registered financial adviser before making any investment decision. Lior Ronen and Finro are not registered financial advisers and shall not have any liability for any damages of any kind whatsoever relating to this material. By accepting this material, you acknowledge, understand and accept the foregoing.

Source: Apple And Samsung To Benefit From The Changes In The Chinese Smartphone Market

CORRECTING and REPLACING Worldwide Smartphone Growth Expected to Slow to 10.4% in 2015, Down From 27.5% Growth in 2014, According to IDC

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Source: CORRECTING and REPLACING Worldwide Smartphone Growth Expected to Slow to 10.4% in 2015, Down From 27.5% Growth in 2014, According to IDC

As China Smartphone Market Slows, Focus Goes To India

A sharp slowdown in smartphone sales in China prodded research firm IDC to cut its 2015 growth estimates, with India now seen as a key market for growth.

IDC now expects smartphone shipments of 1.44 billion units in 2015, up 10.4% from last year. It had been forecasting 11.3% growth.

The IDC outlook is comparable to a report last week from research firm Gartner. It said global smartphone sales last quarter rose by the slowest quarterly rate since 2013, as sales in China fell for the first time, with Apple (NASDAQ:AAPL) taking market share from Samsung.

Market leader Samsung, despite the April launch of its new S6 models, continued to be challenged by Apple's large-screen iPhones. In Q2, Samsung unit sales fell 5.3% from Q2 2014, Gartner said. Apple iPhone sales rose 36%, lifting its market share to 14.6% from 12.2%. Samsung's share fell to 21.9% from 26.2%.

IDC's report said China has joined North America and Western Europe in a more mature growth pattern. As a result, it says the focus on smartphone growth will shift to India.

"India has captured a lot of the attention that China previously received and it's now the market with the most potential upside," IDC analyst Ryan Reith said in the report.

"The interesting thing to watch will be the possibility of manufacturing moving from China and Vietnam over to India," he said. The shift in manufacturing to India is seen as a way to cut costs and capitalize on financial benefits associated with localized India manufacturing.

China clearly remains a key market, IDC said, accounting for 32.3% of new smartphone shipments in 2014. But China's smartphone unit sales are expected to rise just 1.2% in 2015, vs. 19.7% in 2014.

Despite Apple's continued success with its iPhones, the story among operating systems is not expected to change, IDC said. The Google (NASDAQ:GOOGL) Android operating system is expected to hold a dominant 81% share of the smartphone market this year, due partly to Android's widespread use on cheaper smartphones. Apple's iOS is expected to have a 15.6% share. IDC said Apple's efforts to maintain profit margins significantly higher than its rivals is much more valuable for the company than chasing market share.

Last week, Google announced that the new version of its Android operating system, previously called Android M, will be called Marshmallow.

Microsoft (NASDAQ:MSFT) continues to struggle to generate wider demand for Windows Phone devices and will remain a marginal challenger. IDC estimates that Microsoft Windows will have a market share of 2.6% in 2015.

Follow Brian Deagon on Twitter: @IBD_BDeagon.

Source: As China Smartphone Market Slows, Focus Goes To India

Tim Cook of Apple Seeks to Quell China Fears in Email to Jim Cramer

Photo Timothy D. Cook, Apple's chief executive, during a trip to China in May. Credit China Daily/Reuters

SAN FRANCISCO — As stocks in the United States tumbled on Monday morning following another sell-off in China, Timothy D. Cook, the chief executive of Apple, took an unusual step to put investors at ease: He emailed Jim Cramer, the television host of CNBC's "Mad Money."

In the email, Mr. Cook said iPhone activations had accelerated recently, and that Apple's App Store in China had its best performance of the year in the last two weeks.

"I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through J uly and August," Mr. Cook said in the email to Mr. Cramer. "Obviously I can't predict the future, but our performance so far this quarter is reassuring."

The email seemed to ease the minds of some investors. After falling sharply shortly after the markets opened, shares in Apple regained their losses. By midday, shares were about 1.2 percent higher

China has become an increasingly important market for Apple. The company's growth has slowed over the last few years in mature markets like the United States and parts of Europe, where the smartphone market has become saturated. China, however, remains a huge untapped market where plenty of people are still buying smartphones for the first time.

Apple has long laid the groundwork to reap big sales in China, and revenue growth from the region has steadily gained momentum. The company in late 2013 struck an important deal to sell iPhones through China Mobile, the world's largest phone carrier. Apple is also expanding its operations in the region, planning to increase its number of stores to 40 by mid-2016.

Source: Tim Cook of Apple Seeks to Quell China Fears in Email to Jim Cramer

China's smartphone market is saturated

Andrew Mager/FlickrA cracked iPhone.

"Saturation" is the new Economic Reality. But this is Worse.

Smartphones conquered even impoverished consumers in desperately poor countries, giving them access to things they couldn't even imagine a few years ago. The devices and the activities they spawned have been one of the world's growth engines. China's consumers adopted them at stunning rates. But even that growth engine is slowing down on a global basis. And in China, it just skidded backwards into the ditch.

Globally, smartphone sales in the second quarter rose 13.5% to 329.6 million units, the slowest year-over-year growth rate since 2013, Gartner reported today. What drove growth were cheaper 3G and 4G smartphones in emerging markets in Asia/Pacific – excluding China – Eastern Europe, the Middle East, and Africa. The winners in these markets were Chinese and local brands.

But in China – the world's largest market for smartphones, accounting for 30% of global sales last quarter – unit sales fell 4%, the first decline ever.

Gartner's explanation of the phenomenon, after years of mind-bending growth, featured the very unwelcome S-word:

China has reached saturation – its phone market is essentially driven by replacement, with fewer first-time buyers. Beyond the lower-end phone segment, the appeal of premium smartphones will be key for vendors to attract upgrades and to maintain or grow their market share in China.

It's getting tough in China. "Saturation" inspires fear. It turns a market into a war zone of pricing and innovation, of margin pressures and profit declines. There will be shakeouts and losers. But in China, it's worse: the market actually shrank.

Don't blame Apple. Its large-screen iPhones have been kicking butt in China – and elsewhere. Globally, Apple's market share rose by 2.4 percentage points to 14.6%. Unit sales rose 36% to 48.1 million. Apple saw strong iPhone replacements in all markets, but "particularly in China," according to Gartner. In China, iPhone sales soared 68% to 11.9 million units.

But Samsung, still number one globally, saw its market share drop 4.3 percentage points in Q2 to 21.9%. And unit sales fell 5.3% to 72.1 million.

The chart shows global smartphone sales. The declining sales of Lenovo include those by Lenovo and Motorola in both quarters. Note how super-hyped Chinese maker Xiaomi is falling further behind Huawei and Apple.

Wolf Street

Apple ate their lunch….

Apple's double-digit growth in the high-end segment continued to negatively impact its rivals' premium phone sales and profit margins. Many vendors had to realign their portfolios to remain competitive in the midrange and low-end smartphone segments. This realignment resulted in price wars and discounting to clear up inventory for new devices planned for the second half of 2015.

China dished out a brutal lesson in operating systems. For a company to grow in a shrinking market it must surgically remove market share from other players. And that's what Apple's iOS did, taking share from Android for the third quarter in a row. Android lost out with a shrinking share of a shrinking market.

That debacle in China dragged down Android's global growth to 11% year-over-year. Its global market share dropped 1.6 percentage points to a still phenomenally successful 82.2%.

And Microsoft's operating system? Forget it. Gartner, gently: "In light of Microsoft's recent cuts in its mobile hardware business, we'll await signs of its long-term commitment in the smartphone market." I wasn't quite as gentle when I wrote a few weeks ago, Microsoft Tallies True Costs of M&A Boom: Layoffs, Write-Offs, Shut-Downs, and Economic Decline

The fact that smartphone sales in the world's largest smartphone market declined in the second quarter, for the first time ever, is another warning that the official GDP growth figure of 7% is delusional.

"Saturation" is becoming a new economic reality in China. For years, global companies have been spoiled with hyper-growth. That era is over.

But actually shrinking sales are worse than what could be expected in a merely "saturated" market, which would imply flat or slowly growing sales. It's hard to blame "saturation" for shrinking sales. Something more complex is going on, something that the official figures refuse to acknowledge.

Smartphones are not the only consumer item facing this debacle of shrinking sales in China after years of breath-taking growth. Numerous other products are now wading through the same mire. For example, passenger vehicles sales in China, the largest auto market in the world both in terms of manufacturing and sales, declined in June and July from a year ago. But incredulous manufacturers are still building plants and adding capacity.

So Volkswagen, whose sales in China – its largest market – have declined three months in a row, is now busy denying that it's slashing production to deal with ballooning overcapacity; yes, it's slashing production, but for other reasons, it said. Overcapacity is too terrible in the car business. It simply cannot be publicly acknowledged.

And GM has already figured out how it will deal with its overcapacity in China. Read…LEAKED: GM Sees Overcapacity Fiasco in China, Hopes Americans Will Buy Lots of Chinese-Made Buicks

Read the original article on Wolf Street. Copyright 2015. Follow Wolf Street on Twitter.

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SEE ALSO: China's manufacturing data is utterly awful
Source: China's smartphone market is saturated

Lenovo’s Smartphone Future: Vibe, ZUK, Moto

Today, Lenovo made the ZUK brand international. Back on August 11th, they announced the ZUK Z1 in Beijing. This was the Chinese version that is running their own OS known as ZUI. I actually have one here and it's been working pretty nice. Nothing to fancy, but not bad either. It just works. Now today, they are announcing the international version, which is a partnership with Cyanogen OS – and the code will be open sourced next month. You can read more about that smartphone here

We had a chance to sit down with Lenovo and their partner Elephone (a bit strange choice there), and talk about what this means for Lenovo in the future. As most of you know, Lenovo already has the Motorola and Vibe brands. So the way that Lenovo is positioning the ZUK branding is in the mid-range, but international. So you have your Motorola smartphones as the high-end contenders, and the ZUK smartphones in the middle. With Vibe coming in at the low-end, and possibly even being rebranded. However the rebranding part is all speculation right now.

While ZUK started out as a domestic product for Lenovo, its now going international thanks to their partnership with Cyanogen. Currently the Z1 is only supporting bands in Europe and Asia, however they have assured us that a model support the bands in the Americas will be coming soon. Lenovo used to be the number one export smartphone manufacturer in China. Meaning they sold the most phones outside of China, of the Chinese OEMs. They've now slipped down to number three. Still a pretty decent stand, considering how many competitors are around. But they want that number one spot back, and I can't blame them there. With the ZUK line, they might just do that. For just $280, the ZUK Z1 is one heck of a smartphone. Including some of the latest tech like the USB Type C connector, Snapdragon 801, 3GB of RAM, 64GB of storage and a massive 4100mAh battery inside.

We're still here in Shenzhen talking with ZUK, Lenovo, Elephone and Cyanogen. So there will be plenty of content coming up about this new smartphone as well as partnership. So make sure you keep it locked to Android Headlines for all of the details!

Source: Lenovo's Smartphone Future: Vibe, ZUK, Moto

Global smartphone sales increase 13.5 per cent in Q2

Gartner said smartphone sales in China fell for the first time year-over-year, recording a 4 percent decline. The largest market for smartphones, China is reportedly in the last lap of its first-time buyers segment, and replacements being the current trend.

Apple Inc.'s smartphone market share stood at 14.6% in the reporting quarter, with iPhones witnessing a 36% increase in sales, which resulted in the firm gaining a 2.4% market share. Huawei, on the other hand, saw the highest sales growth (46.3 percent) on the back of robust overseas sales and 4G smartphone sales in China.

The increasing number of Chinese Smartphone players in the Indian market has even led to price war. Although Apple has exposure in the region, we would remind subscribers that CEO Tim Cook struck a confident tone when discussing the region on the company's recent conference call, stating that he believes China will be Apple's strongest market at some point in the foreseeable future. The sales of Samsung Electronics plummeted 5.3%, to 72 million.

Gartner Inc (NYSE:IT) published a report today, which shows the slowest pace of yearly growth since 2013, in worldwide markets, experienced in the second quarter of 2015.

Samsung lost ground to Apple in the worldwide smartphone market for the second quarter of 2015, as the overall growth rate for sales of the devices slowed.

Gupta said China has reached saturation point.

Xiaomi took fifth place thanks to its eastern success with 4.9%, so the usual players are still dominating the market. An interesting note is that Android and iOS combined made up 96.8 percent of the entire smartphone market with Windows following far behind at only 2.5 percent of the market and BlackBerry OS at 0.3 percent. This marks the first ever sales decline in China (which still bought about a third of the total smartphone sold during the quarter), a worrisome milestone for device manufacturers.

The Korean mobile phone maker saw its cut of the smartphone market dip to 21.9 percent in the second quarter ended June 30 from 26.2 percent for the same quarter past year, Gartner said on Thursday.

North American consumers bought 10 percent more smartphones in the second quarter than they did in the year-ago quarter, and they're increasingly buying more expensive models, market research company Gfk found.

Source: Global smartphone sales increase 13.5 per cent in Q2

Global smartphone sales growth slowest since 2013: Gartner report

NEW DELHI: Global smartphone sales grew at its slowest pace since 2013 at 13.5 per cent to 330 million units in the second quarter of 2015, impacted by declining sales in China, research firm Gartner said today.

Worldwide sales of smartphones to end-users totalled 329.67 million units, an increase of 13.5 per cent from 290.38 million units in the same period in 2014, Gartner said in a statement.

"While demand for lower-cost 3G and 4G smartphones continued to drive growth in emerging markets, overall smartphone sales remained mixed region by region in the second quarter of 2015," Gartner Research Director Anshul Gupta said.

Emerging Asia/Pacific (excluding China), Eastern Europe and Middle East and Africa were the fastest-growing regions, driven by good performance from Chinese and local vendors, he added.

By contrast, smartphone sales in China fell for the first time year over year, recording a four per cent decline.

"China is the biggest country for smartph one sales, representing 30 per cent of total sales of smartphones in the second quarter of 2015. Its poor performance negatively affected the performance of the mobile phone market in the second quarter," Gupta said.

He added that China has reached "saturation", its phone market is essentially driven by replacement, with fewer first-time buyers.

"Beyond the lower-end phone segment, the appeal of premium smartphones will be key for vendors to attract upgrades and to maintain or grow their market share in China," he said.

Samsung led the tally with 21.9 per cent share in the April-June 2015 quarter, followed by Apple (14.6 per cent), Huawei (7.8 per cent), Lenovo (five per cent) and Xiaomi (4.9 per cent).

In terms of operating system (OS) market, Android saw its global share being affected by the weak performance of China and the strong performance of Apple in the Asian nation.

"Android saw its lowest year-over-year growth of 11 per cent with share reachi ng 82.2 per cent in the second quarter of 2015, Gupta said.

iOS (Apple) had a share of 14.6 per cent, Windows (2.5 per cent) and BlackBerry (0.3 per cent) in the second quarter of 2015.

The total mobile handset market (feature and smartphones) grew marginally to 445.75 million units in the said quarter from 444.19 million units in the April-June 2014 quarter.

Samsung led the total market with 19.9 per cent, followed by Apple (10.8 per cent), Microsoft (6.2 per cent), Huawei (5.9 per cent), LG Electronics (4 per cent), Lenovo (3.7 per cent), Xiaomi (3.6 per cent), TCL Communication (3.5 per cent), ZTE (3.3 per cent) and Micromax (2.2 per cent).

Source: Global smartphone sales growth slowest since 2013: Gartner report

Samsung SM-G9198 specs: Most powerful flip smartphone in today's market?

South Korean giant LG Electronics Inc. recently launched its new affordable flip smartphone, called the LG Gentle, initially in the local market, followed by its release to global markets as the LG Wine Smart.

Recently, Samsung Electronics Co., Ltd. just made the same move by unveiling its brand new Android SM-G9198 flip phone for the Chinese market. In terms of the specifications, this phone sports a dual 3.9-inch Super AMOLED display screen with a 1280 x 768 pixel resolution.

GSM Arena

Samsung's SM-G9198 flip smartphone

The SM-G9198 has a sharp 16-megapixel camera on the back and a 5-megapixel camera on the front, weighing about 204 grams (7.2 ounces), according to a recent report by The Next Web. Under the hood, it packs a Qualcomm Snapdragon 808 processor, a 2G B of RAM, and up to 16 GB built-in memory storage. The internal memory of this phone can be expanded up to 128 GB via microSD card.

The SM-G9198 is powered by a 2,020 mAh battery, which, according to Tech Times, provides up to 189 hours of standby time. As for the operating system, it comes with the new Android Lollipop 5.1.1 version pre-installed.

In addition, this phone is expected to support dual-SIM capability, global positioning system (GPS), Bluetooth, Wi-Fi, and fourth generation (4G) connectivity. One of the most interesting features of this phone are its screens on both sides.

According to Tech Times, there's a very small chance that this new flip phone will make its way to markets outside China. The Next Web reports that Samsung's SM-G9198 is scheduled to be released later this month.

In comparison with LG's recently released flip phone, Samsung's new phone comes with more high-end specs, which makes it today's most powerful Android "flip smartphone" in the worldwide market.

The LG Wine Smart sports a smaller 3.2-inch display screen and runs one the Android Lollipop OS as well. It packs a quad-core 1.1 GHz processor, and has only 1 GB RAM and 4 GB internal memory. Other specs of the Wine Smart include a small 1,700 mAh battery and only 3.15-megapixel primary camera.

Source: Samsung SM-G9198 specs: Most powerful flip smartphone in today's market?

Why We’re Jealous of Chinese Smartphones

Aug. 18, 2015 12:37 p.m. ET

Hong Kong

We're not using our phones to their full potential.

That we learned earlier this month at Converge, the Journal's Asian tech conference, where we met Chinese entrepreneurs, colleagues and friends—and of course immediately asked to play with their smartphones.

Sure, Americans get the best new handsets from Apple first. But in China, there are ways of living your life through a smartphone that left us jealous. China has even figured out a business model to legitimately stream the current season "Game of Thrones" on your phone, free.

What's China's edge? Technology is often just cheaper, allowing for more frequent phone swaps. Then there's the world's largest Internet culture—some 649 million wired people, 86% on phones—who make an incredible test base for new ideas. Many young people leapfrogged over laptops right to smartphones as their main computing device, so phones have evolved to do more.

Giant domestic rivals like Tencent and Alibaba compete for loyalty across all kinds of mobile services, including messaging, shopping, video and even food delivery.

Of course, we can't ignore China's problems with Internet freedoms. The Great Firewall means there's very limited access to international services like Facebook and Google. GOOG -0.96 % The government embeds police in Internet companies ostensibly to prevent crime, but also to keep control over its citizens.

But as with many of the other contradictions in China, there's so much good with the bad. Here are five lessons the Chinese can teach Americans about smartphones:

Messaging apps as operating systems

In China, a messaging app is much more than a way to text someone that you're running late for a meeting. It's a social network for keeping up with friends and celebrities.

But it isn't just social. It taps into your phone's GPS, microphone and camera to let you play games, check in to a flight, identify a song, book an appointment, call a cab, pay bills, you name it.

Messaging services like WeChat TCEHY -1.91 % do so much, they're kind of like operating systems for your life, as venture-capital firm Andreessen-Horowitz's Connie Chan recently noted. WeChat hosts millions (yes, millions) of other apps inside its platform, so you can really live your whole life inside WeChat.

It's convenient to have so much in one app, and the identity verification that WeChat provides makes it easier to use payment services.

The best part? Our colleague Li Yuan says everyone who matters in her life is on the same messaging platform. Since WeChat is fully functional across many phones, you don't get sucked into the ecosystem of a particular one, like with Apple's iMessage or Google's Hangouts. You'd think Facebook would be able to accomplish the same in the U.S.

Phones really are wallets

In China, the tech elite are much more likely to pay for goods and services with their phones because it's widely accepted, and doesn't rely on merchants updating clunky old terminals with special technology like Apple Pay. AAPL -0.15 %

Apps like WeChat allow you to pay from a mobile wallet (linked to a bank or credit card) without waving your phone over anything. Just pull up the account of the merchant you want to pay, millions of whom live inside WeChat with their own accounts. The equivalent to this in the U.S. would be paying for dinner with Facebook Messenger (a service it's entirely possible Facebook is working to emulate).

And WeChat has giant competition. Alipay, which started as a PayPal PYPL -1.54 % -like system to ensure transactions on giant online marketplace Alibaba, has grown into a flexible replacement for cash in all kinds of settings—paying landlords, bills, friends and so forth. You can earn better interest with it than at a bank or get a loan, stimulating parts of the economy underserved by banks.

A new phone without waiting

Forget not upgrading until your contract is up, or worse, until your phone is broken or on its last legs. The tech savvy in greater China, like our colleague Carlos Tejada, get a new phone nearly every year. Cheaper Android handsets from Xiaomi, Huawei and LeTV (sold often online and without pricey American marketing budgets) combined with contract-free mobile service enable people to always have the latest technology—better screens, processors and cameras.

Even iPhone owners, a colleague told us, sell their phones on the giant secondary market as soon as the new iPhone is announced.

Customization is also part of the upgrade culture. During our visit, Xiaomi had a special on for its omnipresent Mi Note phablets where you could come into its showroom and swap out the glass back for bamboo at no cost.

The operating system gets better, faster

You don't have to wait around for the latest software in China, either.

In the U.S., updates to Android phones like the Samsung SSNHZ 0.00 % Galaxy can come as a trickle because the phone maker has to push them first to carriers. In China, Samsung rival Xiaomi bypasses the carrier and pushes out free updates to its MIUI flavor of Android as often as once a week. Avid fans sign up for these frequent updates, beta software that they happily test for Xiaomi. (Regular Xiaomi customers see an update once a month or so.)

Xiaomi's system allows superfans to be more involved with generating ideas, and for improvements to come regularly. This includes features like a flashlight you can turn on from the lock screen just by holding the home button.

Could you imagine Apple crowdsourcing ways to improving the iPhone?

Phones are TVs

In China, phones aren't second-class citizens when it comes to watching shows and movies.

The best stuff is mostly available to stream online. China's historic challenges with protecting intellectual property have helped the market invent new business models for media. Services like Youku Tudou, YOKU -0.38 % iQiyi and Tencent Video convinced many piracy-stricken content owners to join, rather than fight, the demand for online video by making it legitimate and getting paid for it through video advertisements. If you pay, you watch without ads.

Chinese can legally watch recent episodes of "Game of Thrones" free on a video site owned by Tencent, though censors make it considerably less exciting than what Americans see on HBO.

Now China's online video services are even producing 360-degree virtual reality shows designed for the mobile world. We're not holding our breath for U.S. TV producers to invest in a VR version of "The Big Bang Theory" anytime soon.

Write to Geoffrey A. Fowler at Geoffrey.Fowler@wsj.com or on Twitter @geoffreyfowler and Joanna Stern at Joanna.Stern@wsj.com or on Twitter @joannastern

Source: Why We're Jealous of Chinese Smartphones

4G Smartphones unit share more than doubles in a year

India is expected to be the largest contributor of absolute smartphone unit growth globally this year. The main reason behind this is the currently low smartphone penetration.

According to the latest global smartphone sales data from GfK, consider these facts & stats:

• In Q2 2015 global smartphone sales value was up +8 percent year-on-year, and unit sales were up +6 percent year-on-year.

• 4G unit share was 58 percent globally in Q2 2015, up from 26 percent in Q2 2014. This represents a unit growth of +129 percent year-on-year, with China leading the global 4G ramp up.

• Globally the unit share of smartphones with large screens (5"+) increased to 48 percent in Q2 2015, up 5 percent from Q1 2015, and 17 percent from Q2 2014. China has the highest regional share of smartphones with large screens at 63 percent, followed by Developed APAC at 61 percent.

• Average sales price (ASP) in USD declined -1 percent from Q1 to Q2 2015, but it was up +3 percent on a year-on-year basis. GfK forecasts smartphone ASP to decline by -1 percent year-on-year in 2015.

Almost six in ten (58 percent) smartphones sold in Q2 2015 were 4G-enabled, according to the latest global smartphone sales data from GfK. And with a major operator launching 4G services in India at the start of this month, 4G is now available in all key countries. GfK forecasts 4G smartphone penetration to continue to grow at the expense of 3G, which is currently at 38 percent of smartphone units and is forecast to decline by another percentage point by Q4 2015.

Kevin Walsh, director of trends and forecasting at GfK comments, "India is expected to be the largest contributor of absolute smartphone unit growth globally this year. The main reason behind this is the currently low smartphone penetration in the market together with a significant intensification of the competition amongst the smartphone vendors, which will drive ASP erosion allowing more affordable devices in the market."

There are significant regional differences in 4G take up: price polarization in N. America, saturation in W. European markets, local brands tackling global players in India and China, and intense price competition in emerging markets.

Walsh continues: "The first half of the year has seen macro events providing headwinds to topline demand in regions like C&E. Europe, LATAM and China. However, the underlying trend of consumers optimizing their digital consumption by screen size, within affordability constraints, continues in all regions. This trend can be seen from TV's down to smartphones. In smartphones, it manifests in trends like price point polarization in the US, the rapid screen-size increases in emerging markets and phablet market development. These trends are forecast to continue to the end of year but we see new inflection points and market drivers for 2016."     

Here's how the global smartphone market stands today:

Smartphone sales: Q2 2014 vs Q2 2015

Units sold (in mil)        Sales value (in billion USD)   Q2 2014    Q2 2015    % Change Q2 2014    Q2 2015    % Change Latin America   25.0       25.2        1%         7.4        6.2        -16% Central & Eastern Europe                14.7       15.2        3%         3.7        3.2        -15% North America     40.3       44.4       10%        15.4       18.2         19% Emerging APAC      36.2       44.2       22%         7.1        7.5          5% Middle East & Africa  31.9       39.4       24%         9.5       10.5         11% Western Europe    27.8       30.3        9%        12.5       11.7         -7% China                 98.6       88.7      -10%        22.8       26.8         17% Developed APAC     13.8       14.7        6%         7.6        8.3         10% Total Global      288.3      302.1        5%        86.0       92.4          7%

Source: GfK point-of-sales (POS) tracking data in 90+ markets, August 2015

N. America - +10 percent year-on-year growth in unit sales in Q2 2015

In this market, which like W. Europe is nearing saturation point, we see a price polarization as sales of high ($500+) and low end ($0-250) devices grew at the expense of mid-ranged devices ($250-500). Smartphones in the high end captured 43 percent of smartphone unit share in Q2 2015, up from 38 percent in 2Q 2014. N. America and China were the only regions to see an increase in high-end smartphone unit share on a year-on-year basis.

W Europe - units up +9 percent year-on-year, but value and ASP fall

Unit sales of smartphones grew +9 percent year-on-year in Q2 2015, but sales value declined, due to a mix shift towards the low-end observed in the quarter capturing almost 50 percent of the smartphone unit mix, up from 37 percent in Q2 2014. This region had very high LTE penetration levels in smartphones in Q2 2015, with the Nordics taking the top three places: Norway at 90 percent, Denmark at 89 percent and Sweden at 88 percent.

China - high-end demand increased +49% year-on-year in Q2 2015

Unit sales fell -10 percent year-on-year in China to Q2 2015, which follows the previous quarter's decline of -14 percent year-on-year. However, strong demand for high-end smartphones ($500+) pushed smartphone value up +17 percent year-on-year to $26.8bn in the quarter. The high-end smartphone market now accounts for 17 percent of the market, up from 10 percent in Q2 2014 - and is growing at the expense of the low-end. In 2015, GfK forecasts high-end unit demand in China to grow +28 percent year-on-year, the strongest growth in this price band of any region this year.

C&E. Europe - a tale of two halves: rise and fall

Despite unit sale declines of -11 percent year-on-year in Russia and -34 percent year-on-year in Ukraine driven by macroeconomic factors, the total regional smartphone demand grew +3 percent year-on-year in Q2 2015, buoyed by strong growth in Poland and Romania. GfK forecasts smartphone unit demand in Russia to decline to -14 percent year-on-year, and -23 percent year-on-year in Ukraine in 2015.

                     Units sold (in mil)          Sales value (in billion USD)   CY 2014    CY 2015    % Change CY 2014    CY 2015    % Change Latin America   108.5      111.2       2%         30.8       28.0     -9% Central & Eastern Europe                   69.3       70.6       2%         17.2       14.4       -16% North America     177.3      194.5      10%         72.1       83.5        16% Emerging APAC      148.5      182.8      23%         28.2       30.5         8% Middle East & Africa  135.8      167.6      23%         39.6       44.0        11% Western Europe    127.9      138.0       8%         55.8       53.2        -5% China            392.8      371.7      -5%         99.0      108.7        10% Developed APAC            65.1       65.5       1%         38.1       38.1         0% Total Global      1,225      1,302       6%        380.8      400.4         5%

                                                                                                              

Source: GfK point-of-sales (POS) tracking data in 90+ markets for calendar year (CY) 2014, and GfK forecasts for calendar year 2015. As at August 2015.

Latin America - Brazilian economic slowdown starts a change of pace

A significant slowing of growth in this region has been caused mainly by the macroeconomic situation in Brazil. Q2 2015 saw +1 percent year-on-year unit growth, compared to +28 percent in Q1 2015 and +72 percent rise in Q2 2014. In 2015, GfK forecasts total smartphone unit demand and sales value to drop in Brazil for the first time ever, with unit sales expected to fall -3 percent year-on-year, and sales value to decline -15 percent year-on-year.

Emerging APAC - fierce competition in a growing Indian market

In Emerging APAC, smartphone unit demand increased by +22 percent year-on-year in Q2 2015, with all major countries growing. India in particular has seen strong unit growth of +40 percent year-on-year, with local brands accounting for three of the top five smartphone vendor spots in the quarter. A number of Chinese smartphone brands have entered the Indian market this year, intensifying the already fierce competition between international and local vendors. The resulting price war is forcing ASPs down in a market where more than 80 percent of sales are in the low-end. In Q2 2015, smartphone ASP in India declined -12 percent year-on-year. In 2015, GfK forecasts smartphone prices in India to fall -11 percent year-on-year and 4G unit demand to more-than-triple, capturing 6 percent of the smartphone unit demand.

Developed APAC - unit sales up +6 percent as Japan improves

Unit sales in Developed APAC grew +6 percent year-on-year in Q2 2015, driven by Japan (+15 percent), which benefitted from an easy comparison with low sales in Q2 2014. GfK forecasts smartphone unit demand in the region to grow by +1 percent year-on-year in 2015. A -6 percent smartphone demand decline in S. Korea will be offset by Japan, which is forecast to see a +3 percent year-on-year increase.

Walsh concludes: "Weak macroeconomic trends will continue across a number of major countries such as Brazil, Russia and China, but recoveries when they come are often faster than expected especially for tech sectors. In addition, we are still a long way from saturation in emerging market while adjacent industries to the smartphone fuel the next round of growth, generally complementing and in some cases cannibalizing smartphone growth."

Source: 4G Smartphones unit share more than doubles in a year

Xiaomi Redmi Note 2: Five Best and Worst Features of the Phablet

The Chinese smartphone maker Xiaomi, has unveiled the Redmi Note 2 smartphone at its MIUI 7 event yesterday. The Redmi Note 2 comes in two variant including TDD-LTE and TD-SCDMA 16GB variant and TDD-LTE and FDD-LTE variant with 16GB.

Also, the company has launched the Redmi Note 2 Prime, which is powered by a 2.2GHz MediaTek Helio X10 Octa-Core 64-bit processor alongwith 2GB LPDDR3 RAM and 32GB of internal memory on board

Stay tuned to GizBot for more updates!

Display

Xiaomi Redmi Note 2, sports a 5.5-inch Full HD IPS display with a resolution of 1920 x 1080 pixels and 178-degree wide viewing angle.

Memory

This device comes with the storage option of 16GB/32GB built-in memory with an expandable option up to 32GB via microSD card slot.

Camera

Redmi Note 2 sports a 13MP rear camera with LED Flash, PDAF, Samsung / OmniVision Sensor, 5p lens, f/2.2 aperture, 78-degree wide-angle lens, 1080p video recording, 5MP front-facing camera, OmniVision sensor, 1.4-micron pixel, 720p video recording.

Infrared Sensor

An Infrared ray blaster is quite handy when it comes to operating other devices, right with your phone. With this feature it let the user control their TV, set-top box, and receiver straight from their smartphone

Connectivity and Battery

At this price point, the Redmi Note 2 comes with 4G LTE connectivity and powered by a huge 3060mAh battery for full day use.

Prone to Water-related damages:

While most of the brands these days are working towards bringing water resistance in their devices, especially premium ones, Samsung Galaxy Note 5 misses on this feature as well.

Look and Feel

This Redmi Note 2 comes in plastic material, which doesnt give the premium look or feel. Keeping the price in mind, this looks quite adjustable.

Form Factor

Coming to the body of the device, Redmi Note 2 with 5.5-inch screen, 8.25mm thickness, weight around 160grams is too big to hold. It will be less comfortable when inserted in pockets of clothing

Screen

The screen has not been coated with a protective layer screen. So it is prone to screen damages when fallen from hand. Also the Screen is doesnt have anti-glare coating.

FM

The Redmi Note 2 doesnt come with the FM radio feature.

Stay tuned to GizBot for more updates!

Story first published: Sunday, August 16, 2015, 10:03 [IST]

Source: Xiaomi Redmi Note 2: Five Best and Worst Features of the Phablet

Samsung Officially Announces SM-G9198 Clamshell Smartphone

Home  »  News  »  Samsung Officially Announces SM-G9198 Clamshell Smartphone

Last month, Samsung SM-G9198 clamshell smartphone visited TENAA certification agency, but the company has just now officially announced the device. At this moment, the smartphone is exclusive the Chinese market and probably won't reach any other markets.

Samsung SM-G9198 is now the most powerful flip phone since it is powered by the Snapdragon 808 chipset with a hexa-core processor, 2 GB RAM and 16 GB of expandable storage. It also has two 3.9-inch 768p Super AMOLED displays protected by Corning Gorilla Glass 4. Other specs include a 2,020 mAh battery, a 16 MP rear and a 5 MP front camera. Maybe Samsung will change its mind and release the phone on other markets as well.

Source: Samsung Officially Announces SM-G9198 Clamshell Smartphone

The smartphone battleground of India -- and why Xiaomi wants in

This article, The smartphone battleground of India -- and why Xiaomi wants in, originally appeared on CNET.com.

View gallery

.Xiaomi execs alongside Indian politicians at the press conference of the announcement. Xiaomi

Xiaomi, China's No. 1 smartphone maker, is set to ramp up its operations in India with the announcement earlier this week that it is opening up a manufacturing facility in the Indian state of Andhra Pradesh.

The move by Xiaomi is a sign of a change in the global smartphone wars. Simply put, the gold rush in China is slowing down and smartphone makers are looking for the next big chance arena in which to do battle for the hearts and minds of consumers.

That arena, as far as Gartner is concerned, will be emerging markets in the developing world. According to the analyst firm, worldwide sales of smartphones to end users reached 336 million units, an increase of 19.3 percent during the first quarter of 2015.

Gartner's report further added that the fastest growing regions were in Asia Pacific, Eastern Europe, the Middle east and North Africa, with a 40 percent increase in sales during the first quarter of 2015.

Among a ll these markets though, one country in particular is getting a fair bit of attention, the world's second most populous country: India.

Battlefield India

India is, quite simply, the next big battlefield in the smartphone wars. According to an IDC report, India was the fastest growing smartphone market in the third quarter of 2014 and by 2017, according to international research firm Strategy Analytics, India is expected to overtake the US as the world's second largest smartphone market after China.

"India's growth is being driven by low smartphone penetration, expanding retail availability of devices, wealthier middle-class consumers, and aggressive promotions from local smartphone brands like Micromax," said Linda Sui, director at Strategy Analytics.

HSBC suggests that the reason for this movement toward India is probably because China's smartphone penetration has already reached 95 percent, meaning most customers in the Chinese market own a smartphone, while India 's is roughly 30 percent.

According to IDC, while Xiaomi is now fifth in market share in India, it still far behind the likes of Samsung and local leader, Micromax. With India being the next big battlefield, it makes sense that Xiaomi intends to set up camp on the front lines.

At the moment, it is likely that Micromax, the world's 10th largest smartphone maker, will be Xiaomi's main target. The company, which produces anywhere between 700,00o to 1 million handsets a month for customers in countries like India and Russia, has been growing at a breakneck pace trailing only Korean giant Samsung among Indian consumers.

This success has come out of Micromax focusing squarely on the problems of the Indian consumer.

This success has come out of Micromax focusing squarely on the problems of the Indian consumer. For example, the company's first phone, the X1i, boasted a massive battery life because in many towns in India, the electricity supply was not even stable enough for one to charge their phone on a regular basis so the X1i was designed to go weeks between charges.

The second was probably something that only local designers could have come up with -- in India, different carriers serve different areas of the nation with differing service quality. The solution to this problem of poor network service was simple: offer a phone with two SIM card slots. Most users have two SIM cards, one for the permanent incoming number and the other for whichever provider is strongest in the area.

At the time, no phone made by then-market leader Nokia had this feature, so Micromax swooped in and cashed in on that niche. Today, dual SIM card phones are among the most commonly sold types of han dsets in India. Micromax still dominates that sector.

Similar yet different

Another issue Xiaomi will have to contend with is that is very similar to Micromax. Both companies offered products that maximized the potential of their local markets and supply chains and brought solutions that were tailored specifically for a certain kind of market.

Like Xiaomi, Micromax is all about viral branding and has varied its products to include things like TVs.

It remains to be seen how Xiaomi, which does have a small but very dedicated following in India, will deal with Micromax and other companies that operate with similar claims to fame.

Xiaomi seems to be playing it cool. The company's head of operations in India, Manu Jain, told CNET that, "We don't focus on competition. The main objective of local manufacturing in India is to bring us closer to Indian consumers."

However, this is not one battle that Xiaomi, or for that matter, any phone manufacturer can back do wn from. It's like the Strategy Analytics report says, "No serious global hardware or software player can afford to ignore the huge Indian smartphone market today."

View gallery

.The Xiaomi Mi 4i is a flagship phone designed for India. Aloysius Low/CNET

Welcome to India

Xiaomi's move into India comes on the back of Indian Prime Minister Shri Narendra Modi's "Make in India" initiative. The initiative is one of Modi's economic reform plans and its purpose, basically, is to encourage companies, both foreign and local, to manufacture their products in India through a variety of incentives and benefits and targets sectors such as IT, automobiles, textiles and electronics.

"Manufacturing smartphones locally is a significant step towards incorporating Xiaomi into the fabric of India in the years to come," says Hugo Barra, Xiaomi's vice president.

"Thanks to Prime Minister Shri Narendra Modi's visionary plan to transform India into an attractive destination for manufacturing, we have a great opportunity to make our products in India, bringing us even closer to Indian consumers and contributing to India's evolution in the technology sector."

However, the actual manufacturing will be done by Foxconn.

However, the actual manufacturing will be done, as it is in Brazil and China, by the local subsidiary of Taiwanese manufacturing giant Foxconn.

The first Xiaomi phone to be manufactured in India will be the Redmi 2 Prime, an enhanced version of the company's entry level Redmi 2 smartphone, which retails for around $110 -- this converts to approximately £70 and AU$150 respectively -- and packs a Qualcomm Snapdragon 410 64-bit processor, 4G dual-SIM support, and a 4.7-inch HD display under the hood.

The phone will be sold, like most Xiaomi devices, through its online store and other e-commerce platforms like Amazon and Flipkart.

A spokesperson from Xiaomi told CNET that the company intends to eventually start producing a larger variety of products at the new Indian plant.

"We have great faith in young leaders and young companies like Xiaomi," said Shri Nara Chandrababu Naidu, chief minister of Andhra Pradesh. "These new generation companies and entrepre neurs will be key to the success of Andhra Pradesh and India."

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India

Source: The smartphone battleground of India -- and why Xiaomi wants in

Top 5 Smartphone Companies According To A Recent IDC Report

The recent data given out by the International Data Corporation (IDC) suggests 26.5 million smartphones to have been shipped to India in the second quarter of 2015, a significant 44% increase from 18.4 million units for the same period last year.

While smartphones are booming in India, the overall mobile market is, surprisingly, still contracting slightly. A grand total of 59.4 million mobile shipments in Q2 2015 is down on the 63.2 million units in the same period in 2014.

According to IDC, the significant growth in smartphone market may be due to the growing usage of ecommerce - both by consumers and some phone brands. Apparently, ecommerce has opened up additional gates for many vendors in India to easily reach the customers who would have otherwise struggled to get a hold in the complex distribution network.

Having said this, let us directly jump into India's top 5 smartphone companies according to IDC's recent reports.

Here's the top five at present:

1. Samsung

Samsung remained the leader in the Indian smartphone market despite experiencing a QoQ shipment decline while growing shipments on a YoY basis. The resultant volume growth YoY came from their phones in the affordable segment, such as the relatively new Galaxy J1, and older models such as the Galaxy Core.  Performance was not boosted by the first full quarter of sales for the new Galaxy S6 and S6 edge.

2. Micromax

Micromax made a comeback in 2Q15 with 60% QoQ growth. Even though its Android One phones and the Yu Yureka phones got off to a slow start, its other smartphones in the US$50-150 price segment, where it is traditionally strong, performed well.

3. Intex

Intex captured the number 3 position launching a slew of new models. It remains strong in sub-US$100 segment, which contributes to at least four-fifths of its overall volume. Also, it forayed into the 4G space with Aqua 4G Plus with a small initial volume.

4. Lava

Lava continues to feature in the top 5 of the India Smartphone business. Their recent investments on local manufacturing and their plans for the future make them a serious player in India.

5. Lenovo

Lenovo, as a group, is the only China-based OEM in the top five list in India. It captured 6% of the market as its Lenovo and Motorola brands continued to record strong shipments through its online channel partners. The entry level 4G smartphones, A6000 and A7000, initially exclusively available through eTailers, helped lift Lenovo in to the top vendor league in India.

As per the list, we may find that Xiaomi has been outpaced by its Chinese competitor Lenovo.

However, taking a leap forward, Lenovo and Xiaomi, two Chinese brands are the ones who have been benefited most from the current ecommerce scenario in India.

The IDC reports also says that all Chinese brands operating in India have tripled their shipments year-on-year in India and doubled quarter-on-quarter. Lenovo, Xiaomi, Huawei, and Gionee alone accounted for 12 percent of the total smartphone market in the second quarter – a figure that's doubled from a year ago.

While Xiaomi gets all the headlines, it's actually Lenovo that leads the Chinese firms in India. Lenovo is the sole China brand in the smartphone top five in India, according to the latest IDC report.

Tags : Top 5 Smartphones India, IDC, Micromax, Lenovo, Intex

Source: Top 5 Smartphone Companies According To A Recent IDC Report

Alibaba Growth Slows as China Economy Cools; Buyback Planned

Alibaba Group Holding Ltd.'s quarterly sales rose at the slowest pace in at least three years and transaction volumes missed analyst estimates amid a weakening Chinese economy. Shares fell.

Revenue rose 28 percent to 20.2 billion yuan ($3.2 billion) in the three months ended June, down from an average of 56 percent in the previous 12 quarters. The company also announced plans to buy back $4 billion of stock.

The slowing growth stems from e-commerce market saturation in China's larger, wealthier cities and the company's strategy of shifting to services over smartphones and tablets, which generate less revenue from ads compared with desktop computers. Investor confidence has been shaken, with the company's market value plunging $100 billion, amid a domestic economy growing at the weakest pace since 1990 and lawsuits over counterfeits.

"The growth slowdown will continue to be a problem going forward," said Li Muzhi, a Hong Kong-based analyst at Arete Research Service LLP. "Investors don't think Alibaba can uncouple from the overall slowdown in China, especially when the majority of its revenue still comes from within the country."

Alibaba fell as much as 7.9 percent on Wednesday to $71.23, heading for their lowest in 11 months. The shares have never traded below the $68 paid in September's initial public offering that raised a record $25 billion.

Slowing Economy

The e-commerce operator will purchase its shares over a two-year period, mainly to offset such dilutions as compensation programs, in its first buyback since listing.

Gross merchandise volume, which measures transactions on its Chinese retail marketplaces, rose 34 percent to 673 billion yuan in the quarter, short of the 38 percent growth expected by analysts.

That hasn't dulled billionaire Chairman Jack Ma's appetite for expansion. On Monday, he announced a $4.6 billion investment in Suning Commerce Group Co. to get more access to the electronics retailer's network amid intensifying competition with online shopping site JD.com Inc.

Ma is trying to diversify Alibaba's businesses while simultaneously tapping more of the 594 million Chinese accessing the Internet through smartphones and tablets.

The strategy includes expansion into entertainment, health care and location-based services, while pushing its own YunOS smartphone software.

"We manage our business and execute our growth strategy for the long term, and short-term movement won't affect our strategy," Chief Executive Office Daniel Zhang said during a conference call.

Overseas Efforts

Alibaba's overseas efforts have seen it start e-commerce sales in Russia, Brazil and India through AliExpress. Founded in 2010, AliExpress is the top shopping site in Russia and Brazil.

Alibaba named former Goldman Sachs Group Inc. partner Michael Evans as president this month to help its global push.

As China introduces policies that make it cheaper to import overseas goods, Alibaba is competing with JD.com to introduce more brands from the U.S. and Europe. Thousands of American products, including Converse Inc. sneakers and Procter & Gamble Co. toothpaste, are available to Chinese shoppers through Alibaba's websites.

As it deals with the slowing Chinese economy, Alibaba also battled criticism from the government. In January, a report by the State Administration for Industry & Commerce accused Alibaba of allowing merchants to operate without required business licenses, to run unauthorized stores that co-opt famous brands and to sell fake wine and handbags.

For more, read this QuickTake: Alibaba

Source: Alibaba Growth Slows as China Economy Cools; Buyback Planned