China Smartphone Glory Days Are Over as Apple, Xiaomi Face Tough Times

China Smartphone Glory Days Are Over as Apple, Xiaomi Face Tough Times

China’s smartphone boom may be over, as even Apple Inc grapples with a slowing economy and investor darling Xiaomi Inc struggles to stand out amid intense competition in low-margin handsets.

On Tuesday, Apple reported the slowest-ever increase in iPhone shipments as the Chinese market weakened. That slowdown in the world’s second-largest economy is threatening to hamstring consumption across the country.

Xiaomi, China’s most valuable startup with a $45 billion (roughly Rs. 3,06,047 crores) pricetag, is under threat, after it missed targets for $1 billion (roughly Rs. 6,801 crores) in Internet service revenue and also handsets sales in 2015.

As China’s economy grows at its slowest pace in a quarter of a century, the country’s once booming smartphone market has become saturated. For vendors whose products have become commoditised and make little to no profit, that doesn’t just mean the years of easy growth are in the past, but that it could be a struggle to keep their heads above water.

(Also see:  Apple Says It Has Over 1 Billion Active Devices Worldwide)

“The large growth rates that we saw in years past are definitely much different now,” said Bryan Ma, analyst at IDC, which predicted China’s smartphone market will grow at 1-2 percent this year. “In theory it could slip below zero this year, but either way, it’s relatively flat.”

Last year, IDC estimated it grew 2 percent. From 2011 to 2013, the market on average more than doubled in size each year.

Xiaomi’s Internet services revenue surged 150 percent to CNY 3.71 billion ($563.94 million or roughly Rs. 3,834 crores) from CNY 1.48 billion a year earlier, an internal document reviewed by Reuters showed.

xiaomi_phone_reuters.jpgA spokeswoman for Xiaomi declined to comment on revenue for 2015.

Like peers such as Apple, Beijing-based Xiaomi is trying to sidestep a slowdown in the world’s largest handset market by coaxing smartphone buyers to also purchase Internet services and opening stores in China’s less wealthy cities.

The firm has grown rapidly since it started in 2010. But Xiaomi’s valuation has been questioned recently as the firm has struggled to maintain its early growth surge.

Xiaomi missed its global shipment target by 12 percent, selling 70 million handsets last year, when domestic rivals such as Lenovo Group Ltd and top player Huawei Technologies Co Ltd countered at home with similar Internet-only device sales campaigns.

“Given that Xiaomi’s valuation has always been based on the company being more than a commodity handset manufacturer, missing their services revenue goal by such a significant margin is even more concerning than missing their handset target,” said Ben Thompson, a tech analyst at Stratechery.

Now it’s a question of whether Xiaomi can grow that revenue fast enough to prove its critics wrong, Thompson said.

The company encapsulates the risks of a vendor like Samsung Electronics Co Ltd in recent years, who can’t build a moat for their business.

“The only way to win with an undifferentiated product is having a superior cost structure and scale,” said Thompson. “Samsung did it, and now Huawei is doing it. ‘Win’ is all relative though, if you’re making a couple of bucks in profit per phone.”

[“Source-Gadgets”]

No Need to Fret, Apple Is Doing Fine

No Need to Fret, Apple Is Doing Fine

Let’s get this out of the way first: Despite what you may have heard, the iPhone is not dying. Neither, by extension, is Apple.

It’s true that in an earnings report Tuesday, after weeks of speculation by Wall Street that iPhone sales would finally hit a peak, Apple confirmed the news: iPhone sales grew at their lowest-ever rate in the last quarter. And the company projected total sales of as much as $53 billion (roughly Rs. 3,61,532 crores) in the current quarter that ends in March, which would be a decline of 8.6 percent from last year and Apple’s first revenue drop in more than a decade.

But if Apple is now hitting a plateau, it’s important to remember that it’s one of the loftiest plateaus in the history of business. The $18.4 billion (roughly Rs. 1,25,518 crores) profit that Apple reported Tuesday is the most ever earned by any company in a single quarter.

(Also see:  This Is the Biggest Threat to Apple’s Business Around the World)

It’s necessary to start with these caveats because people have a tendency to react strongly, almost apoplectically, to any suggestion of weakness on Apple’s part. Like pickles, cilantro and Ted Cruz, Apple inspires extreme opinion. The doubters are now ascendant. Apple’s share price has fallen more than 11 percent over the last year, in stark contrast to gains by the other four American tech giants.

So this column will try to do something tricky: explore what’s ailing Apple without going off the deep end. And after talking to several observers who watch the company closely, here’s my ice-cold take:Apple is doing quite OK.

Could it be doing some things better? Sure. Are any of its problems urgent? Not particularly, and from what one can tell, it’s working to address many of its shortcomings. Does it face existential threats? Yes, but no more than any other tech giant. Will it remain an outsize presence in the tech industry for years to come, generating profits on a scale that no other corporation can match? Almost certainly.

(Also see:  Apple’s iPhone Success May Be Reaching Its Peak)

“I’m not worrying about Apple in 2015 or Apple in 2016,” said Ben Thompson, an analyst who runs the site Stratechery, and who questioned Apple’s far-off future in a recent piece. “I’m thinking about the arc of Apple from 1976 to Apple in 2046. The iPhone era has been the pinnacle of everything that Apple does best. Anyone fretting about Apple right now is totally overstating it. But if I look out 10 years, 20 years, each of Apple’s advantages starts to fade.”

I’ll get to those long-run worries in a bit, but let’s start with the present. At the moment, Apple’s biggest problem is its own success. The iPhone turns nine this year. The iPad turns six. These devices have made Apple the world’s most valuable company (until Google’s parent company, Alphabet, overtakes it, which might happen soon).

Apple’s iPhone business is now so huge it sounds almost fantastical – Apple books more revenue from the iPhone (about $154 billion or roughly Rs. 10,50,534 crores in its last fiscal year) than Amazon,Facebook, Google, Microsoft, Hewlett-Packard or IBM generate from all of their operations. Two-thirds of the world’s countries have gross domestic products smaller than annual sales of the iPhone.

Yet the very dominance of Apple’s aging mobile empire inspires doubts about its future. The bigger the iPhone gets, the harder Apple has to work to beat its previous milestones, and the more vulnerable it appears to some fatal technological surprise.

The primary criticism of Apple’s recent performance is that it’s doing too much, and as a result, the general quality of its products has slipped. Related to that is the notion that Apple has lost some of its innovative and design magic. It has put out a larger-than-usual number of features and products that have failed to thrill reviewers. As Gizmodo put it in a headline summing up 2015, “Everything Apple Introduced This Year Kinda Sucked.”

Apple still does noteworthy new things, but I can understand Gizmodo’s frustration. The Apple Watch is a work in progress. Apple Music and Apple News feel awkward, far less pleasant than dedicated music-streaming and news apps that have long been available in the app store (like Spotify and Flipboard). The Apple TV offers little I couldn’t get on other devices, and its remote is heroically unfriendly. And 3D Touch and Live Photos, the new features in the latest iPhone, are nice but not groundbreaking.

But there’s something worth keeping in mind about each of these criticisms. They’re the gripes of a technophile, and they don’t necessarily reflect mainstream consumer perceptions about Apple’s products.

“Most of these critics are those who spend most of their time in this world of Apple analysis, so of course they’re hypersensitive to their devices,” said Horace Dediu, a fellow at the Clayton Christensen Institute, a think tank, and an analyst who follows Apple at his site, Asymco.

Dediu said customer satisfaction data showed continuing love for everything Apple sold. Almost everyone who has purchased an Apple Watch loves it. The same is true for iPhones and iPads. Apple’s crash logs show that its software isn’t getting buggier, contrary to what heavy users might think. “And people have short memories – they forget that the first iPhone was also full of bugs, that things in the past weren’t perfect,” he said.

Dediu is one of a chorus of analysts who argue the iPhone is far from its peak. With incremental improvements to the device’s interface and capabilities, Apple can add more than enough to keep people hooked to its devices. He calls the current peak in sales a “localized peak” – a blip from which Apple will soon emerge. In a piece last fall, I echoed this theory that the iPhone can’t lose; so has Thompson.

But if continued growth sounds like wishful thinking, there’s another path for Apple to prosper even if iPhone sales do hit a wall: Suck more money out of each phone. In a note to clients last fall, analysts at Goldman Sachs suggested that through a widening number of subscription services baked into the iPhone, Apple could begin to reap a huge monthly fee from its users, which it said constituted “the most lucrative installed base in the world.”

It’s an argument Apple executives are starting to vocalize loudly. On Tuesday’s earnings call, Tim Cook, Apple’s chief executive, said the popularity of the iPhone provided the company a “long-lasting foundation.”

Apple’s ecosystem is so sticky that people tend to flock to its services even if there are better products out there. Even if I’m not a fan, 10 million people have subscribed to Apple Music in its first six months.

Given all these options for minting bullion from the iPhone, the most alarming worries for Apple aren’t about the present. They are about the future beyond the horizon, and they are necessarily speculative.

The basic question is this: In the future, will physical devices matter less than they do now? If computers are more like the machines in the movie “Her” – ethereal, ambient computers that exist in the cloud, that respond to our voices and our bodies, anticipating our desires – what will happen to Apple then? This is a company whose entire existence hinges on the cultural appreciation of physical things. Can it prosper in an age of ambient computing?

These are interesting questions to pose. I had a long conversation with Thompson about these ideas, and Apple’s apparent weaknesses – how it’s not as good at artificial intelligence and voice recognition as Google, how it lacks the cloud infrastructure that Amazon has built, and how, most important, its entire corporate culture is geared toward making actual stuff, which could limit its capacity to create fantastic online services.

But ultimately the discussion felt academic. It seems obvious that as the tech world changes around it, Apple, over the next decade, will need to reinvent itself. But so will everyone else. That is just what you do in this industry.

[“Source-Gadgets”]

VLC Media Player for Apple TV Launched, Brings Remote Playback and More

VLC Media Player for Apple TV Launched, Brings Remote Playback and More

The widely-used VLC Media Player is now also available for the Apple TV, which runs a customised version of iOS called tvOS. Much like its client on the other platforms, VLC’s Apple TV app offers playback of a plethora of video and audio file codecs and formats. In addition, the app can also pull videos from your local network, DLNA servers, FTP servers, and Plex.

It hasn’t been long since Apple started to sell its new Apple TV, and the platform has already attracted a lot of developers — it has over 2,600 apps in its dedicated app store as of December last year. On Tuesday, VideoLAN announced that it is bringing its popular media player VLC on Apple’s TV box.

(Also see: VLC arrives on Chrome OS)

The goal of the player is to run any media file you throw at it. This should make Apple TV customers happy as they no longer have to convert their files into a format that the Apple TV natively supports. But that’s not the only highlight of the app.

VLC for Apple TV also lets you watch your local content using SMB, UPnP and Plex protocols. But more importantly, the app offers support for remote playback, which means that you can send your file directly from a Web browser or an app to your Apple TV and it will run it.

Furthermore, the developer team added that it is working on adding support for popular cloud services such as Dropbox, OneDrive, and Box into the app soon. The feature is already available on the VLC beta app for Apple TV.

You can find the app on your Apple TV by searching for VLC in its App Store.

[“Source-Gadgets”]

Apple to Start Charging for iTunes Radio

Apple to Start Charging for iTunes Radio From January 28

Apple said it will soon start charging for iTunes Radio, its music-streaming service that competes with Pandora Media Inc.

iTunes Radio, which was announced in 2013, will no longer be free from the end of January, Apple said in statement.

The ad-supported service, available only in the United States and Australia, will be folded into Apple Music, which costs $9.99 (roughly Rs. 675) a month.

Beats 1, the global 24/7 radio station, will now be the free music option for listeners.

Apple may also have plans to introduce more live streaming Beats radio stations to Apple Music. Recently filed trademark applications reveal the company’s intention of adding four more radio stations to the music streaming service. Beats 1 radio is one of the headline features of Apple Music.

The speculation of the new Beats radio stations revolves around the company applying for trademarks with the US Patent and Trademark Office (USPTO) covering names and logos of Beats 2, Beats 3, Beats 4, and Beats 5.

Apple Music in December was reported to have more than 10 million paid subscribers. The achievement comes roughly six months after the company released its app for iPhone and iPad, and roughly two months after it released a beta version of the app on Android. To compare, Spotify had 20 million paid subscribers as of last June.

Citing people familiar with the matter, the Financial Times reported that Apple’s music streaming service has hit the 10-million paid subscribers milestone. The impressive figure shows Apple Music’s quick adoption and Apple’s reach, as Spotify, presently the most widely used music streaming service has 20 million paid subscribers as of June 2015. It took the company six years to reach the 20 million figure. Spotify hasn’t revealed an updated figure since.

[“source-gadgets”]