Chinese phones go global after pushing aside Apple, Samsung

SEOUL, South Korea — Move over, Apple and Samsung. The next big smartphone might be from little-known Chinese brands such as TCL and OPPO.

Along with other Chinese phone makers such as Huawei and Xiaomi, Chinese brands have surpassed Samsung in China and are encroaching on Apple’s turf. In the coming years, analysts forecast that these cheap Android phones with not-so-cheap features will likely attract more budget-conscious customers in Europe and even in Samsung’s and Apple’s home markets, South Korea and the United States.

Chinese phone makers made their global ambitions known at this week’s Mobile World Congress wireless show in Barcelona, Spain. Huawei and TCL vied to steal the spotlight from Samsung and LG, both of which announced new high-end phones at the show. Xiaomi, which typically launches phones in China, will preview the Mi 5 phone in Barcelona on Wednesday.

“The Chinese smartphone vendors have a very unique feature — it is the price,” said Shu On Kwok, editor of AndroidPIT, a website that tracks Android developments. “You get the same features as an LG or a Samsung smartphone has hardware-wise, but for a lower price.”

Samsung saw its market share decline in 2015, while Apple forecast its first revenue decline in over 13 years. Both will have to do more to prove the value of the extra dollars their customers pay.

Along with premium hardware, Apple has tried to position its products as unique by offering software, services and apps that work only on Apple devices — although in many cases comparable services are available for Android devices.

At Samsung’s product event Sunday, mobile chief D.J. Koh said “we have other ideas” beyond core smartphone features. Samsung, for instance, is promoting its Galaxy phones’ compatibility with a Samsung virtual-reality headset and an upcoming 360-degree camera. But VR is still in its early days, of interest largely to gamers and tech pioneers.

The Chinese brands have already taken their toll on Samsung. Although it’s still the largest smartphone maker in the world, Samsung is no longer among the top five phone makers in China, according to market research firms IDC and Counterpoint Technology. Profits from the mobile business have plunged to less than half of what it was in its heyday. Apple’s sales in China rose in the fourth quarter, but its growth was outshined by Huawei.

But bad news for manufacturers is good news for consumers.

Many of these Chinese companies sell decent phones for less than $200, compared with about $650 for an iPhone or high-end Samsung Galaxy phone. In other words, for the same price, customers can buy three or four smartphones with decent cameras and screens.

Chinese makers can keep prices low by reducing the profit margin and turning to cheaper components that are a year or two old. That means high-end phones still take better pictures and have sleeker, thinner designs. But phone innovation has slowed, and the advances appear marginal to many consumers. A Huawei photo taken in good light often looks just as good as an iPhone or Samsung shot when displayed on a small phone screen.

Melissa Chau, senior research manager at IDC, said Chinese companies are catching up on phone design and quality even more quickly than Samsung did a few years ago.

“Samsung was a fast follower in terms of innovation,” Chau said. “These Chinese players, they are even faster.”

And while these phone companies are pushing cheap phones, they are starting to succeed in getting customers to pay more — though still not as much as an iPhone or a high-end Galaxy. For instance, the average price for Huawei smartphones in China was $213 last year, up 21 percent from 2014, according to IDC.

Having succeeded in China, these phone makers are looking elsewhere to grow. OPPO, China’s fourth-largest smartphone maker according to IDC, is marketing aggressively in southeast Asia. Xiaomi already sells phones in Indonesia, Singapore and Malaysia.

At the Barcelona show, Huawei executive Adam Joshua said that while the company’s focus has been on emerging markets, it also has eyes on “the European market, Australia, and obviously the last big one, the U.S.”

Analysts said Huawei and Xiaomi will likely steal customers from Apple and Samsung in their strongholds as some budget-conscious consumers seek to upgrade their phones without financial pressure.

When South Koreans were just starting to buy smartphones, many upgraded frequently to get longer-lasting batteries, sharper cameras and larger screens.

Now fewer consumers care whether they have the latest technologies, said Oh Bong Yeon, a 38-year-old South Korean. They may even wait several months until the price drops. Although Oh has the iPhone 6, he said he would buy Huawei’s flagship smartphone if the company starts selling it in South Korea.

Raphael Rashid, 28, a British citizen living in Seoul, loves his Xiaomi Redmi Note 2, which his friend bought for him in China for about $120. Before Xiaomi, Rashid used a $150 Huawei smartphone for about a year.

“For a thousand dollars, I can get five new phones in the space of two years,” he said. “I’ll always have the latest phone.”

Much of the growth comes from consumers who feel comfortable buying phones directly from manufacturers online, rather than from the wireless carrier. In the U.S., consumers are just starting to warm up to direct online sales, especially as carriers stop offering discounts in exchange for two-year contracts.

Huawei is now the third-largest smartphone maker in the world. Its market share exceeded 7 percent last year, compared with less than 6 percent in 2014, according to IDC. That’s still far behind Samsung’s 23 percent and Apple’s 16 percent, but success doesn’t necessarily mean being No. 1 everywhere.

In fact, ZTE mobile chief Adam Zeng said the Chinese phone maker wants to be in the top three in selected markets — read that as No. 3 — and not necessarily worldwide.

And Xiaomi might have trouble expanding to established markets — particularly the U.S. — because of accusations it has copied or closely imitated designs from Apple and other companies. Phone manufacturers routinely sue each other in these markets, and Xiaomi will need to build up a portfolio of its own patents to defend itself.

Even if gaps remain in market share, IDC’s Chau said Chinese companies can at least close the gap in brand reputation in about three years. That’s partly because Apple and Samsung are struggling to stay cool.

She said that while Apple is still the premium brand in China, “it’s been around for a while and people are familiar with it. It lost the extra shine of being the new.”

source: technology.inquirer.net

Facebook’s Zuckerberg at crossroads in connecting the globe

SAN FRANCISCO — Facebook CEO Mark Zuckerberg likes to boast that his 3-year-old effort to bring the developing world online has reached millions of people in some of the world’s poorest nations.

But a central element of his Internet.org campaign was controversial even before it was shut down in a key market this month. Indian regulators banned one of the pillars of the campaign, a service known as Free Basics, because it provided access only to certain pre-approved services — including Facebook — rather than the full Internet.

That leaves the social media mogul at a crossroads. Though he has vowed not to give up, Zuckerberg hasn’t said whether he’ll alter his approach. Facebook declined to make executives available for comment. Zuckerberg could shed light on his plans when he speaks Monday at Mobile World Congress, an annual industry event in Barcelona, Spain, where he has touted Internet.org in previous years.

“Everyone in the world should have access to the Internet,” Zuckerberg wrote on Facebook this month, arguing that online connections can improve lives and fuel economic development.

To achieve that goal, Zuckerberg has high-flying dreams for someday providing Internet connections through a network of drones, satellites and lasers. But his near-term plan is simpler: Facebook works with wireless carriers in poorer nations to let people use streamlined versions of Facebook and certain other online services, without paying data charges.


While the drones may someday connect people in areas too remote for cables or cell towers, Free Basics is intended for people who live in areas with Internet service but still can’t afford it.

A low-income resident of urban Manila, for example, can use Free Basics to view thePhilippines‘ GMA News site. “He can be informed. He can research. He can read the news,” Ederic Eder of GMA News said.

The program varies by country, in offerings and effectiveness.

In South Africa, for instance, Facebook partnered with the third-largest wireless carrier, Cell C. But Johannesburg resident Priscilla de Klerk said she couldn’t get Free Basics to work on her phone.

“Cell C is much cheaper as far as everything else is concerned, but their free Facebook is not a reality,” she said.

Last fall, Facebook announced a major expansion in Africa, where another regional carrier, Bharti Airtel, said it will offer Free Basics in 17 countries.

“They’re getting a lot of traction in Africa,” said Danson Njue, a Kenya-based telecom analyst with the Ovum research firm. Tech rivals Google and Microsoft also have programs to expand Internet access, he noted, but their approaches are content neutral and involve extending networks to underserved areas.

Facebook doesn’t pay wireless companies for the cost of Free Basics. Carriers make money if new users eventually move to a paid data plan. Facebook also says it makes no money, as it doesn’t show ads, though Zuckerberg has conceded it benefits from gaining users in the long run.

While the company hasn’t released detailed usage figures, Facebook says Free Basics has brought more than 19 million people online for the first time. That counts any user who didn’t have Internet access before, regardless of whether they’re currently active.

On the Internet.org website, mixed in with videos about impoverished students using Free Basics to study and laborers starting small businesses, Facebook boasts more than 1 billion people “have access” to the service. That’s the combined population of regions where it’s available, not the number of users.

Free Basics is now in 36 countries. It was suspended last year in Egypt, on the anniversary of anti-government protests that were organized partly on Facebook. An earlier version of Free Basics, known as Facebook Zero, was shuttered three years ago in Chile, after authorities said Internet providers couldn’t offer discounts for accessing some content but not others.

Similar concerns turned India into the program’s biggest battleground.

Free Basics enrolled more than 1 million Indians in its first year, according to Facebook’s wireless partner, Reliance Communications. But critics, including many in the country’s growing tech community, complained it was a predatory scheme: If low-income users couldn’t afford anything besides Free Basics, opponents said, that meant Facebook was deciding which online services the nation’s poor could use.

“The government should not allow big players to monopolize the Internet,” said Manu Sharma, who runs a software development company in New Delhi.

Facebook responded last fall by announcing it would open Free Basics to any app that met its technical requirements for systems with limited capacity. Zuckerberg also changed the program’s name to Free Basics, after critics complained “Internet.org” sounded like a nonprofit, when it’s part of a for-profit company (the overall campaign is still called Internet.org).

But opponents still worry that Facebook could change requirements at any time, force competitors to pay higher rates to get into the program, or even block services that run afoul of powerful politicians.

“The fact that it could decide what apps could be hosted … was a huge problem for me,” said Basit Zaidi, a New Delhi attorney.

As Indian regulators began studying the issue, Facebook drew more resentment with a public-relations blitz that critics called heavy-handed and patronizing. The regulators effectively banned Free Basics after concluding Internet providers shouldn’t be allowed to charge different rates for certain services, because that discriminates against other content.

U.S. regulators have endorsed the concept of “net neutrality,” which says all websites and apps should be treated equally by Internet providers. They’re now studying whether “zero rating” programs, which offer some content for free, should be allowed. Net neutrality supporters are hoping India’s decision will influence other nations.

Facebook has also launched a program that helps Internet providers offer reliable Wi-Fi service in underserved areas at affordable rates and without limits on content. The program’s been limited to tests in a few countries.

The giant tech company could use its resources and clout with carriers to offer a similar wireless service, perhaps at limited speeds or volume, but without any restrictions on content, said Josh Levy of Access Now, a nonprofit that supports net neutrality. Zuckerberg has suggested in the past that such a service would be too expensive and difficult to offer.

Some Indians, meanwhile, say their country could have benefited from Free Basics.

“Ultimately, something is better than nothing, even if that something is flawed,” said Uday Singh Tomar, a software engineer in New Delhi. “If a person is hungry and getting nothing, a free meal is good enough.”

source: technology.inquirer.net