Apple Inc.

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#31
Apple share of China smartphone mkt almost halved in Q2 - IDC

By Lee Chyen Yee

Fri Aug 24, 2012 4:59am EDT

(Reuters) - Apple Inc's share of China's smartphone market almost halved to 10 percent in April-June as buyers waited for the next iPhone model - expected later this year - or switched brands, data from industry research firm IDC showed on Friday.

China, Apple's second-largest market, is set to overtake the United States as the world's biggest smartphone market this year, with demand driven by generous handset subsidies offered by the three main carriers, increasingly tech-savvy consumers and more feature-packed and affordable products.

For the first time, smartphone shipments in China overtook feature phones in the second quarter, with local brands Lenovo Group Ltd and ZTE Corp pushing Apple to fourth place from second, the IDC data showed.

Total April-June smartphone shipments rose to 44 million, accounting for 51 percent of China's total mobile shipments of 87 million, IDC said.

"There are two things in play," said IDC analyst TZ Wong, referring to Apple's drop in ranking and market share. "One is seasonal, people know the new phone is coming. And the second is that the alternatives are becoming much more attractive than a year ago. The iPhone didn't change much over the year."

South Korea's Samsung Electronics Co Ltd retained its lead in the Chinese smartphone market with a share of 19 percent, though this was down from 21 percent in the previous quarter, according to the IDC data.

Lenovo, the world's No.2 vendor of personal computers which makes the LePhone, climbed to second place and increased its China market share to 11 percent from a single-digit percentage in the first quarter when it was ranked 7th, the data showed. Local rival Huawei Technologies Co Ltd ranked fifth.

Data from Gartner, another research firm, showed Apple's market share fell to 12 percent in the second quarter from 17 percent in the previous three months, though it kept its No.2 ranking, according to a report by Nomura Securities.

CHIPS FOR CHINA

U.S. chipmakers such as Qualcomm Inc have been trying to capture a larger slice of a booming market that has long been dominated by Taiwan's Mediatek Inc and China's Spreadtrum Communications Inc, by offering chipsets and solutions catered to Chinese vendors.

Recently launched Chinese smartphones packed with Qualcomm's Snapdragon chips include Huawei's G330D and Xiaomi Technology's MI2.

"It's such an important market because of the volume and the growth rate, which are so attractive for chipset vendors ... so we're seeing a lot of competition," said James Shen, Qualcomm's vice president for business development.

In the overall mobile phone market in China, which includes smartphones and feature phones, Samsung, Nokia and ZTE top the rankings for the second quarter, IDC said.

IDC's Wong said it was inevitable that Chinese brands would gradually gain more share due to their aggressive marketing and close ties with local carriers China Mobile, China Unicom and China Telecom.

"In the mid- to long-term, it's very possible they will start to dominate four of the top five (rankings), leaving Samsung as the only one standing. At that point, even Samsung will start to feel the pressure."


For worldwide smartphone market shares of the top 5 vendors for 2Q11 and 2Q12, please refer to the following article:

Strong Demand for Smartphones in Second Quarter Continues to Drive the Worldwide Mobile Phone Market, According to IDC

http://www.idc.com/getdoc.jsp?containerId=prUS23624612

IPhone sales per quarter

Note: the table is up to 2Q12 (end of June 2012) but not the chart

http://en.wikipedia.org/wiki/File:IPhone...simple.svg
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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#32
I would like to contribute a doubt, instead of a clarity Tongue

Technology stocks are always a sector value investor avoided, due to its market volatility and long term uncertainty. WB is well known for his avoidance of technology stocks. IIRC, He has started to invest on technology stock only recently, after decades of his career.

The doubt is technology stock is a different breed all together, which required additional if not different approach for valuation. The typical approach of looking into historical earning, PE, current market share, cash reserve etc might not be sufficient, or maybe totally off-track.

Don't ask me for answer. I am also looking for answer now. I had gotten clues by reading books, but i am still not able to re-structured a meaningful and convincing answer for myself

Pardon me to interrupt and divert the discussion Tongue
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#33
iPhone 5 has failed to excite me unlike previous launches.
Visit my personal investing blog at http://financiallyfreenow.wordpress.com now!
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#34
(12-09-2012, 09:50 PM)Musicwhiz Wrote: Hi Ser Jing,

Thanks for the detailed response - nice to read a well thought-through response, and frankly if I had more time to compile the numbers I would engage you further on Apple Inc. What I typed was just based on my basic understanding of Apple, cursory observations and anecdotal evidence. Of course, as people in this thread have mentioned, it may just be extrapolation bias for me to see friends/colleagues switching to Samsung. Also as mentioned by some others, the rise of Windows Phone and Android technology cannot be underestimated.

To cut a long story short, I would think that for a TTM PER of 16x, Apple would seem fairly valued. For comps, Google and Amazon are less of a phone company, and more of advertizing (their revenues I mean); and I am surprised Amazon is trading at 300x! Could it be a blip in earnings or some exceptional item which has depressed the earnings? Seems a little too "amaz-ing" (mind the pun).

Technically, Apple should be compared to its closest competitor in the phone cum tablet space, and that would be South Korea's Samsung. Samsung is trading at a PER of 11x - lower than Apple; and it is also growing market share and sales rapidly in the SEA region, including (I believe) China. While it is impossible to get accurate market share numbers unless one gets a report from Datamonitor or Euromonitor (which costs a bomb), I think one can probably infer from their respective segmental breakdowns on their potential in each country.

You said Apple provides just breakdown by continent, does Samsung provide that info as well? Would be good to compare Samsung and Apple on a same currency level (convert KRW to USD) and see the gains in revenues and net profit for both players over the last 3-4 years. Then we can see if the growth trajectory has been up and up, or bumpy.

Next step is we should coincide this with the release of new products from each company. Normally, I would anticipate a spike in sales once a new product is launched; so it would be good if one could map the revenues to their respective new product launches.

After all that's been said and done, why wouldn't Samsung be a better and more compelling buy than Apple, since it trades at a lower valuation multiple and is also targetting the SEA and China market? Smile


Hi Musicwhiz,

Amazon has always been trading at nose-bleed multiples. 300 is abit of a mile-stone for them, but its not due to one-off charges or exceptional items. Amazon's always reinvesting in itself - its just that Mr. Market pretty much loves Amazon. I actually like the company alot, its stock price.. not so much so.

Anyway, why would Samsung not make a better investment? The electronics arm of Samsung is too schizophrenic - like what KopiKat mentioned, they have businesses in DVD players, LCD TVs, computers, smartphones, tablets, and all kinds of other stuff. Some are losing money, some are making money.

Balance sheet strength is another issue - Apple's market cap is around $640 Billion USD with $120 Billion USD in cash and no debt. Samsung's market cap is around $169 Billion USD after conversion with $25.6 Billion in cash and $11.5 Billion in debt. Off-the-cuff calculations would show Apple's cash to be around 16% of Market Cap, while for Samsung, only 8%.

The more important thing for me would be 'is there a cohesive strategy for their electronic products?' Samsung looks to me to be quite a decent example of 'diworsification' for those who are familiar with Peter Lynch. Apple's products are all nicely tied in by their OS. This creates stickiness - I just saw a preview of iOS6, and it looks really cool to be honest. SIRI is still in beta phase and if done properly, is a huge addition to Apple's stickiness (even though anecdotally, people aren't using SIRI that much). So yes, I would prefer a company with a more cohesive product strategy over one that does everything under the sun.

As for the breakdown in geography, Samsung does not do that I think, at least from my cursory glance at their financial statements. So we can't really compare how well Samsung is doing in China vs Apple. Marketshare is only one measure - the more important one is 'share of profits'. Can't get that at the moment. If anyone has any info, please share!

That's all I have for now.

Cheers,
Ser Jing

(13-09-2012, 09:25 AM)FFNow Wrote: iPhone 5 has failed to excite me unlike previous launches.

The iPhone5's front profile looks almost the same as the iPhone4 and 4S - that was a little disappointing. I've never been personally excited about any electronic product release, so I can't give any personal experience. But from the community in US, the launch seemed to be pretty well received Smile

Cheers,
Ser Jing
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#35
Why Apple Could Finally Crack China Market With iPhone 5

Published: Thursday, 13 Sep 2012 | 5:41 AM ET Text Size By: Jean Chua
Writer for CNBC.com

For years now, Apple has been trying to rule the smartphone market in China. Its latest iPhone offering might just do the trick.
The breakthrough appears to be an imminent partnership with China Mobile [0941.HK 81.70 -1.10 (-1.33%) ], the country’s largest mobile service provider. Apple has been trying to sign a contract with China Mobile to sell its iPhones, but the tie-up has been held back due to incompatible technology.

The iPhone 5, however, has been built to support the frequency bands that China Mobile adopts for its homegrown 3G networks, paving the way for the deal to be inked by early 2013 — a development analysts say could double sales of iPhones in China.

According to HSBC, if China Mobile can convince its high-end users, or 4 percent of its total 683.1 million subscribers, to switch to the iPhone 5, that’s an additional 27.3 million smartphone sales for Apple [AAPL 680.52 10.73 (+1.6%) ]. The bank estimates that there are currently about 22 million iPhone users in China.

“It's going to mean a significant increase of Apple sales into China,” Tucker Grinnan, the bank’s head of regional telecom research, said on CNBC Asia’s “Squawk Box” on Thursday, adding that the development represents a game-changer for Apple in China.

Apple currently has a 10 percent share of China’s smartphone market, after Samsung Electronics, which dominates with a 19 percent share. Apple lost significant share in recent months due to competitive offerings from local players like ZTE [4063.SS Unavailable () ] and Lenovo [0992.HK 6.19 0.05 (+0.81%) ], according to research firm IDC.

Grinnan said Apple is on the right track taking a much more aggressive global rollout of its iPhone 5, which he describes as the “broadest launch of a new phone by Apple so far.”

“They're talking about reaching 100 carriers in 240 countries by the end of this year,” Grinnan said. "That's a much, much broader push. And countries like Hong Kong which in the past have not been in the first line of launch, are in this time around. So it does appear that Apple is significantly expanding the addressable base and China Mobile should be one of the top customers globally in the next year or two.”

Compatibility aside, the new iPhone offering also has features which appeal to the Chinese consumers, said Scott Sutherland, managing director of equity research at Wedbush Securities.

“What you get with the iPhone 5 are all these new features: Chinese language integration, social networking websites, Siri is going to be in Chinese, so again, they’re making a big focus on the software functionalities of this phone,” said Sutherland, which has a 12-month target of $885 for Apple’s stock.

While the addition of China Mobile to its carrier partners in China could have a "huge impact" on Apple's presence in China, according Melissa Chau, research manager at IDC Asia/Pacific, she believes the company's growth may be limited.

Existing users of Apple will likely convert to the iPhone 5, but the company will struggle to bring new customers on board, she said.

"If we are talking about new users, I think that’s where it gets a little bit tricky because for the new users, a lot of that market that is growing is actually in the lower-priced tiers," Chau said. "And with this device not coming in any cheaper than the (iPhone) 4s or 4, for that matter, it’s going to be hard for Apple to grow in that segment."
http://www.cnbc.com/id/49012945
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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#36
what really struck me during the recent iPhone5 introduction, was the appearance of Cook.

i thought he was unbelievably similar to Jobs - right down to the black top. I guess the fact is that the cult like status of Jobs is one huge intangible asset to Apple - and they are afraid of losing that.

i find it a turnoff that the new power adapter was not thrown in free. penny wise pounds foolish.

nonetheless, Apple will continue to bulldoze on out of pure momentum/brand loyalty/patrotism/switching costs/software superiority.

but i am starting to think of what happened to Sony....
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#37
The retail price of iPhone 5 seems to be S$980+ for the lowest end model. my guess is it's without contract. Don't you find it expensive?
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#38
Bibi think the 4gs was similarly priced w/o contract.
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#39
Apple launched iPad mini yesterday. Apple's late founder Steve Jobs once ridiculed a small tablet from a competitor as a "tweener" that was too big and too small to compete with either smartphones or tablets. The new management seems following a slightly different approach from Steve Jobs'.

Will the iPad mini as successful as previous iPad 1/2?
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#40
Samsung putting up full pages of advert in ST Saturday to promote Samsung phones/pads indirectly with punchline of "creativity". I assume it is the global strategy, instead of this region only

IMO, this is the effort to push Samsung phones/pads toward a tipping point, hopefully became sticky with Samsung phones/pads users. Samsung is the ONLY company which resourceful and innovative enough to compete with Apple, not only now, but also in future.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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