What a difference a year makes. It was almost exactly this time last year that smartphone sensation Xiaomi was king of the world, after closing a major new funding round that valued the company at a lofty $45 billion just 5 years after its founding. That was the last time Xiaomi boasted of its high valuation, and since then the company’s name has become more associated with marketing snafus, product delays and minor scandals involving issues like false advertising.
So it seems appropriate that Xiaomi is kicking off the new year with yet another new scandal, this one involving its air purifiers that were at the center of yet another scandal when they first launched about a year ago. This time the bad news is coming from Shanghai’s quality regulator, which says Xiaomi’s air purifiers fail to meet its standards. Read Full Post…
Bottom line: Huawei’s new move into notebook PCs could seriously challenge the existing establishment, and it could become a top 5 brand by the end of next year.
Huawei moves into notebook PCs
Telecoms giant Huawei is making a surprise move into the PC market, with word that it will launch a new line of notebook models next month using chips supplied by Intel (Nasdaq: INTC). The move would put Huawei into direct competition with leading PC maker Lenovo (HKEx: 992), as it aggressively expands beyond its older networking equipment business and diversifies into consumer electronics.
Huawei’s move into notebooks isn’t a huge surprise, since such products are increasingly similar to the new generation of smartphones where Huawei has found recent success. Huawei already sells tablet PCs, which perform many of the functions as notebooks as well. But the move does represent an entire new product area for Huawei, and is almost certain to put the company on collision course with Lenovo in their home China market. Read Full Post…
Bottom line: Competition will remain fierce in China’s smartphone market this year, as major players including Huawei and Xiaomi compete aggressively with newcomers like LeTV for market share.
LeTV sets ambitious smartphone goal
The sputtering Xiaomi and high-flying LeTV (Shenzhen: 300104) have become 2 of China’s first smartphone makers to announce 2015 sales figures, as broader industry data show just how crowded the field has become. Xiaomi’s first-look sales figures come in a microblog post from one of its executives, and show the company missed its 2015 sales target by around 10 percent. LeTV’s figures come from an emailed statement, and say the company sold a relatively modest 4 million smartphones last year following its entry to the space.
Then there’s the broader industry data that points out 7 of the world’s top 10 smartphone brands last year came from China. That report notes that among the top 10, only Samsung (Seoul: 005930), Apple (Nasdaq: AAPL) and LG (Seoul: 066570) were non-Chinese, and that a surging Huawei overtook Lenovo (HKEx: 992) to become the world’s leading Chinese brand. Read Full Post…
Bottom line: Google’s new alliance with Lenovo and its rare response to rumors Chinese media rumors are the latest signals of its plans to launch an app store and sell its Nexus smartphones in China later this year.
Google Tangos with Lenovo
Google (Nasdaq: GOOG) has been in the China headlines twice these last few days, announcing a new tie-up with local PC giant Lenovo (HKEx: 992) and issuing a rare response to the latest rumors on its slow march back to the world’s biggest Internet market. These latest signals seem to show that a return to China is almost inevitable for Google, which wants to avoid a negative publicity backlash that will inevitably come when it announces the move later this year.
Google abruptly shuttered its China search service nearly 6 years ago, after Beijing refused the company’s demands to ease strict Chinese rules that require all Internet sites to self-police themselves for politically sensitive content. The closure and acrimony that followed carried a healthy dose of self-righteousness by Google, and thus a return to a market it once scorned might seem just a tad hypocritical. Read Full Post…
Bottom line: Lenovo’s plans to turn around its struggling smartphone business lack focus and are likely to fail, which could ultimately result in the exit of longtime chief Yang Yuanqing this year.
Lenovo denies plans to change Motorola logo
Computer giant Lenovo (HKEx: 992) was busy showcasing its latest PCs at a major trade show last week in Las Vegas, but industry watchers were far more interested in the outlook for its struggling smartphone business. That’s because 2016 could easily become a make-or-break year for Lenovo, which desperately needs to turn around a smartphone unit that will be critical to its future growth.
In response to a flurry of questions focused on its smartphones, talkative CEO Yang Yuanqing said his company is making steady progress in the BRICS markets of Brazil and India, and that he’s aiming to set Lenovo back on an upward track in its home China market. Lenovo also announced a vague new smartphone partnership with Google (Nasdaq: GOOG), and denied any plans to jettison its the famous bat-wing logo for its recently acquired Motorola brand.Read Full Post…
Bottom line: Huawei’s move into the US smartphone market looks like a logical and necessary step to consolidating its place as a top global brand, but will require years of major investment to succeed.
Huawei to sell smartphones in US
Riding high on strong momentum from the second half of 2015, smartphone maker Huaweiis aiming to fill the last major black hole in its global footprint by entering the US. The new campaign carries special significance for Huawei, since the company was banned from selling its older networking equipment in the US several years back due to national security concerns from Washington.
The move into the US was just one of many topics that Huawei executives discussed at CES, the world’s biggest consumer electronics show taking place this week in Las Vegas. But it was the move the attracted the most attention due to Huawei’s past frustrations with one of the world’s biggest markets for both networking equipment and smartphones. Read Full Post…
Bottom line: ZTE’s new Suning tie-up presages an aggressive push into the China smartphone market this year, potentially helping it reach an aggressive target for 20 percent annual revenue growth over the next 5 years.
Suning buys into Nubia
Following a painful restructuring that wrapped up more than a year ago, telecoms stalwart ZTE (HKEx: 763; Shenzhen: 0000063) is heading into the New Year with a major new partnership with retailing giant Suning (Shenzhen: 000063), and a medium-term revenue target that looks quite aggressive. The signals reflect a new level of confidence at ZTE, which has returned to the profit column and is aggressively building up its smartphone business as a key plank for its future growth.
The smartphone business lies at the heart of the new tie up with Suning, which is buying a major stake in ZTE’s separately-run upscale Nubia brand. The bigger picture has a top ZTE official forecasting the company’s revenue will hit 200 billion yuan ($31 billion) by 2020, a 150 percent increase over 2014 levels. Read Full Post…
It’s official: the fast-rising Huawei has formally passed the 100 million mark for smartphone sales this year, cementing its place as the world’s undisputed third largest player behind only Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). In a relatively unusual move for this low-profile company, Huawei is also trumpeting the milestone in a formal press release and forecasting more strong growth for next year.
Huawei has been China’s biggest success story to date in the young smartphone space, gaining rapid momentum over a crowded field of domestic rivals that includes Lenovo (HKEx: 992), ZTE (HKEx: 763; Shenzhen: 000063) and smaller names like Alibaba-backed Meizu. But the company should also carefully watch the case of the stumbling Xiaomi, which was being called a homegrown Chinese version of Apple before it began its recent rapid fall from grace. Read Full Post…
Bottom line: OnePlus and Smartisan are 2 brands that could be most at risk for closure or acquisition in a looming smartphone shakeup that will intensify next year and claim at least 2-3 mid-sized and smaller players.
Less than 2 weeks after he talked about a looming shakeup in China’s overheated smartphone sector, OnePlus co-founder Carl Pei is having to explain layoffs at his company, and also fend off rumors of a takeover bid. At the same time, more signs of Pei’s predicted shakeup are coming from Smartisan, another newer smartphone play, whose manufacturing partner for its new model has reportedly gone bankrupt.
Both OnePlus and Smartisan fit the profile of the kind of company that Pei said would be most at risk in the coming shakeup. Each is relatively young, and both are pure smartphone plays without any other operating history. That means they have few other resources to fall back on as their profits evaporate in the unending price wars gripping China’s smartphone market. Read Full Post…
Bottom line: Next year’s likely election of a Taiwan president from its current opposition party could delay many of Tsinghua Unigroup’s pending Taiwan acquisitions, crimping its plans to build a Chinese chip giant using Taiwanese technology.
Unigroup buys into 2 more Taiwan chip firms
Barely a week seems to pass without news of a major new acquisition by Tsinghua Unigroup, the Beijing-backed company that suddenly seems intent on building a global chip giant able to challenge worldwide leaders like Intel (NYSE: INTC), TSMC (Taipei: 2330) and Samsung (Seoul: 005930). The company is once again in the headlines as we head into year-end, this time in new deals to buy stakes in 2 Taiwanese chip firms for a combined $2.1 billion.
These latest deals follow another major purchase in Taiwan last month, making it increasingly clear that Unigroup hopes to combine its own financial resources and government connections with Taiwan’s high-tech expertise to realize its chip-making dreams. That plan looks good in principle, since China and Taiwan are highly complementary and also share many cultural elements. But the plan could run into big problems next year, as Taiwan’s political landscape looks set for major change that could see the current China-friendly regime replaced with a more conservative government. Read Full Post…
Bottom line: New remarks by Taiwan’s likely new president indicate a flurry of recent new cross-Strait chip tie-ups could be delayed, but most are likely to ultimately get approved in a new era of more pragmatic cross-Strait relations.
Taiwan presidential candidate cautious on new China chip tie-ups
In a move that I predicted earlier this week, Taiwan’s likely next president is pouring cold water on a nascent series of tie-ups between its fragmented high-tech chip industry and cash-rich partners from mainland China. The latest reports cite Tsai Ing-wen, presidential candidate of the opposition Democratic Progressive Party (DPP), calling a recent series of planned Chinese investments a “huge threat” to the island’s large but also struggling semiconductor industry.
Even I was a bit surprised by the alarmist tone of Tsai’s comments, as I previously predicted that she was likely to call for a slowdown in the recent series of new deals but not an outright halt. (previous post) Beijing was also somewhat surprised, and a top official called on Taiwan not to politicize such commercial transactions. Read Full Post…
