Bottom line: A new Pepsi-branded smartphone set to launch in China next week could get an initial boost from strong publicity, but will quickly fizzle due to lack of special features to distinguish it from others in the crowded market.
Pepsi phone coming to China
An entertaining new twist to China’s overheated smartphone story is coming from the soft drink sector, with word that global beverage giant Pepsi (NYSE: PEP) is preparing to enter a crowded space that hardly needs any new entrants. The headline looked somewhat strange to me, though nothing surprises me these days in a market where names like industrial equipment supplier Sany (Shanghai: 600031) and air conditioner maker Gree (Shenzhen: 000651) have all jumped on the smartphone bandwagon.
Such a bandwagon approach is quite typical for China, where local companies are always quick to join the latest trends even if they have little or no experience in the business. But foreign names are usually a little more savvy, and this particular instance was the first I could recall of a major foreign brand joining this kind of silly herd mentality that often ends in failure and big losses for the associated company. Read Full Post…
Bottom line: Huawei’s ongoing surge should help to consolidate its position as China’s leading domestic smartphone brand, while a newly formed cell tower operator will relieve China’s 3 telcos of the burden of owning and operating such assets.
New cell tower operator takes shape
The telecoms space is buzzing on both the operator and consumer products sides, with surging smartphone maker Huawei and a new cell tower operator called China Tower both rising in the latest headlines. The higher profile of these 2 telecoms headlines has Huawei continuing its rise to become the world’s third largest smartphone brand, stealing the title from the fading Xiaomi. Meantime, all 3 of China’s big state-run telcos have come out with one of their simultaneous announcements saying they have formally transferred their cell tower assets to China Tower.
This pair of stories is quite different, but the bigger picture is one of trying to improve by becoming more efficient and diverse. In the case of Huawei the company is trying to leverage its long experience in making telecoms equipment to diversify into the consumer-oriented smartphone space. In the second case, China’s telecoms regulator is trying to improve efficiency among the nation’s 3 stodgy telcos by doing something that carriers in the west did on their own long ago. Read Full Post…
Bottom line: Lenovo and Tsinghua Unigroup may be considering rival bids for EMC following a $67 billion offer from Dell, but will ultimately abandon any such plans due to high price and political sensitivities.
Unigroup, Lenovo eying rival bids for EMC?
As the blockbuster deal that would see faded PC giant Dell buy leading memory products maker EMC (NYSE: EMC) for $67 billion buzzes through the high-tech headlines, I thought I would look at 2 leading Chinese candidates whose names were noticeably absent on the list of companies that might make rival bids for EMC. China tech watchers will know I’m referring to local PC giant Lenovo (HKEx: 992), which has never seen an acquisition opportunity it didn’t like, and the more recently acquisitive Tsinghua Unigroup.
Both of these names could be interested in EMC for similar reasons, and each could theoretically make rival bid for the US company. Dell’s newly announced purchase of EMC would be one of the biggest-ever sales in the high-tech world, but also includes a 60 day period where others could make counter offers. Other names mentioned that could make such bids include the likes of IBM (NYSE: IBM), Cisco (Nasdaq: CSCO) and Hewlett-Packard (NYSE: HPQ), though sources say the chances of such a bid are slim. Read Full Post…
Bottom line: The bankruptcy of a major component supplier to ZTE and Huawei is the latest sign of stress in the overheated smartphone sector, and at least 1-2 small to mid-sized brands are likely to leave the market by mid-2016.
Smartphone price wars undermine parts maker Fosunny
Fresh new cracks are appearing in China’s smartphone making machinery, with reports that a major component supplier to Huawei and ZTE (HKEx: 763; Shenzhen: 000063) has gone bankrupt. At the same time, another report is citing bad weather for a supplier’s delivery delays that are causing Alibaba-backed (NYSE: BABA) smartphone maker Meizu to postpone the launch of a new high-end model.
The most worrisome of these 2 stories is the bankruptcy of Fosunny, a maker of metal casings used for smartphones. The company lists US wireless carrier AT&T (NYSE: T) and Europe’s Vodafone (London: VOD) among its customers on its website, but I suspect that both of those relationships come via third-parties like Huawei and ZTE that supply smartphones to those telcos. Read Full Post…
Bottom line: Apple’s new drive to sell legal music, books and video in China stands a reasonably good chance of success, banking on consumers’ growing willingness to pay for such products if they are convenient and affordably priced.
iTunes comes to China
Following the record-breaking debut for its iPhone 6s models, tech giant Apple (Nasdaq: AAPL) is taking a big new risk by attempting something no one has done yet successfully: making profits from selling legal music and movies in China. The move was part of a newly announced major expansion of Apple’s online store in its second largest global market. But while Chinese consumers have shown a big willingness to pay huge premiums for iPhones, it’s far from clear they’ll do the same for movies and music that they can usually download for free.
Apple sold a record 13 million iPhone 6s models worldwide in their first weekend on sale, easily beating the previous record of 10 million for the iPhone 6 models. China was an important factor in achieving the new record, since the iPhone 6 wasn’t available here during the first weekend of its global launch due to technical reasons. Apple hasn’t given any individual country figures yet, but it’s probably safe to assume it sold at least 3 million of the new iPhones in China during their opening weekend. Read Full Post…
Bottom line: Huawei’s new Nexus tie-up with Google could help Huawei make significant inroads to the US, and could see Google enter the crowded Chinese smartphone market by year-end.
Huawei, Google link up through Nexus
Just days after the launch of the newest iPhone, fast-rising Chinese smartphone maker Huawei will make its own renewed push into Apple’s (Nasdaq: AAPL) home turf through a highly-anticipated tie-up with Internet titan Google (Nasdaq: GOOG). This particular tie-up will see Huawei make one of the newest phones in Google’s Nexus line, in a tie-up that has been written about quite a bit already but is set for a formal announcement later on Tuesday.
That announcement would come just days after the launch of the newest iPhone 6s models, which broke records by selling 13 million units over their first weekend. Apple was able to break that record in no small part due to contributions from China, the world’s biggest smartphone market, which was absent in the last iPhone global launch due to delays for technical reasons. Read Full Post…
Bottom line: iPhone 6 sales are likely to start slow in China, but could pick up momentum as the nation’s 3 wireless carriers launch aggressive promotions to attract users for their new 4G services.
iPhone 6s in subdued China launch
As everyone awaits the first sales figures for the iPhone 6 after its launch last Friday, it’s becoming apparent that Apple’s (Nasdaq: AAPL) newest smartphone isn’t drawing quite as much buzz as earlier models in China. But that said, strong promotions from some of China’s leading e-commerce sites, a price that’s relatively unchanged from previous ones and the Chinese obsession with owning the newest of everything could work to the new iPhone’s advantage in the world’s largest smartphone market.
In case anyone out there can’t tell, most of us really have no idea how the new iPhone is selling in China for this latest launch, thanks to the huge number of sales channels Apple now has in the country. In addition to official Apple stores and the nation’s 3 wireless carriers, consumers can buy their new iPhones through thousands of unauthorized Apple shops, as well as through top e-commerce sites like the ones operated by Suning (Shenzhen: 002024) and JD.com (Nasdaq: JD). Read Full Post…
Bottom line: Xiaomi will lower its profile after a recent spate of negative publicity and intensifying competition, but could still stand a 50-50 chance of becoming a major smartphone brand if it executes well in its globalization strategy.
Xiaomi in new switcharoo scandal
Former smartphone high-flyer Xiaomi is quickly learning that a high profile is a double-edged sword, with word that it’s landed in the middle of a fresh new false advertising scandal. Xiaomi certainly isn’t the only company learning this lesson, as its recent downfall tracks a much louder crash at former e-commerce high-flyer Alibaba (NYSE: BABA).
No one is predicting Xiaomi’s demise just yet, and I’ve often said that co-founder Lei Jun is largely to blame for the recent fall due to the huge expectations he set for his company. But this latest news involving false claims for one of the newest models from Xiaomi’s low-end Redmi smartphone line will certainly bring the company down yet another notch in the eyes of investors and consumers. Read Full Post…
Bottom line: Qihoo’s settlement of its dispute with Coolpad could ultimately see the former buy out their joint venture, leaving the latter open to a takeover by LeTV.
Qihoo, Coolpad settle JV dispute
Security software specialist Qihoo 360 (NYSE: QIHU) and smartphone maker Coolpad (HKEx: 2369) have announced a settlement in the spat over their troubled joint venture, though this hardly looks like the end of an entertaining story that has captivated China’s high-tech world for the last few months. This kind of settlement seemed likely, after Qihoo tried to forcibly sell its stake in the joint venture to Coolpad over claims that the latter had violated an anti-compete clause in their agreement.
Qihoo and Coolpad formed their joint venture last year, and Qihoo made its complaint after Coolpad later formed another smartphone manufacturing partnership with online video company LeTV (Shenzhen: 300104) in June. Now Qihoo says it has settled its dispute by agreeing to boost its stake in the Coolpad joint venture to 75 percent, giving it clear control of the enterprise. Read Full Post…
A brewing spat between security software giant Qihoo 360 (NYSE: QIHU) and struggling smartphone maker Coolpad (HKEx: 2369) has provided some good entertainment for followers of China’s vibrant Internet sector over the last few weeks. The tale has all the elements of a good trashy romance novel, including a love triangle and vengeful scheming by China’s most famous Internet bad-boy.
But more fundamentally, the tale is also filled with valuable lessons for anyone doing business in China’s high-tech sector, or really in any of the country’s emerging industries where private entrepreneurs are driving the growth. The story’s biggest moral is to be careful when choosing your business partners – a lesson that many private investors have learned over the last 3 decades as China transforms from a socialist system to a market-oriented economy. Read Full Post…
Bottom line: The new iPhone 6S models will post lackluster sales during their first weekend in China, but could gain momentum later as the nation’s 3 mobile carriers launch aggressive promotions for their new 4G services.
High hopes for China with new iPhone launch
China has become a center of attention for Apple (Nasdaq: AAPL) these last few days, on hopes that the world’s largest smartphone market will help to power the latest iPhone to a record launch. Apple is being quite circumspect about the situation, saying only that global pre-orders for its new iPhone 6S and 6S Plus were “very strong”, ahead of their official September 25 launch date when they will become available in stores.
Analysts are saying they expect China to play an important but also muted role in the early stages for the iPhone 6S, accounting for as much as 15 percent of global sales in its first weekend. At the same time, another report is spotlighting discrepancies in iPhone 6S prices in different global markets. As usual the report shows that models in China will cost around 20 percent more than the the US, though Chinese prices will be comparable with Britain, France and Germany. Read Full Post…
