UPDATE: After publishing this earlier this morning, a source in Barcelona informs me that Oppo is indeed attending and is holding a press event to show off their newest products. Headline and photo caption changed to reflect Oppo’s attendance, but the rest of the original post remains the same.
Bottom line: The absence of Oppo and Vivo from the world’s top telecoms trade show in Spain this week reflects their overwhelming reliance on China sales, while Xiaomi’s absence from the show could be a cash conservation move.
Vivo, Xiaomi absent from top telecoms trade show
Most eyes from the telecoms world will be focused on Barcelona this week, where an annual show that’s arguably the world’s most important for smartphones is taking place. That seems like a good opportunity to look at who from China’s crowded smartphone arena is attending this year’s Mobile World Congress (MWC) in Spain, even though I’m personally not at the show.
Attending the event is by no means cheap, which is probably why some companies may choose the skip the affair. But the decision to attend or not does provide some insight as to what companies are thinking, since you would expect anyone with truly global aspirations to make an appearance at this showcase for the newest telecoms products. Read Full Post…
Bottom line: Ofo and rival Mobike will use their hundreds of millions of dollars in new funds to buy better and more expensive bikes to flood city streets, even though neither has a sustainable business model that can justify such long-term expense.
Ofo raising $150 mln in new funds
The race for supremacy in China’s fast-moving shared bicycle realm is kicking into high gear, with word that second-place Ofo is raising $150 million with an eye on achieving a $1 billion valuation. That would come just a month after sector leader Mobike raised a larger $215 million, in a deal that also valued the company at about $1 billion.
Readers may note that I’ve called this particular contest a “dead-end race”, because I really do think there’s no winner here. That’s because I honestly believe this business is based on a model that won’t work, especially in China. The reality here is that a lack of public spirit means that many people simply use bikes and then carelessly discard them without much thought about whether they might be damaging those bikes or putting them in places that effectively take them out of circulation. Read Full Post…
Bottom line: Xiaomi stands a better than 50 percent chance of stabilizing this year and reversing its 2-year-old decline, based on its push into brick-and-mortar retailing and positive reviews for its newest higher-end model.
Xiaomi builds up brick-and-mortar presence
Blame it on the Internet. That seems to be the message coming from Xiaomi, the smartphone maker that’s in a bit of an identity crisis, trying to explain its rapid descent over the last 2 years following a meteoric rise in 2014. A couple of other reports are also saying the company is preparing to roll out its own processor later this year, and have charismatic chief Lei Jun criticizing rival Huawei for lacking the “internet sensibility” needed to succeed in the online era. Read Full Post…
Bottom line: Lenovo could reverse its smartphone decline this year under a new leadership team anchored by a respected company veteran, though chances of success are relatively low due to stiff competition and magnitude of the task.
Lenovo nets former Samsung smartphone exec
My first post in the new lunar Year of the Rooster seems like a good time to look at the ultra-competitive smartphone market, and what may lie ahead for the embattled Lenovo (HKEx: 992) as it seeks to regain its footing in the space. CEO Yang Yuanqing has made repeated overhauls of his mobile devices division, including the naming of longtime executive Gina Qiao to try and turn the division around late last yaer. Now the latest reports are saying that Qiao has made one of her first big moves in that post by hiring an executive from rival producer Samsung (Seoul: 005930). Read Full Post…
Bottom line: Xiaomi’s poor handling of a case involving malfunctioning fitness bands in the US is unlikely to erupt into a crisis, but shows how unprepared the company is for moving into PR-savvy western markets.
Xiaomi wristband suffers from bad race relations in US
Smartphone maker Xiaomi just can’t seem to catch a break in the final days before the Lunar New Year. Earlier this week the company made headlines when Hugo Barra, its prized foreign catch who was heading its global expansion, announced he would be resigning and returning to his home in Silicon Valley. Now the latest negative headline is also coming from the US, where media are reporting that blacks are complaining that Xiaomi’s wristband-style fitness tracker doesn’t seem to work for people with dark skin.
It does seem somewhat coincidental that this pair of negative items have occurred in the same week, since Xiaomi has largely fallen from the top news pages these days. If we wanted to say that bad news comes in threes, I could even mention another more significant headline saying Xiaomi’s share of the global smartphone market fell to 3.7 percent last year from 5.2 in 2015. (press release) But that’s a story for another day. Read Full Post…
Bottom line: The departure of former Google executive Hugo Barra from Xiaomi marks the end of a chapter for the smartphone maker, which stands only a 50-50 chance of surviving over the next 5 years in the cutthroat market.
Xiaomi’s Barra heads back to US
The world was all abuzz in 2013 when Hugo Barra suddenly gave up his cozy position as a high executive at Google (Nasdaq: GOOG) to join a then-little-known Chinese smartphone maker called Xiaomi. Gossip swirled that his departure might be linked to a high-powered love triangle, even though the more obvious explanation was that Barra was leaving to join one of the hottest companies in the world’s hottest emerging market.
Fast forward to the present, where Barra has just announced his resignation from Xiaomi, citing health reasons, among other things. Lots was read into Barra’s original move, so it seems appropriate that we look for similar symbolism in his sudden departure after just over 3 years on the job. We should also look at what the future holds for Xiaomi, whose star has faded considerably since Barra first joined the company. Read Full Post…
Bottom line: Xiaomi could return to growth mode in China this year on the strength of stronger models, while Huawei’s local market share will contract as it focuses on profitable sales and backs away from money-losing businesses.
Huawei meets reduced smartphone target
Two of China’s former smartphone leaders are in the headlines going into the weekend, casting a spotlight on the difficulties these past high-flyers face after becoming king of the world’s biggest market. In one story the faded Xiaomi is saying the worst is behind it, and the company is aiming for a relatively ambitious 100 billion yuan ($14.5 billion) in sales this year.
In the other, the still-buoyant Huawei is announcing its smartphone sales rose an impressive 29 percent last year. But that figure is still below its earlier target, and also is being revealed just a week after the company said it was abandoning its older model of growth at any cost. Accordingly, I expect we’ll see sharply slower growth this year for Huawei in China, as it looks for profitable gains over simply getting more market share. Read Full Post…
Bottom line: Chinese smartphone brands with local production are most likely to survive upcoming price wars they are exporting to India, while Nokia’s new smartphones are unlikely to make any inroads in China over the next 2-3 years.
China exports smartphone price wars to India
A case of deja vu is rapidly shaping up in India, where Chinese smartphone makers have flocked over the last two years in search of growth outside their overheated home market. In this case media are reporting that Chinese brands have surged to take half of the Indian market by dumping millions of their cheap look-alike Android phones into the country.
Meantime back in their own home country, nostalgia has become the word of the moment with word that Nokia (Helsinki: NOK1V) has officially re-entered a market it once dominated. Nokia joins a number of other faded brands to rediscover China, including former arch-rival Motorola, which has become the smartphone flagship of the brand’s current owner Lenovo (HKEx: 992). Read Full Post…
Bottom line: ZTE’s move into smart cars and Gome’s into smartphones follow a typical Chinese pattern of herd mentality investing, and are both likely to fare poorly.
ZTE buys car maker Granton
A couple of headlines are shining a spotlight on the herd mentality you often see among Chinese companies looking for the next big growth opportunity. One of those has telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063) buying a small bus maker, parroting a trend among a growing number of firms who see the future in smart vehicles. The other has the increasingly irrelevant electronics retailer Gome (HKEx: 493) rolling into the smartphone business, an area in desperate need of consolidation due to cutthroat competition. Read Full Post…
Bottom line: Xiaomi’s Singles Day sales show it’s still dependent on low-end models for its smartphone business, while Tencent shares could be set for a pause as it celebrates adulthood with its 18th birthday.
Tencent turns 18
After a couple weeks’ hiatus, I’m returning to the blogosphere with one item from last week’s Singles Day shopping extravaganza, and another from one of the few major Internet companies that was absent during that festival. In the Singles Day headlines is word from Xiaomi that it topped the list for most sales by a smartphone maker during the shopping fest. Meantime, media are noting that social networking giant Tencent (HKEx: 700) has just celebrated its 18th birthday by announcing it will give out 300 of its shares to each employee. Read Full Post…
Bottom line: Huawei may have lost its top position in China’s smartphone market in the third quarter, while Xiaomi’s new model with a screen that takes up the entire front surface could bring some buzz back to the company.
Huawei loses ground in China smartphone race
A trio of smartphone headlines nicely summarize the rapid changes constantly gripping the space, where today’s superstar can become little more than a footnote in just a year. The latest rising superstar Oppo is leading the headlines, with a new report saying it overtook Huawei to become China’s smartphone leader in the third quarter. Meantime, former market leader Xiaomi is also in headlines as it rolls out a new intriguing model in a bid to regain its former glory. Last but not least is the faded ZTE (HKEx: 763; Shenzhen: 000063), one of the industry’s oldest players, which is changing smartphone chiefs in its own bid to find new relevance in the tough market. Read Full Post…
