Earlier this month, IDC reported that the “latest worldwide smart connected device market, comprised of PCs, tablets and smartphones, is forecasted to grow 27.8% year over year in 2013, slightly lower than the 30.3% growth in 2012.”
These few percentage points of slowing, however, are not reflected in the fast pace of change with the top players in the mix. It has been a whirlwind in the last week or so. Apple and Samsung continue to rise, Microsoft plays the middle and BlackBerry is a now a bigger question mark.
The predicted growth from the market, according to IDC, will be driven by tablet and smartphone shipments. Plus, a new round of device cannibalization is also expected to kick in.
Large-screen (5+ inch) smartphones are beginning to impact the smaller (7-8 inch) tablet market. Bob O'Donnell, Program Vice President, Clients and Displays said in a release, "Over the next 12-18 months, however, we believe the larger smartphones, commonly called 'phablets', will start to eat into the smaller-size tablet market, contributing to a slower growth rate for tablets."
The phablet space has been a sweet spot for Samsung, and BlackBerry just entered the field with the Z30, but Apple is sticking to smartphones for now and Microsoft is lagging with its latest SurfacePro. How has each company played into the IDC forecast?
In his first ever Tweet on Sept. 20, @tim_cook said, “Visited Retail Stores in Palo Alto today. Seeing so many happy customers reminds us of why we do what we do.” He followed that up on Sept. 23: “Thanks to all our amazing customers for the fantastic weekend!”
He certainly has a lot to be grateful for: A record 9 million iPhones were sold the first weekend the iPhone 5s and 5c debuted. This crushed estimates, and dumbfounded the doubters on the Street. The result of such sales provided enough confidence, however, for Apple to give Q4 revenue guidance of $34 to $37 billion.
Along with the smartphones came a shortage and the operating system upgrade. The iPhone 5s in gold is in short, or non-existent supply. Apple’s site indicates an October ship date, Verizon says November and it’s unclear on AT&T.
This has led to speculation that the shortage was on purpose to create demand and mystique. Many news outlets have reported on the missing gold, tracking stores and carriers around the world. However, somehow, the devices have already showed up on ebay at astronomical prices ($4,000 “Buy it Now”).
On the other hand, there’s no shortage in iOS7 converts with 200 million downloads. Many organizations reported a spike in network traffic as the system was released. As with anything new, there are mixed reviews. At #iOS7, Tweets range from “still not feeling iOS7,” “confusing UI,” to “iOS 7 is so much better!” “it’s expanding what’s possible,” —plus there’s a ton of tips, tricks, secret features, bug reports and advice for both users and IT.
A recommendation from the NYPD to upgrade to iOS7 has gone viral. The news originated when Michael Hoffman (@Hoffm) tweeted that officers handed him a flyer dubbed a “Public Awareness Notice.” He Tweeted a pic flyer (typo therein included), which points out the new authentication security feature that renders the device useless without the associated Apple ID and password.
In other security matters, there have been reports of German hackers breaking the new fingerprint security on the 5s with a high-resolution image of the fingerprint. Yankee Group Senior VP of Research Wally Swain commented in a release, "The error is assuming that any biometric technique cannot be bypassed, particularly in a device that costs less than U.S.$1,000. The problem is expectations, not Apple's design.”
Apple stock rose about 5% as of close on Monday, Sept. 23. Earnings are slated to be released in a month. That call is likely to provide insight in the Apple’s plans for the holiday season as well.
BlackBerry: In or Out?
By contrast, BlackBerry sold approximately 3.7 million smartphones in the entire second quarter. Amid rumors of layoffs and its ultimate demise, the company confirmed a huge workforce reduction of 4,500 employees (a 50% cut), is looking at reducing operating expenditures also by 50% by Q1 2015.
Yet in the same week, BlackBerry also released a new device and app, and announced (Sept. 23) its acquisition by Fairfax Financial. This means that speculation will be abundant until the ink is dry. For the next several weeks, there is a diligence period in which other offers can be considered. The Wall Street Journal has already reported that the company’s co-founder and former CEO, Mike Lazaridis may be a bidder.
That case notwithstanding, going private could actually mean business as usual at BlackBerry without the eyes of the shareholders. In fact, Fairfax chairman and chief executive Prem Watsa said in a statement: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”
A new strategy was mentioned in the preliminary Q2 statement as well—a turnaround that would mean a return to the company’s roots—the enterprise. BlackBerry stated it had planned to refocus on the business market. The company talked enterprise all along, but most of its marketing in the last year was aimed at the consumer. This worked well for Apple and Samsung, but failed big time in BlackBerry’s case.
BlackBerry had also tried to balance the consumerization of IT by supporting iOS and Android management with BES 10, but the enabling of email on these systems did not prove compelling enough. And as touted during the May 2013 BlackBerry Live event, BBM for Android and iOS was announced as available through an app on Sept. 21.
However, in another misstep, the app was leaked just prior to rollout, which was then halted due to unspecified issues. According to a Sept. 22 Tweet on the topic: “@BBM We will provide you an update on timing as soon as we can. Teams are working non-stop. Sign up for launch alerts at http://www.BBM.com”
In support of a new/old approach, BlackBerry had planned to adjust its portfolio of with a future smartphone mix of six devices to four. The portfolio would focus on enterprise and prosumer-centric targeted devices, including 2 high-end devices and 2 entry-level devices in all-touch and QWERTY models.
To that end, it announced the debut of the BlackBerry Z30, a 5-inch device that plays into the opportunity of phablets that IDC identified. The BlackBerry Z10 would be re-tiered to make it available to a broader, entry-level audience.
The bigger issue and piece of the pie remained on the services side for BlackBerry. While it claims 25,000 BES 10 installs (including those in test mode), up by about 6,000 in July, that number is still a far cry from its former dominance.
Be that as it may, president and CEO, Thorsten Heins remained on course as of Friday, Sept. 20, at least in his talking points. He said, "Our enterprise business continues to reflect the trust that governments and businesses have placed in the BlackBerry platform. Security matters and enterprises know the gold standard in enterprise mobility is BlackBerry."
But that was last week, and tomorrow is a different day for the company. Most analysts do favor the private buyout, noting also that it should provide enough confidence for at least those 25,000 enterprises not to bail.
Samsung is Everywhere
Meanwhile Samsung is all over the place in its efforts to rule the market, launching devices of all shapes and sizes. The company is first of the four players to enter the wearables space. Mobile Enterprise was in attendance for the launch of the Galaxy Gear. Combining smart device connectivity and tailored technological features, the premium accessory lets users stay connected to their Samsung GALAXY devices.
Along with the “smartwatch,” the company added another signature piece to its collection, the Samsung Galaxy 3. “We introduced the original GALAXY Note in 2011 and launched a whole new smart device category. The undeniable success of the GALAXY Note strengthened our conviction that consumers want higher quality features for smart devices and they want those new features to make their lives better,” said JK Shin, CEO and President of IT & Mobile Division at Samsung Electronics in a company statement. This device offers a 5.7 inch screen and was designed for a premium experience.
Covering all bases, Samsung also launched a full size tablet this month—the Galaxy Note 10.1. Shin indicated that this device demonstrates Samsung Mobile's focus on “constant product innovation to stay aligned with shifting consumer interests.” Playing to the enterprise, the 10.1 includes KNOX and its secure container offering system-level protection against malware and phishing and hacking attacks. Plus the device offers enhanced content and collaboration features.
This all comes after a year that saw Samsung releases of the GALAXY S 4; the GALAXY Mega, with a 6.3 inch screen; the Galaxy Tab 3 7.0 and 8.0 (7 and 8 inch screens respectively); GALAXY Note 8; GALAXY S4 Active, which is IP67 certified to be water-resistant and dust-resistant; the Samsung Rugby III, a rugged flip phone; and the GALAXY S III mini, a more affordable version of a flagship device.
Samsung also opened its Executive Briefing Center back in June as part of its roadmap to dominate business. This is backed by its “Vision 2020,” a plan to go from $100B in 2010 (as that was the size of the company then) to $400B by 2020. The company is expected to make another enterprise-related announcement soon.
Outgoing Microsoft CEO Steve Ballmer met with financial analysts on Sept. 19 for the last time before his exit. When it comes to mobile, he said “we have almost no share.” He also added, “Anything we have low market share sounds like upside opportunity to me. “
Accordingly, the company announced the acquisition of Nokia, its top smartphone maker, on Sept. 3 and stated, “Microsoft aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing.” At the time, Ballmer called it a “bold step into the future.”
Prior to that (July 2013), the company had announced a restructuring , which would also ostensibly support mobile growth. The new horizontal approach will theoretically provide operating consistency across phones, tablets, PCs and even game consoles.
Yet, at this most recent meeting, the message was quite mixed. Ballmer said, “We must do the job to ensure that the PC stays the device of choice for people when they're trying to be productive in life. It doesn't mean that people aren't going to buy some tablets to be productive, but if you look at the bulk of the tablet market today it's moving actually to smaller tablets…Our device brand more than anything is brand Windows: Windows Phones, Windows PCs, Windows tablets. And we have to make absolutely clear to people what the value proposition is and by the way how they can also get some of those same high-value services on non-Windows devices, on iPads, on iPhones, on Android devices, et cetera.”
So is it PCs? Or tablets? Or mobile? Is it Windows or other OSes? Is it services or hardware? To Ballmer it’s everything. “We can lead with our enterprise services but our customers will require us to support other platforms, and we're doing so. Or we can lead with our devices, particularly in the consumer market, and even so if we want people to adopt our services there's a requirement that we support some other platforms…Windows is first, Windows can be best because we have the capability of doing so. But we're also eyes wide open and being I think pretty smart in taking a look in developing for other platforms.”
The next question, he said is around how well Microsoft will execute. That, of course, will be up to his yet unnamed replacement—information on which the Street was looking for during that meeting.
The SurfacePro 2, meant for business was released on Sept. 23, and this— not really a tablet and not really a PC— seems to be in line with what is currently considered important by the company. But as one analyst put it, “The Street is not really interested in that. What’s important about the Microsoft valuation will be the messaging the new CEO will deliver.”