Author: Tero Kuittinen

Apple and China Mobile have been locked in bitter contract negotiations for years. Apple wants the same kind of deal it has with Verizon or Vodafone. China Mobile wants something much, much sweeter. But as months slide by, Apple’s position weakens and China Mobile’s grows stronger. In April, China Mobile hit 730 million subscribers, growing by another 4 million subscribers in just one month. China Mobile is now adding more 3G subscribers per month than its smaller rivals China Unicom and China Telecom.

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The Lumia 520 is Nokia’s most important smartphone in 2013 — it’s the budget Windows Phone that is supposed to recapture low-end smartphone share in emerging markets. A bit of digging has revealed that India-based retailer ​Flipkart just hiked prices on the Lumia 520, which has been in and out of stock since launching in early April. The 520’s price had been 9,999 rupees since it first debuted, but has since moved to 10,299 rupees in late May. It is extremely rare for smartphone prices to bounce up two months after launching. Nokia’s Lumia 520 keeps selling out at Flipkart, India’s leading e-tailer site, even though its production should have ramped up strongly by now. Is this a sign of remarkably strong demand for the low-end Lumia, or a symptom of Nokia’s production bottlenecks?

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A leading Nordic beverage company, Olvi, just reported an 85% increase in soft drink sales and its impressive  growth is attributed almost entirely to the new range of Angry Birds sodas. This is one of the most tangible examples of how mobile game companies have started to have an impact on old industries, particularly in Scandinavia where franchises like Minecraft and Angry Birds have recently forged high-profile licensing deals.

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Obviously, estimating smartphone sales volumes is fiendishly difficult. BlackBerry beat the Wall Street consensus on BlackBerry 10 device shipments by 100% in the February quarter. Most hedge funds have long suspected that most “store check” research reports are crude hoodoo, particularly outside the United States. But now former London hedge fund analyst Michael Collins has published a very detailed piece on just how dreadful the quality of even top-tier Wall Street store checks can be. The target here is Brian Modoff, the telecom analyst at Deutsche Bank, and this is a particularly relevant smack-down because we are talking about a leading brokerage.

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American consumers are sleepwalking into being permanently locked to ever-rising phone bills from monolithic incumbents. This is exactly the scenario that the government tried to avoid when it broke AT&T into seven Baby Bells in 1982. In France, the average mobile bill is now dropping by $7 a year. In America, the average bills from AT&T and Verizon Wireless keep rising as operators force consumers into texting bundles and sneak in new monthly charges. European incumbent operators are facing a consumer revolt as millions of Europeans switch to cheap challenger operators every month. American incumbents have no fear; AT&T and Verizon have locked in 75% of the smartphone market and keep growing.

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It’s no surprise that AIM and Yahoo Messenger are collapsing, with unique visitor counts declining by about 30-40% year on year, according to comScore. But it is fascinating that Skype (-12%) and Google Talk (-15%) are now losing ground now. There is no doubt that Facebook’s messaging system is one major factor in the desktop messaging decline. Yet it’s hard to avoid the notion that the rapidly multiplying messaging apps on smartphones are the biggest headache for Skype right now.

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There are rumors about Wii U sales in North America slipping below 40,000 units in April. But it’s a fact that Wii U sales in its home market of Japan spiraled below 7,000 units during the week ending May 12. This is an atrocious level. The ancient PS3 sold 12,000 units and the portable console champ 3DS sold 46,000 units during the same week. The PS Vita sold 12,000 units and even its predecessor the PSP managed to top 6,000 units. This means that the closest sales comparison to the Wii U is a Sony portable console that was replaced by a newer model more than a year ago.

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It’s pretty fascinating that Facebook and Google debuted new messaging paradigms within six weeks of each other. Facebook Home’s one key feature is the prominent placement of its “chat heads” messaging alerts on the home screen. Google is launching a new messaging app particularly focused on group messaging. The debuts of these two initiatives fit within the same timeline: a sudden realization in 2012 that smartphone messaging had started evolving, followed by the feverish development of a new product that would finally launch in the spring of 2013. Facebook and Google are very much on the defense here. So what happened in 2012 that suddenly awakened these slumbering giants?

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The early reviews of Google Fiber are in from Kansas City and one of the most attractive features of the service seems to be how it makes Netflix irresistible. The buffering annoyances that consumers take for granted vanish as Google Fiber feeds movies and shows instantly to eager Silicon Prairie dwellers. What’s more, the recently launched Google Fiber TV app offers video on demand for iPad. This direction is fascinating because of the hottest trend in US consumer behavior: broadcast television audience collapse.

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Millenial Media, a leading mobile advertising platform, is out with another Mobile Mix report. It shows Amazon’s tablets gaining share in the mobile content market at a fairly dizzying clip. The Mobile Mix report is based on billions of monthly ad impressions and it offers an interesting glimpse of emerging trends in mobile content consumption. Perhaps the biggest bombshell is that Amazon is now hogging 28% of ad impressions served to Android tablets; just marginally behind Samsung’s tablets that get a 35% share. No other Android vendor has achieved double digits. The cheapo Kindle tablet strategy has helped Amazon to already vault to the top tier of the U.S. tablet market when it comes to content consumption.

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European governments are casting a baleful eye on the explosive smartphone and tablet growth. The problem for many Europeans lies in the way these devices promote vehicles for American entertainment — from Amazon and Netflix to Apple and Disney. The new proposal made by the president of France would slap a 1% tax on all smartphone and tablet retail sales, with a goal to protect “l’exception culturelle”. This exception is a concept France created in 1992 to defend protectionist measures aimed at preserving the cultural heritage of France.

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The PC market isn’t the only tech sector in trouble. According to Gartner’s new numbers, Asia-Pacific is the only region in the world where mobile phone volumes are still growing. Phone sales in the United States are now dropping at 9% annualized pace. Globally, phone volumes were practically flat in Q1 2013, inching up a mere 0.7% year-over-year. Smartphone growth came in at a torrid 43% during the quarter, several points above what was expected a few months ago. This contrast means that feature phone sales are in a real free fall. This is particularly clear in Latin America, where even the hot smartphone growth is not enough to prevent overall phone sales from declining by nearly 4%.

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When BlackBerry really began its tailspin in the summer of 2011, the reason was clear. Handsets in the new Bold lineup were too expensive for emerging markets and the cheap Curve phones were suddenly slammed by cheap Android competition. BlackBerry has known for years that its real problem is pricing. It was the Latin American demand shift for low-end Android phones that broke the company’s back two years ago. This is why it’s so puzzling that BlackBerry had chosen to kick off its comeback with two very expensive devices, the Z10 and the Q10. This in turn means that the vendor’s first budget device, the Q5, is absolutely crucial for BlackBerry’s future.

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Over the last 12 months, the NASDAQ has moved up by 17%, a respectable performance. However, most of the best-known hedge funds in the world continue lagging both NASDAQ and the broader S&P index woefully. The smartest investors in the world are having trouble matching index funds in both 2012 and 2013. Probably the biggest reason for this is the way smartphone-related stocks have underperformed. This was something that was extremely difficult to predict in early 2012. Not only has Apple tanked over the past year but other hedge fund darlings have also lagged behind NASDAQ: Omnivision, the camera module champion, is down 16% in a year and Qualcomm, the key phone chip vendor, is up by only 4%.

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Chinese smartphone shipments hit a heady 82 million units in the first quarter this year. This is more than three times the smartphone shipment volume in the U.S. market during the same period of time. These Canalys numbers dovetail well with Qualcomm’s regional 3G device shipment trends. Over the past year, Qualcomm has repeatedly lowered its North American device shipment estimates while hiking its estimates sharply in China and India. Smartphones are a narrower category than 3G devices, but by both counts Asia’s portion of global sales keeps rising faster than most people expected a few years ago.

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