Lenovo is making money selling handsets in China

via phonearena.com

Back in November, Lenovo CEO said it would take the company two to three more quarters before it showed a profit in China. The executive blamed this on the cost of marketing and building out a sales channel. But on Wednesday at the World Economic Forum in Davos, the company's CFO, Wong Wai Ming, said that China is already profitable for Lenovo when it comes to smartphones. The country is the world's largest smartphone market and over the last year, Lenovo has seen its market share in China soar from 1.7% in 2011 to 15% in 2012. The stunning rise has allowed Lenovo to capture the second largest slice of the Chinese smartphone market. Research firm Gartner predicts that Lenovo will surpass Samsung in 2013 to be the number one smartphone manufacturer in the country.

Analysis: Apple sounds warning bell for smartphone industry

via reuters.com

In developed markets, every other person already owns a smartphone. In emerging markets, penetration rates are much lower, but cheaper phones that cost under $100 are squeezing profit margins.

That was not the case during the last recession, when Apple's iPhone and Google Inc's Android were still in their infancy. Smartphone demand remained strong even as sales of other electronics declined because consumers felt it was worthwhile to upgrade to a device with so much to more to give - touchscreens, email and full Web browsers.

Without a technology breakthrough such as touchscreen - made popular by the first iPhone in 2007 - people are in far less of a hurry to upgrade their phones this time around, analysts said.

That was evident from Apple's June quarterly results, which showed a much bigger hit from the European debt crisis than Wall Street expected.

"The economy is having an impact on all electronic goods. Even Apple, which did defy gravity in the last recession, is not escaping now," said Hudson Square Research analyst Daniel Ernst.

Smartphone users, who typically upgrade their phones every 18 to 24 months, are now holding on for three months longer than usual, according to Gartner analyst Carolina Milanesi.

"The reason to upgrade is less urgent" she said.

PRICE PRESSURE

Overall smartphone shipments rose 32 percent in the second quarter, their slowest pace since 2009's 16 percent increase, according to Strategy Analytics. The research firm forecast annual smartphone shipment growth would slow to 40 percent in 2012 from 68 percent in 2011 and ease further to 23 percent in 2013.

Analysts say demand from emerging markets will support smartphone shipments even if the global economy takes a turn for the worse, but a growing supply of lower price devices from vendors such as Huawei Technologies Co Ltd and ZTE Corp will pressure prices even if the economy improves.

"We're forecasting ASPs (average selling prices) to dip in 2013 and accelerate from there on," said Strategy Analytics analyst Neil Mawston. "If the economy continues to flat line or dip that will accelerate the move to lower cost models."

The popularity of Apple's iPhone and Samsung Electronics Co Ltd's Galaxy S will give these companies some pricing insulation, analysts said.

But there could be much more pressure for price cuts at already struggling smartphone vendors, such as LG Electronics Inc, HTC Corp, Nokia Oyj and BlackBerry maker Research In Motion Ltd.

"Apple and Samsung's ownership of the high-tier and intense price erosion means the fight among others will be cutthroat," said CCS Insight analyst Geoff Blaber.

The tough road ahead for smaller vendors became more apparent this week, when market leader Samsung reported its best quarterly smartphone sales in history as it outsold Apple and won customers from smaller rivals. Samsung's bigger size allowed it to drive down costs and still make a profit on phones that would generate a loss for smaller rivals.

Some of Apple's earnings miss was attributed to consumers postponing purchases in anticipation of a new iPhone model hitting store shelves this fall. LG did not have that excuse - its cellphone division, which accounts for around one-fifth of sales, posted a quarterly loss as competition forced LG to spend more on marketing for cheaper phones.

LESS PURCHASING POWER

According to Gartner, about 35 percent of an estimated 1.9 billion cellphones sold this year will be smartphones. Between 20 percent and 25 percent of people in the world already own smartphones, with the penetration rate rising to 50 percent to 55 percent in the United States.

"The first wave is selling expensive models to affluent buyers. The second wave is selling lower cost models to less affluent buyers," Strategy Analytic's Mawston said.

Gartner's Milanesi said Huawei and ZTE are in the best position among the lower-tier smartphone vendors.

"If price is the first driver I'm going to pick the Chinese," said Milanesi, who said LG and HTC are most vulnerable to price declines as they "need more to stand out."

Also putting pressure on handset makers are the wireless service providers on which they are heavily dependent in many regions such as Europe and the United States for promotions. Carriers often subsidize phones to encourage their customers to commit to long term contracts.

In Europe, some operators such as Telefonica have been dropping subsidies entirely. The top three U.S. operators, Verizon Wireless, AT&T Inc and Sprint Nextel Corp have all been improving profit margins because they cut down on their subsidy costs by offering customers upgrades less frequently.

If consumers do have to cut spending because of the weak economy, IDC analyst Ramon Llamas said: "There's smartphone available for just about every single budget out there."

HTC talks smartphone design: from inception to final product -- Engadget

At the Frequencies media summit in Seattle over the last two days, HTC walked us through the fine details on how its smartphones are developed, going from the boring rectangular ABS block to the more refined plastic mockups that are presented to carriers and focus groups -- the findings of which then shape the final product. Sadly, we weren't allowed to take photos of the One X mockups that were shown to us, but do read on to learn the general process of how an HTC phone goes from inception to the final product.

An HTC phone starts out somewhere between four months and a year before reaching to the ABS block mockup stage. During this time engineers figure out the next best way to put the phone together, as well as finding the best weight and the best components for certain models, so that the actual size of them feel good in our hands. In the US, HTC talks to carriers to find out what technologies (such as chipsets, displays and radios) they want to enable, as well as learning what size, appearance, feeling and functions their customers are asking for. HTC has even conducted smartphone deprivation studies to see what features the participants missed the most: phones were taken away for two weeks, and during the period people had to document what they missed about their smartphones, as well as noting whether they had found other ways to do what they'd normally do with their phones.

When asked about whether we will see the QWERTY keyboard in future HTC devices, design firm One & Co's Claude Zellweger didn't seem to be a fan:

"As a company on the QWERTY keyboard we're sort of moving away from them in general."

But there's still hope. In response to whether there's still room for QWERTY keyboards in HTC's lineup, Claude said his team's just waiting:

"I think the market's there, the sort of the diehard community, they keep wanting it, there's definitely still a market for it. We feel that putting too much effort in that would take away from our main focus, being a whole-screen device. I think people recognize the trade-off with size. There are a couple of technologies that we are waiting to sort of mature that could make a big bump suddenly in the evolution, that we are looking at very closely."

We also discussed battery life and competing phones that come with physically larger batteries (especially the Droid Razr Maxx), but Vice President of Phone Strategy Bjorn Kilburn claims that for most customers going into the shops, power consumption is not on the top of their lists. In fact, HTC claimed it tested a large battery concept with selected customers and carriers last year, but it didn't sell. It turns out people just prefer thinner phones (or at least initially they do), and therefore HTC chose to take a holistic approach to improving battery life through power management optimization, choice of power density, choice of voltage and many more. HTC's preference to wired charging over the comparatively slower wireless charging also helps reduce phone downtime, of course.

With the sets of basic specifications and features set in stone, HTC's engineers can then offer the right phone sizes that meet the carriers' requirements, as well as showing a relatively bland rectangular ABS block as an indication on how much space is needed to pack all the components. From then onwards, the designers join in and work with the carriers to boil down to a few phone ideas, the best of which are then presented to focus groups in the form of refined mockups. In these sessions, HTC doesn't just listen to what the participants want more or less of, but it mainly observes what people do with the mockups in their hands, as well as studying their emotional feedback. By the way, on average these mockups cost about $3,000 to $5,000 per unit, and to get one phone arranged in the US, HTC could easily accumulate up to $50,000 worth of mockups for that one phone alone!

Sometimes HTC also throws in some super bright colors to get some feedback from focus groups, and one time it even had a "you've got to be joking" reaction from carriers over a recent pink prototype. Claude didn't outright dismiss the color, but he's not keen on the idea of a pink One X:

"Pink can be done right, but I don't think it's right to take a hero device like that and just turn it pink."

We as customers don't see that many color options from HTC, anyway -- it's mainly black, gray and white these days. There are a few reasons for this: for starters, there are certain colors that HTC has to avoid, particularly those that are associated with US carrier loyalty -- blue to AT&T, red to Verizon and yellow to Sprint. Obviously, it'd be difficult to convince the carriers to pick up a device that comes in a competitor's color; though there are certain exceptions, like the red highlight on the primarily-black EVO 4G LTE on Sprint. Another exception is the purple MyTouch 4G on T-Mobile, which was the first color that sold out.

HTC's Product Strategy Manager Eric Lin personally thinks that purple and cyan are two colors that do really well, especially them being popular accent colors on sneakers from the more stylish brands; but these are only for people who are in touch with style enough, and there's not that many people. In response to a question on HTC seemingly favoring white devices over time, Eric pointed out that with more men owning smartphones than women, the color really helps open up smartphones to women, even if the phones are larger than what the women would normally consider (like the One S vs the One X, as he observed in a focus group -- many women eventually chose the latter for the white option). Of course, the purple Rhyme was a different example but with a similar goal -- it was a special project where Verizon wanted to see if it could make a phone that'd get away from the hyper-masculine Droid aura, and the color was chosen through studies. Can't say that was a successful attempt, though.

Then there's the personal image: HTC suggests that a lot of people want their phones to be their symbol of success, which means the phones themselves need a professional look, so glossiness and bright colors aren't for everyone. However, as you may have seen in our hands-on already, HTC's colorful cases for the One X should take care of some of the minority while also letting the majority protect their phones.

So these are some the key points in the long process of design development of an HTC phone, where engineers and designers push each other to uncomfortable realm, before eventually delivering the near-final product to Peter Chou for his ultimate test on the size, feel in hand, feel in pocket and even the ringtones. If you need more convincing on how much of a hands-on CEO Mr. Chou is, here's some video proof starring him and Chairwoman Cher Wang -- just go ahead and skip to 1:47:

via engadget.com

Canalys: Android rules the smartphone world, Samsung could've done better

via engadget.com

Thought Android was killing it in the US? Try the rest of planet Earth, bud. The latest from our friends at Canalys has Google's mobile OS on 48 percent of smartphones worldwide, or nearly one out of every two sold. Mountain View's stratospheric rise came at someone's expense, and it looks like Nokia's the loser here folks, which corroborates the data from last week's IDC report. Espoo's foibles are troublesome in a market that grew 73 percent year over year, especially when Samsung shipped 421 percent more handsets than it did a year ago. As a result, the Korean company has surpassed Nokia in smartphone marketshare, just like its rival in Cupertino. Despite the rampant growth, the research firm suspects Sammy could have done better, noting that it had failed to capitalize on Nokia's "weakened state around the world" with its "global scale and channel reach." We'll see if Samsung takes Canalys' constructive criticism to heart in Q3, but while you wait, you can read the full report after the jump.

Introducing America's Newest Disfiguring Disease: Blackberry Neck

via gawker.com

Did you know that spending too much time looking down at your Blackberry and texting is going to give your neck ugly and unsightly wrinkles? It's true! It's called Blackberry Neck. Says who? Well, the lady who came up with the treatment to fight Blackberry Neck.

Joanna Czech, an aesthetician in Manhattan, concocted the Blackberry Facial, which is an exfoliation treatment consisting of "a neck cleansing, a peel with sapphire stones, another peel, a hydrating serum, and then some lymphatic drainage." Then there is 20 minutes of weird light and electricity shot through the neck which is followed by an oxygen mask. The whole process takes about 45 minutes, and sounds more like creating the Bride of Frankenstein than something that happens at a spa.

So it wasn't enough to worry about our weight and complexion, tennis elbow and swimmer's ear, carpel tunnel and iPhone knuckle (when your pointer finger gets jammed when dialing), now we have to worry about Blackberry Neck, too? This sounds like one of those things that didn't even exist until there was a supposed cure for it. Ladies: Save your money and don't worry about treating your Blackberry Neck. Chances are you're going to die from the brain tumor the damn thing gave you before it looks that bad anyway.

The cutting edge HP Pre3 smartphone

Mixing business with pleasure has traditionally been frowned upon. Today’s business world, however, requires professionals to stay connected 24 hours a day, seven days a week. And not just connected to business e-mail, but also to personal e-mail, secure corporate networks, professional social networks, personal social networks and to the Internet. In addition to staying connected, mobile productivity and the ability to multitask are essential to efficiency. But what device can truly support these demands? Introducing a cutting-edge smartphone from the US that meets all of your needs: the HP Pre3.*

True multitasking functionality
The HP Pre3 smartphone is loaded with the HP webOS, putting the “smart” in “smartphone”. The HP webOS works the way you do. For example, begin an e-mail, pause to answer a call, check your calendar, send a text, then switch back to your e-mail without closing anything. Pre3 lets you easily manage multiple open applications and notifications, using natural touch gestures.

The HP webOS takes the hard tasks out of everyday work and optimises business functionality by logically organising your workflow. Keep multiple apps open at once and easily switch back and forth between them. Plus, HP webOS lets apps share information with each other, simplifying your life. Additional products that run on HP WebOS include the HP TouchPad tablet and the HP Veer 4G.

One device that brings it all together
With so many accounts to manage – such as Microsoft® Exchange, Google calendars, LinkedIn and Facebook – staying on top of them all can be a real challenge. The HP Synergy feature on the Pre3 brings together messages, contacts and calendars from different sources, accounts and platforms, so everything’s where it should be.[1] The information automatically populates the phone and stays updated, so it’s always at the user’s fingertips. The e-mail inbox can be customised to view all accounts together or separately, and folders that are used most often can be marked as favourites for faster access. Users can separate business and personal e-mail inboxes on the HP Pre3 smartphone if they choose to, but there’s no need to have separate devices for business and personal use. Now, with the HP Pre3, business professionals can send important e-mails, touch base with old friends – and remember their kids’ birthday parties.

Beauty to match its brains
The HP Pre3 is as stylish, comfortable and easy to use as it is functional. The large screen and portrait layout enable optimal readability for e-mail, attachments and Internet browsing, and the vertical slide-out wide keyboard helps ensure quick and comfortable error-free typing. The HP Pre3 offers the best of both worlds with an intuitive combination of vivid touchscreen and large keyboard – and all this in a compact design. It’s ideal for heavy e-mail and messaging needs, Internet browsing, enjoying multimedia and for staying in touch with business and social circles.[1][2]

Designed for the speed of business
In today’s demanding business world, it’s important to have a device that can do it all. The HP Pre3 also includes more business essentials such as video calling, noise-cancelling speakerphone, wireless charging, HD video shooting, access to thousands of apps and Microsoft Word® and Excel® file viewers. Plus, it enables users to have a real Internet experience on a mobile device.

Real web experience
The Internet browser on the HP Pre3 smartphone isn’t a mobile browser that only shows text or watered-down versions of websites. It displays full HTML sites just like on a computer and allows users to perform tasks such as stream video, upload photos and online banking. Experience the web the way it was meant to be. With support from the Adobe Flash® Plugin 10.1, flash-based games, videos and other rich interactive content are all accessible through the browser.

The HP Pre3 smartphones enable for powerful mobile productivity while seamlessly bringing users’ worlds together on a single sleek device, connecting them to those worlds 24/7. A mobile device isn’t solely for business use and multitasking doesn’t only apply to the workplace. The HP Pre3 systematically allows users to mix business with pleasure. And thanks to the latest HP WebOS, the HP Pre3 does more to simplify the busy days in the lives of business professionals and enables them to get more done.

Find out more:

• HP Pre3
• HP webOS