• This is the second successive year where Nokia phones lead the global rankings in providing the fastest software and security updates with the highest share of portfolio recommended for enterprises.
• Nokia phones lead across the price tiers in providing the fastest software and security updates; Nokia phones are also joint first in providing the latest software updates across their portfolio.
• Nokia phones also lead in build quality by applying tougher tests than the industry average.

 Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

October 27^th, 2020

HMD Global, the home of Nokia phones, leads the Counterpoint Research 2020 trust rankings based on the four pillars of software, security updates, build quality, and devices recommended for enterprises. These pillars comprise various weighted criteria with a comparative analysis done for the leading Android smartphone brands. The findings are a part of Counterpoint Research’s latest whitepaper titled “Nokia Phones Lead the Trust Rankings based on Software, Security Updates and Build Quality”

Highlighting the whitepaper findings, VP & Research Director, Peter Richardson, noted, “The COVID-19 pandemic has made the world even more digitally connected than before. With smartphones being devices that are always-on and connected, they are more vulnerable to cyberattacks which are growing both in frequency and severity. This makes software and security updates for Android smartphones an critical aspect. Due to the pandemic, there have been changes in the work environment with many more people working remotely. This situation calls for an enterprise-grade security solution for data security, to block malware, and to prevent things like phishing attacks. For the second year in a row, Nokia phones have topped our rankings in providing the most comprehensive software and security updates and it has the highest share of portfolio recommended for enterprise use. The performance of Nokia phones continues to be a competitive advantage over the rest of the smartphone brands in the Android ecosystem. 98% of Android smartphone brands still offer inconsistent software and security updates or none at all. OnePlus also did well by providing faster software updates to all its devices currently selling in the market followed by Samsung and realme.”

Exhibit 1: Android OS Version Share within Key OEMs’ Portfolio

* Models older than three years not considered, Android Go variants not a part of the study

In a crowded smartphone market, every manufacturer is trying hard to differentiate its offering from its competitors. From design and build quality, to screen size and the number of cameras, a lot goes into this effort to differentiate. The software that the smartphone runs on is also an important consideration. Consumers should expect it to be updated regularly to ensure that potential security vulnerabilities are kept at bay and new features are delivered as they become available.

Commenting on the performance of smartphone brands, Global Content Manager, Ritesh Bendre, highlighted, “Some brands focus on keeping their products up-to-date, while others only issue software and security updates after a considerable delay. Regular software and security updates helps not just the overall device experience, but also helps devices retain their value over time. Surprisingly, there are top 10 smartphone manufacturers that don’t have any clear strategy to inform customers whether their devices are eligible for security and software updates. We think this issue will become increasingly important as consumers keep their smartphones for longer and rely on them more. Nokia and OnePlus devices have done well here.”

Exhibit 2: Security Patch Frequency Share for Top Manufacturers

* Models older than three years not considered, Android Go variants not a part of the study

Commenting on build quality results, Associate Director, Tarun Pathak commented, “The build quality pillar was evaluated on several criteria including product robustness, force measurement, drop and impact, fatigue, wear and scratch, thermal tests, moisture and liquid tests, and others which included both qualitative and quantitative observations. We found that Nokia phones undergo tougher tests than the industry average. We therefore concluded that, when considered alongside the faster software and security updates the strong build quality means Nokia phones will last the test of time which is increasingly important at a time when global device replacement cycles are getting longer, now approaching 30 months.”

Exhibit 3: Nokia Phones Go Through Tougher Tests Than Industry Average

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

For a free downloadable copy, click here:

Analyst Contacts:

Peter Richardson

Tarun Pathak
 

Ritesh Bendre
 

Counterpoint Research
press(at)counterpointresearch.com

Related Posts

1. Nokia Leads the Global Rankings in Updating Smartphone Software and Security
2. Nokia Phones Lead the Trust Rankings Based on Software, Security Updates and Build Quality
3. Nokia's Revival: Is the Finnish Vendor Already Benefiting from Huawei's Absence?
4. Nokia: First Incumbent to Offer O-RAN Compliant Interfaces?
5. Software and Security Updates- The Missing Link for Smartphones

The post Nokia Phones Lead the Trust Rankings appeared first on Counterpoint.

For Reliance, it will help it resolve mounting debts; Reliance Industries Limited (RIL) has consolidated net debt and liabilities of $46.2 billion, which it wants to get rid of by 2021.

For Facebook, teaming up with the largest telco in India hints at a different path to scale-up its India footprint.

These are the key areas we think this partnership will have an impact on:

Powering JioMart and scaling it across India

With its recent announcement of JioMart, Reliance had made its ambitions clear in the field of commerce. JioMart is a Reliance attempt under its “new commerce initiative” to launch an O2O model (Online to Offline) which will connect the local grocery retailers directly with the consumers and replace the cash rich business model.A deal with Facebook means that connections with consumers can be stronger.

Beyond metros, WhatsApp is the only familiar name for a lot of merchants and consumers when it comes to social interactions. Millions of small merchants use WhatsApp as a primary medium to receive grocery orders – but it’s an inefficient medium for e-commerce. Various studies show that most grocery retail in India is poorly organized and Jio is looking to empower over 30 million local kirana stores across the country.

Let me illustrate by way of recent experience. I am currently in a small district of Northern India where users are unfamiliar with online grocery websites like Grofers or Big Basket. However, due to social distancing amid the COVID-19 crisis, the local kirana guys are already proactively calling users to submit their orders on WhatsApp for delivery outside the gate. This highlights the potential scale of the opportunity for Facebook and Jio; WhatsApp brings the familiarity and Jio enables connectivity to even rural parts of India. Other synergies are likely to be explored related to payments like Jiopay or WhatsApp Pay and localized POS machines for Jio, making buying ads more valuable for Facebook.

Social + Commerce = Social Commerce for SMB (Small Medium Businesses)

There are more than 60 Million SMBs in India. A lot of businesses are selling their products in India without even having a website. Many are relying on platforms like online marketplaces, Facebook pages, WhatsApp and Instagram to promote their products and services. These businesses are likely to grow to become the mainstay of the e-commerce sector in India in the coming years. In fact, Facebook was already eyeing this space to monetize WhatsApp in its recent attempt to invest in Meesho, an online marketplace that connects sellers with customers on social media platforms such as WhatsApp.

We believe that e-commerce will change in India when the next 300 million connect to the internet for the first time over the coming years. E-commerce will demand a more localized approach and help niche sellers in the discovery of their products, as both companies can leverage their expertise through AI-based solutions and connect directly with consumers.

Everyday millions of products are listed on Facebook/Instagram pages. Facebook has long been working to enable e-commerce with Instagram Shopping and Facebook Marketplace, but the initial response has been modest. We believe a big advantage for Facebook lies more in facilitating commerce than taking a native e-commerce route, at least in India. During the last earnings call, Mark Zuckerberg highlighted some important points, including mentioning SMB as a top priority.

“Beyond WhatsApp Payments, we’re working on several other efforts to help facilitate more commerce, from Facebook Marketplace to Instagram Shopping to our work on Facebook Pay or our work on Libra. This is such a big space and it’s important for empowering people so we’re taking a number of different approaches — ranging from people buying and selling to each other directly, to businesses setting up storefronts to people engaging with businesses directly through messaging, and a number of things on payments, ranging from using existing national systems like India’s UPI to creating new global systems”

This sums-up Facebook’s ambition and, in an ideal world, this is how it should be for Facebook; control the platform from discovery to payments to delivery. This will eventually give Facebook an important metric to support advertising, tying directly to a transaction.

WhatsApp Pay, Facebook Pay and Jio Pay will get major push

Additionally, as Facebook’s and Jio’s e-commerce ambitions take off, it will be their payment platforms that will get a push especially when Jio has not been entirely successful with its Jio Money and Facebook’s WhatApp Pay, which has been waiting since 2018 for permission to roll-out its full-fledged services,, despite the platforms having 388 million and over 450 million subscribers, respectively. This is where using WhatsApp’s reach and entrenchment will catalyse digital commerce initiatives.

To summarize, Facebook and Jio will try to leverage each other’s user bases by driving synergies between the two platforms to target over 500 million users which they might currently share among both the platforms and target the next 300 million new internet users over the coming few years. Of Facebook’s assets, we expect it will be WhatsApp that will take center-stage; this may turn out to be Facebook’s attempt to finally monetize WhatsApp.

The biggest area of contention is likely how the data-sharing will happen; both companies are sitting on a gold mine of data. Roles and responsibilities are currently unclear. Facebook will look forward to strengthening its ad engine by working closely with an operator like Jio and Jio’s attempt will be to further strengthen its ecosystem led approach and scale its e-commerce ambitions that were, so far, missing.

The paths of internet giants and telcos have been converging for several years, with various steps being taking globally edging them closer. Both have much to gain, but also considerable legacy positions to protect. We expect this deal will be seen as a major step in this convergence.

The post With Its Investment in Jio, Facebook Will Finally Be Able to Monetize WhatsApp appeared first on Counterpoint.

New Delhi, Hong Kong, Seoul, London, Beijing, San Diego, Buenos Aires –

Dec 24th, 2019

Global sales of smartphones with AMOLED panels are set to surpass 600 million units by the end of 2020 with a YoY growth of 46%, according to the latest research from Counterpoint’s Display Market Outlook service. The growth will be coming from the diffusion of AMOLED into mid-tier price bands, driven by Chinese brands like Huawei, Vivo, OPPO, realme, and Xiaomi, as they seek to differentiate their offerings.

Commenting on the market dynamics, Tarun Pathak, Associate Director, said, “Displays drive a major part of the overall smartphone experience. In 2019 smartphone displays gained a lot of attention in a bid to attract users to upgrade their smartphones. Some notable supply chain efforts included reducing the screen to body ratio, increasing the refresh rate, changing the form factor (foldable) or innovating with other components to get more real estate for the display (smaller notch, punch hole camera, pop-up camera, in-display fingerprint sensor, image sensors). These innovations further drove the growth of AMOLED as the technology is best suited to leverage these trends thanks to superior image quality, reduced power consumption and flexible form factors, among other things. Hence, we believe that AMOLED-based smartphones will remain in demand with Chinese smartphone brands aggressively adopting them for their mid-tier portfolio. AMOLED panels are already a default choice in premium-tier smartphones”

Commenting on brand performance, Jene Park, Senior Research Analyst at Counterpoint Research said, “Samsung remained the leading smartphone vendor, capturing 45% of the total AMOLED smartphone sales in 2019 followed by Apple with 16% share and OPPO with 11% share. However, all the leading brands have launched their flagships in 2019 with AMOLED panels. But Chinese players led by Huawei, OPPO, Vivo, and Xiaomi have now adopted OLED panels in their mid-tier portfolios ($300-$500) to differentiate their products. This is one of the key reasons for the growth of AMOLED smartphones. In future we expect these brands to further bring the AMOLED smartphones to the sub-$200 price tier in 2020. Apple is also likely to go for an all OLED portfolio in its next launch cycle. These factors will further lead to the growth of AMOLED based smartphones in 2020”.

Exhibit 1: AMOLED-based Smartphones Penetration within Key Brands’ Portfolios – 2020

Source: Counterpoint Research Display Market Outlook Dec 2019

Although AMOLED is a preferred choice for smartphone brands there are still some reservations that might lead to a slower transition from LCD to OLEDs. One factor being production capability. Samsung display currently accounts for close to 90% of the OLED panel market. Other brands that have LCD fabs like BOE, Tianma, CSOT are transitioning fast but might take some time to arrive with good volume. Additionally, the demand for AMOLED in other product categories like wearables, TVs will further put a supply constraint on existing OLED panel makers. Furthermore, the majority of the other smartphone brands in sub-$200 will continue to use LCD panels. Hence we believe that AMOLED’s growth will be upwards but a lot will also depend on the production capacity of the panel makers.

The comprehensive and in-depth Dec 2019 Display Market Outlook is available for subscribing clients. Please feel free to contact us at press@counterpointresearch.com for further questions regarding our in-depth latest research, insights or press inquiries.

The Market Outlook research is based on Counterpoint research assumptions, historical data, supply chain checks, and secondary research.

Analyst Contacts:

Tarun Pathak

Jene Park

Follow Counterpoint Research
press@counterpointresearch.com   

The post Smartphones With AMOLED Displays Are Set to Surpass 600 Million in Unit Sales in 2020 appeared first on Counterpoint.

The ecosystem is expanding and over the past two years, we have seen devices launched by different partners with use cases across both consumer and enterprise segments. The chart from Qualcomm’s presentation highlights participants in the overall XR ecosystem.

Source: Qualcomm Snapdragon Tech Summit 2019

With a faster tech transition from 4G to 5G on the horizon, the XR2 5G platform is a good move by Qualcomm to enable next-generation features and immersive experiences that demand ultra-low latency with great audio and visual level customizations. In such a scenario the XR2 5G platform brings significant performance improvements over the XR1. These performance improvements include 2X the CPU and GPU performance, 4X more video bandwidth, 6X higher resolution and 11X AI improvements. Additionally, the Snapdragon XR2 platform is also the world’s first to support seven concurrent cameras and a dedicated computer vision processor. This opens up the possibilities of different use cases, especially in the enterprise segment. The XR2 supports high graphics rendering, support for 8K 360 degree videos at 60fps and a custom silicon built to reduce latencies for immersive visual experiences. In audio, XR2 offers voice activation and context detection for certain use cases.

Source: Qualcomm Snapdragon Tech Summit 2019

Qualcomm said that it will maintain first generation XR platform, for now. We expect that Qualcomm will opt for a tiered approach, with XR1 targeting basic use cases within the entry to mid-tier products and XR2 5G powering premium devices.

We expect the first wave of XR2 devices will be in the enterprise segment. Manufacturing, industrial and gaming will lead when it comes to applications where 5G’s role will be critical in providing real immersive experiences. However, this category of devices will demand a strong push initially from ecosystem partners as its value lies in the experience. This holds true both for enterprise and consumer segments. Developers, hardware vendors, and operators will be watching this space closely. Niantic’s partnership with Qualcomm during the event for AR glasses is an indication that many partners are ready to adopt a platform powered by 5G that opens up a whole new set of possibilities.

The post XR2 5G platform- Extended reality’s pivotal moment appeared first on Counterpoint.

New to space is Qualcomm now has three platforms which will help OEMs better differentiate their hardware and also hit a much larger range of price tiers.

The 7c compute platform is the entry of the three unveiled. It is built on the 8nm manufacturing process. The 7c should hit impressive price points as low as $300 and has the goal of the computing power of entry PCs. This is substantial price erosion and should be much more interesting for students or those on a tight budget than first-generation ACPCs.

In past years, gaming was not even mentioned. With the power and software improvements, light gaming is now supported. 4k HDR video capture @30 frames per second are also supported in the entry offer. The platform’s cellular connectivity supports Cat13 up to 150Mbps.

The 8c compute platform is built on 7nm process technology. Relative to the 7c, GPU and CPU are more powerful yet battery life is not negatively affected; 6+ trillion operations per second (TOPs) are supported. The chip is testing 30% faster than last year’s platform. Cellular connectivity supports Cat20 LTE, 256-QAM, 4x4MIMO, carrier aggregation (aka Gigabit LTE). The platform supports two 4k displays at 4k ultra HD. Qualcomm QuickCharge is also a feature. Prices of hardware with the 8c compute platform inside should be in the $500-$800 range.

The 8cx compute platform is the premium of AOAC PCs. It also has a Snapdragon X55 modem—meaning 5G is supported.8cx is the premium platform and hardware using the 8cx are expected to have a point-of-sale cost of $1000 and more. GPU and CPU performance is advertised as 60% more power-efficient than the Snapdragon 850.5G FDD, TDD, SA, NSAs, sub6, and mmWave is all supported. Or, as Qualcomm describes it, ‘real 5G’.

The sector should see growth with the new, lower price tiers. Look for more OEMs to be supporting AOAC PCs in 2020

Qualcomm also launched the world’s first 5G XR platform during the annual Snapdragon tech summit, XR2. This is in addition to the XR1 platform which now has more than 30 devices in the market. The XR series are dedicated chips for eXtended Reality (XR) devices. These have had moderate success so far, mostly due to the limitations of the XR market, but true immersive experiences need a solid connectivity platform.

XR2 5G platform brings significant performance improvements over the XR1. These performance improvements include 2X the CPU and GPU performance, 4X more video bandwidth, 6X higher resolution and 11X AI improvements. Additionally, the Snapdragon XR2 platform is also the world’s first to support seven concurrent cameras and a dedicated computer vision processor. This opens up the possibilities of different use cases, especially in the enterprise segment. The XR2 supports high graphics rendering, support for 8K 360 degree videos at 60fps and a custom silicon built to reduce latencies for immersive visual experiences. In audio, XR2 offers voice activation and context detection for certain use cases

Overall Qualcomm, during the 2019 Snapdragon summit managed to unveil some powerful platforms. With 5G all set to penetrate faster in 2020, Qualcomm will be betting big on 865 and 765 platforms. Additionally, XR2 5G along with 7C, 8C, and 8CX opens up new opportunities in coming years

The post POST EVENT COVERAGE: DAY 3 SNAPDRAGON TECH SUMMIT :: XR2 5G platform and always connected PC (ACPC) appeared first on Counterpoint.

• Snapdragon 865, 765 and 765G:

Qualcomm announced its first-ever integrated 5G platform with the launch of Snapdragon 765 and 765G mobile platforms. Although the hardware details will be disclosed during day two of the event, some of the highlights indicate that Qualcomm is aiming to drive 5G into mid-tier price points in 2020. Interestingly, the 7-series has an integrated modem while the 8-series does not.

Qualcomm has integrated the X52 5G modem into the 765 and 765G series, while the flagship 865 mobile platform will include the Snapdragon X55 Modem-RF system. The granular details are still to come, but some of the key specs of the X52 modem include:

• Download speeds up to 3.7Gbps
• mmWave and Sub6 support
• Dynamic spectrum sharing—4G and 5G devices can share the same FDD channel–meaning carriers do not have to wait to clear spectrum before rolling out 5G
• Carrier aggregation
• Non-standalone and standalone 5G

• Snapdragon 865 and 765 5G Modular Platforms:

Qualcomm also announced the Snapdragon 865 and 765 5G modular platforms. Qualcomm aims to replicate the success it had with integrated chipset solutions and its reference design approach from the 3G/4G era. 5G modular platforms aim to help OEMs get over the complexities in the 5G device launch phase and more easily develop broader portfolios. With 5G modular platforms, Qualcomm will be integrating almost all components into two to three modules, enabling an easy layout. These modular platforms are operator certified, have lower development costs and ensure faster time to market for OEMs. Verizon and Vodafone are the first carriers announcing support of the certification program for Snapdragon modular platforms, with more carriers joining in 2020.These modular solutions are not just applicable for smartphones but can also be adopted in adjacent segments like automotive, IoT and wearables.

• Upcoming 5G devices: Representatives from Motorola, Xiaomi, OPPO, and HMD Global shared the stage making product announcements and complimenting the new Snapdragon designs.

Motorola’s President, Sergio Buniac, announced its commitment to the foldable smartphone segment and how its partnership with Qualcomm will help it to bring more 5G phones in 2020. Motorola stressed the importance of how the Snapdragon 765 platform will be critical in expanding 5G in different markets. Motorola also announced profitability for five quarters running.

Xiaomi’s, Co-founder and Vice Chairman, Lin Bin announced the upcoming Mi 10 smartphone powered by the Snapdragon 865 platform. Xiaomi also announced that, to date, 427 million Qualcomm powered Xiaomi smartphones have been shipped. In fact, all premium-tier devices from Xiaomi since 2011 have been powered by Qualcomm’s Snapdragon. Xiaomi is also planning to launch more than ten 5G smartphones in 2020.

OPPO’s Vice President, Alen Wu, highlighted how the partnership with Qualcomm helped it to launch its first 5G commercial phone in the European market. OPPO is accelerating its Global 5G deployment. It is working with 11 operators in seven countries to launch 5G products in these markets as part of its 5G landing project. It is also launching its first smartphone with the Snapdragon 865 platform in Q1 2020 and the Reno 3 Pro with Snapdragon 765 platform.

HMD Global, Chief Product Officer, Juho Sarvikas, highlighted the approach to 5G with a focus on Snapdragon 765 to deliver premium flagship experiences in the affordable segment. Nokia phones will be covering the highest number of 5G new radio bands in both mid and low bands with the goal of holding a 5G connection longer. This will also help 5G roaming. Nokia will also leverage Qualcomm to highlight its PureView imaging story and likely incorporate its modular platforms.

Other Chinese OEMs and ODMs are planning to launch 5G devices with Qualcomm chipsets in 2020 and beyond. These include BlackShark, Coolpad, iQOO, Lenovo, Meizu, Nubia, OnePlus, Realme, Smartisan, TCL, vivo, Wingtech, ZTE, and 8848.

• Sonic Max, a new fingerprint-scanning technology

Qualcomm unveiled 3D Sonic Max, which is the updated version of Qualcomm’s ultrasonic fingerprint sensor. 3D Sonic Max sensor recognition areas are 17 times bigger than the previous generation and can read two fingerprints at the same time enabling extra authentication and comes with much-improved security levels. Qualcomm is aiming for a one in a million-accuracy rate which is similar to Apple’s accuracy claim on face ID.

• Verizon, AT&T, and T-Mobile are all committed to mmWave

A key theme of Qualcomm was echoed by the three largest operators in the US—low bands will be used for blanket 5G support and mmWave be used for ‘performance’. Each carrier made news with a 5G announcement. T-Mobile announced it has turned on its 600MHz 5G network, covering over 200 million people and over 5,000 cities. Verizon announced new 5G innovation centers and that 5G will reach 30 US cities by year-end. AT&T announced its Band 14 (700MHz) FirstNet network is 75% complete. It also announced a new rural disaster response network which can be deployed from an airship.

The post Post Event Coverage: Day 1 Snapdragon Tech Summit :: Qualcomm Accelerates Its 5G Efforts with New Mobile Platforms appeared first on Counterpoint.

The three most important takeaways from its recent third-quarter earnings call are:

• Quarterly revenue hit an all-time record, but smartphone growth slowed: Xiaomi posted record revenue of RMB 53.7 billion with a YoY growth of 5.5%. Its gross profit during the quarter hit RMB 8.2 billion with a YoY growth of 25.2%. Its adjusted net profit increased by 20.3% YoY to reach RMB 3.5 billion. However, the smartphone segment that accounts for 60% of its total revenue, declined 7.8% YoY to reach RMB 32.2 billion. The decline was driven by its performance in China, where it had a sharp decline (-38%) during the quarter thanks to the onslaught from Honor on one side, and Oppo A-series and Vivo Y-series on the other. The decline would have been steeper if it weren’t for the strong performance in India (+8%) and Western European markets (+68%).
• China turnaround dependent on 5G smartphones: For Xiaomi to gain in the global smartphone market, its performance in its home market China will be crucial. Having a strong portfolio of 5G smartphones can help Xiaomi to capture growth. During the quarter, Xiaomi launched its first-ever 5G smartphone in China, Mi9 Pro, which started well. Xiaomi also announced that it will launch at least 10 5G models in 2020 to capture first-time 5G smartphone users. It is also launching its first 5G smartphone under its Redmi brand (K30) in the coming month. 5G smartphones can also help Xiaomi to improve its ASP which grew a modest 4.6% in China and declined 4.1% outside China; its competitors like Oppo, vivo, and Huawei improved their ASPs in many markets. Additionally, before 5G kicks-in, Xiaomi needs to resolve its inventory situation. There were positive signs during the quarter with inventory turnover days falling from 65 days in Q1 2019 to 52 days in Q3 2019, but more can be done.
• IoT and Lifestyle category drove revenue. Monetization of userbase outside China key to drive service revenue: During the third quarter, Xiaomi’s smartphone revenue decline was offset by its IoT and lifestyle segment, which grew 44.4% YoY to reach RMB 15.6 billion and contributing 29% of the total revenue. TV and wearable segments performed well, contributing the majority of the revenue growth. Xiaomi now has a monthly active MIUI user base of 291.6 million, while the number of connected IoT devices (excluding smartphones and laptops) reached 213.2 million. Out of 291.6 million MIUI users, 112.8 million are from China These are impressive user metrics for any brand, but the key challenge for Xiaomi is to monetize this user base thus driving its internet services revenue which contributes to just 10% of the overall revenue, reaching RMB 5.3 billion during the quarter.As of now Smart TV and Mi Box drove its services revenue with 3.2 million paid subscribers. During the quarter, 37.2% of Xiaomi’s Internet service revenue was from internet services outside of advertising and gaming from mainland China smartphones. However, a lot needs to be done to drive service growth from outside China, especially in markets like India where it has a significant installed base. We believe that within China, advertising, gaming and TV subscriptions can drive service revenue, but in overseas market it will be services revenue from its IoT products that will be key. The absence of a strong service strategy around its IoT devices means that the overall mix and user engagement with its ecosystem products remains low. To drive the attach rate and engagement, Xiaomi should carefully bundle services on top of its popular IoT products like wearables, smart home devices, TV and others. 

To conclude, we believe Xiaomi is at an interesting crossroads. At one point it has to arrest the decline in the smartphone segment within China by accelerating its efforts in 5G devices, while at the same time it finding ways to monetize its massive ~292 million userbase to drive its service strategy. In such a scenario having sufficient working capital is critical. As of now Xiaomi has enough cash in hand with total cash resources at RMB 56.6 billion at the end of Q3 2019. Continuing investing in R&D (its R&D expenses from 2016 to Q3 2019 reached RMB 16.3 billion) will be key to unlocking new revenue potential via in house development as well as investing in meaningful partnerships in content and services. We believe that Xiaomi is aware of its upcoming battles on multiple fronts and 2020 will prove to be a crucial year for Xiaomi.

The post Three Key Takeaways from Xiaomi Third Quarter Earnings Call appeared first on Counterpoint.

November 28, 2019

• MEA smartphone market grew just 2% YoY in Q3 2019.
• 2 out of the top 3 markets, Nigeria and South Africa, are facing economic challenges.
• Transsion Group’s feature phone market share reached the highest ever (77%), Samsung led the overall smartphone market (29%)

The smartphone market in Middle East and Africa (MEA) grew a modest 2% year-on-year (YoY) in Q3 2019, while the feature phone segment remained flat, according to Counterpoint Research’s latest Market Pulse report. Overall handset market grew 1% YoY. One of the main reasons for modest growth in the region is slowing in key countries. Markets like Nigeria, Egypt and South Africa that contribute to one-fourth of the overall regional sales are recovering from economic and regulatory challenges.

Commenting on the smartphone market growth, Tarun Pathak, Associate Director at Counterpoint Research, said, “The Middle East and Africa markets are at different stages of development and face a variety of economic, political and regulatory challenges. The region is largely under-penetrated (~40%) even though it is the third-largest region in terms of absolute internet users (>500 Mn). Hence, the next level of growth in the region will be driven by first-time internet users. While the Middle East is traditionally a strong and developed region, there are countries in Africa (Namibia, Tanzania, etc) where customers are paying among the highest rates in the world to access the internet. To bridge this gap a collective effort from telecom operators, government and handset players is required.”

Commenting on the OEM landscape, Varun Mishra, Research Analyst at Counterpoint Research said, “Transsion Group’s brands’ (iTel and Tecno) feature phone share reached its highest ever in MEA during the quarter. Feature phones remain relevant to the mass market in Africa. Entry-level smartphones are unable to provide a good experience due to the limitations of the device specifications, especially in the <$40 segment. Additionally, the high data and device cost along with other challenges, like digital illiteracy, is holding back users from migrating faster to smartphones. In terms of smartphones, brands like Samsung and Tecno are looking to expand their operations in the region through relevant partnerships. For Example, Tecno opened its first-ever flagship store in Nigeria recently. Among other key Chinese players, Huawei is the only brand having a strong presence in the region while vivo, OPPO, and Xiaomi are still looking to enter or build scale in African countries. The USA trade ban did not lead to steep declines for Huawei in MEA as its older Y-generation models were still selling well.”

In terms of smart feature phones, KaiOS continues to expand in the Africa market as it launched devices with Tecno and Vodacom. It has already launched devices with MTN and Orange. Compared to Q3 2018, shipments for KaiOS have grown over 600% in Africa (from a small base). The devices can be pivotal in capturing first-time internet users. The market holds promising potential for smart feature phone segment. However,  keeping the prices of these devices as close to the traditional feature phone as possible remains key to the success of smart feature phones in the region.

              Exhibit 1: MEA Smartphone Market Share                             MEA Feature Phone Market Share

Source: Counterpoint Research Market Pulse Q3 2019

Market Summary:

• The top five smartphone brands captured 58% of the market.
• Feature phones contributed to 37% of the total handset sales during the quarter. iTel and Tecno’s combined feature phone market share reached highest ever as long-tail brands in feature phone segment started exiting the African market.
• Samsung led the smartphone market by volume, capturing 29% of the total smartphone market in Q3 2019. Galaxy A series contributed to a record 4/5^th of Samsung’s sales with A10 and A20 Core being the best-selling models.
• Tecno overtook Huawei to take the second position in the market. Spark 3 and Pop 2 Power were the bestselling models.
• Huawei sales were driven by the Y series. Y series contribution to Huawei total smartphone sales reached a record 70% from 47% during the same quarter last year
• iTel remained strong in the sub $50 segment while Infinix was one of the fastest-growing brands YoY (34%) to capture 4% of the market.
• Sub-US$100 segment captured 55% of the total smartphone market. Premium segment (US$400 and above) captured only 6% of the volume in the MEA region and principally from the developed markets such as UAE and Saudi Arabia.
• The more advanced Middle East smartphone market remained flat. During the third quarter, some countries in the Middle East launched 5G for the first time in markets like Kuwait, UAE, Qatar, Bahrain and Saudi Arabia. 5G is likely to see fairly rapid growth in the developed Middle East markets as early as 2020 while for Africa markets it is still several years away.

The comprehensive and in-depth Q3 2019 Market Pulse is available for subscribing clients. Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our in-depth latest research, insights or press inquiries.

Analyst Contacts:

Tarun Pathak

Varun Mishra
 

Follow Counterpoint Research
press(at)counterpointresearch.com

The post MEA Smartphone Market Growth Slows in Q3 2019 appeared first on Counterpoint.

Most of these vulnerabilities range from remote code execution, denial of service, and disclosing information. For example, Google has confirmed that it is fixing 193 Android security vulnerabilities with its Android 10 release through a default Android 10 patch. In the September Android security bulletin, Google has fixed more than 50 Android vulnerabilities, which included two critical ones while 12 were categorized under “high-severity”. As per Google, one of the critical vulnerabilities included in the media framework component that could enable a remote attacker using a special file to execute arbitrary code within the context of privileged process.This is just one example of how issuing regular security updates can help end consumers mitigating security-related risks on their Android devices.

Google is addressing security and privacy-related risks through various other steps. Some of the initiatives include Project Treble and strengthening device partner agreements with mandated security updates, the most recent being Project Mainline. Project Mainline aims to bring more security updates to users faster than ever before. Google is working closely with device manufacturers to ensure smooth execution of Project Mainline. Currently, very few device makers are doing a good job on issuing regular security updates even though Android partners are notified of all security vulnerability issues at least a month before publication.

As per our recent whitepaper titled Software and Security Updates: The Missing Link for Smartphones, among the top 10 smartphone makers, Nokia issues regular monthly security patches across its entire portfolio. Nokia is closely followed by Lenovo, which issues monthly security patches to most of its active models. Other leading brands including Xiaomi, Huawei, OPPO, Samsung, and Vivo, tend to issue security updates only quarterly. If we analyze further by price tier, the trend is similar to that of operating system updates. The sub-US$200 segment has the fewest security updates, while premium smartphones fare better in getting regular updates.

Exhibit 1: Security Patch Frequency Share for Top 10 Manufacturers

Source: Counterpoint Research White Paper: “Software and Security Updates:  The Missing Link for Smartphones”

To conclude, we believe that while issuing regular software and security updates are important, notifying users is also equally important. This should be undertaken widely – for example, on websites, and via social media. Consumers are tending to keep their smartphones for longer. And they tend to spend a little more when they do buy a new device. The average time consumers keep a flagship smartphone before buying a new device has been gradually extending. In markets as diverse as China, Europe, and the US, it is now approaching 30 months. Clearly, keeping the software and security up to date is important to ensure consumers continue to enjoy good performance and security throughout their ownership

The post Android Security Updates: An Important Element of Device Hygiene That Device Makers Often Miss appeared first on Counterpoint.

 • Only around a quarter of the top Android models are updated to the latest OS version.

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

August 30^th, 2019

Nearly 96% of Nokia smartphones, sold cumulatively since Q3 2018, are already running on Android Pie or have had an Android Pie update issued to them, making it the fastest brand to reach this level. This is according to the findings of Counterpoint Research’s latest whitepaper titled Software and Security Updates: The Missing Link for Smartphones.

We believe that device makers need to step up their efforts to provide regular software and security updates to their users. Except for Nokia and Lenovo, the performance of other device makers has been poor. Consumers have started to keep their smartphones for longer. They are also spending a little more when they do replace their devices. The average time that consumers keep a flagship smartphone before buying a new device has been gradually increasing. In markets as diverse as China, Europe, and the US, it is now approaching 30 months. Clearly, keeping the software and security up to date is important to ensure consumers continue to enjoy a good performance and have security throughout their ownership. Manufacturers that fail to take this into account when planning the timelines for offering support to their devices with updates are potentially failing their customers

Highlighting the whitepaper findings, Research Director, Peter Richardson, noted, “Operating system and security updates are an aspect of Android smartphones that get relatively little attention. In our experience researching the industry, we have seen few brands focusing on this. And perhaps because manufacturers are not talking about it, consumer awareness is also low. It doesn’t appear among the ten features consumers say they care about most, in our research.”

“Unsurprisingly, therefore, little effort is expended by the top manufacturers in focusing on regular updates to the operating system and device security, despite it being a critical element in the continued safe performance of the smartphone. Many of the key features including battery life, processor,camera and memory are linked to the performance of the underlying operating system. We believe it is important to the overall consumer experience and is likely to become more widely recognized as such,” Richardson added.

Exhibit 1: Android Version Share for Top 10 Manufacturers (Cumulative Sales)

Source: Counterpoint Research White Paper: “Software and Security Updates:  The Missing Link for Smartphones”

Commenting on the performance of smartphone brands, Associate Director, Tarun Pathak, highlighted, “Among the top 10 smartphone makers, nearly 96% of Nokia smartphones, sold cumulatively since Q3 2018, are already running on Android Pie or have had an Android Pie update issued to them. Samsung closely follows Nokia with 89% and Xiaomi with 84%. Xiaomi is good at ensuring its mid-price range products launch with the latest version of Android.”

Pathak further added, “There are a lot of factors that play a role in issuing software updates. But some brands put much more effort into reducing the time lag from the release of the latest Android version to issuing the update to all their smartphones. Only a few brands commit to making sure their smartphones are always running the latest version. Nokia was the fastest brand in issuing the latest software updates covering 94% of its portfolio within a year of the launch of the latest Android version.”

Exhibit 2: Time Taken by Top 10 Manufacturers to Upgrade Portfolios to the Latest Android Version

Source: Counterpoint Research White Paper: “Software and Security Updates:  The Missing Link for Smartphones”

According to Research Analyst, Abhilash Kumar, “High-priced devices are often updated first, but having the latest software is as important to mid- and low-priced products as it is to flagship devices. We, therefore, looked at manufacturers’ performance at updating software across all price tiers. By this analysis, Nokia stands out, again, as the brand most likely to update its full portfolio quickly. Xiaomi and Lenovo also rank high in this metric. Brands like Alcatel and Tecno are the laggards. This is because these brands have broad portfolios, mostly in the sub-US$200 segment, and the lifecycle of their models tends to be short. Their products often transition from launch to end-of-life in as little as six months, which means they have less incentive to provide long-term updates.”

The comprehensive and in-depth whitepaper on “Software and Security Updates: The Missing Link for Smartphones” is available for download from our research portal here

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contacts:

Peter Richardson

Tarun Pathak

Abhilash Kumar

Counterpoint Research
press(at)counterpointresearch.com

You can also visit our Data Section (updated quarterly) to view smartphone market share Globally and from the USA, China and India

The post Nokia Leads the Global Rankings in Updating Smartphone Software and Security appeared first on Counterpoint.

iPhone Revenue Contribution Below 50% since Q3 2012:

iPhone shipments declined year-on-year (YoY) for the third successive quarter. As a result of this iPhone revenue contribution reached below the 50% level for the first time since Q3 2012. This has impacted its overall operating margin, which reached its lowest level since the start of the decade. However, strong services revenues and wearable growth partially offset the decline in iPhone sales. Apple’s buyback programs and other marketing are dampening growing holding periods. However, the lack of 5G over upcoming quarters may again increase holding periods.

Offsetting the iPhone losses were these gains:

• Wearables and home products up 48% or US$1.8 billion
• Services up 13% or US$1.3 billion
• Mac sales up 11% or US$562 million
• iPad sales up 8% or US$389 million

Greater China Improves, but iPhone Sales Remains Challenging for Apple

Apple continues to face challenges in China in terms of iPhone sales although there have been short-term reprieves in sales due to price cuts, trade-in programs, and offers. However, competitive pressures remain with the growing local smartphone players.

The services segment continues to grow but faces challenges from apps of home-grown giants like Baidu, Alibaba, and Tencent.  In Greater China, except for the App Store, it has been difficult for Apple to monetize services and implement stickiness for the Apple ecosystem. In fact, Apple services grew in double-digits only due to the strong growth of the App Store in China.

The US-China trade war had a direct and indirect impact on Apple in China. The indirect impact was in the form adding some nationalistic purchases which benefitted Huawei’s performance. A saturated market like China is now a zero-sum game, and hence, the growth of Huawei meant that it has likely impacted Apple’s share in China. The direct impact of US-China trade war is that Apple has already started looking at alternatives to drive its production into China alternatives such as Vietnam and India. These changes take a long time to implement, and CEO Tim Cook hinted that reports of manufacturing changes were overblown. In reference to a potential boycott of Apple products, Cook responded with, “I see no signs of a boycott at all. None.”

Americas region grows to 47% of Apple’s regional revenue mix:

Strength of the iPhone XR, wearables, and services helped the region grow 2% to 47% of Apple’s revenue. Rest of APAC saw the largest growth at 13%, followed by Japan at 6%. All regions saw positive year-over-year revenue growth if accounting for greater exchange rate headwinds this year. In all, 15 of the top 20 markets had positive trends—a good sign for Apple. In terms of iPhone performance, this was the third consecutive quarter of a decline in Apple iPhone shipments. To ramp up sales, Apple implemented price cuts for the iPhone XR in India and China. In India, its shipments grew 19% YoY but one of the key points to note here is that during the similar period in earlier years its iPhone 6 contributed 2/5^th of the shipments and this year after the iPhone XR price cut, the iPhone XR became the best selling model for Apple in India contributing half of the shipments. These trends suggest that if Apple gets the pricing right in emerging markets, there is a pent-up demand for iPhones.

5G iPhone:

The recent acquisition of Intel’s smartphone modem business highlights Apple’s in-house ambitions for key components. This is Apple’s largest acquisition of staff, and it is much more than improving know-how or its patent pool. Cook clearly stated the acquisition will help Apple expedite rollouts and that Apple clearly wants to own and control the technology behind its products.

No surprise, Apple deflected any comments regarding a 5G iPhone as it never comments on future products. Cook did give some hints that new apps are coming via AR Kit and Reality Kit, which will likely take full advantage of 5G.

Many Android vendors will be on their second (or third) generation 5G smartphone before Apple launches its first. We expect Apple to get more aggressive with its older portfolio—something we have already seen in the US where the iPhone 7 is being transitioned into the prepaid heavyweight at a retail price of us$49. This will help Apple maintain its growing installed base.

Apple Trade-in Program Ramps:

Apple has been growing its retail and partner trade-in programs and announced a “trade-in as a percentage of sales was significant.” This will help Apple to combat growing holding periods. Apple Care also hit all-time highs during the quarter as Apple continues to grow its partners of carriers, resellers, and repair.

Services Continue to Outperform, Wearables Outperformed:

Services now contribute to more than 1/5^th of overall Apple revenue. Apple services grew 13% year-over-year. Apple Pay reached revenues of US$1 billion per month as it has grown to 47 markets. The company has high hopes for its new services, including Apple Card, Apple TV+, and Apple Arcade.

Mac and iPad sales outperformed the overall PC and tablet markets. B2B sales have helped both see 11% and 8% growth, respectively. Apple has a nice corporate brag that 90 out of the top 100 US banks use Apple products.

In terms of wearables, Apple Watch set a new June quarter revenue record with over 50% growth. 75% of the customers buying Apple Watch purchased it for the first time ever during the quarter.

Apple has given solid guidance for the next quarter with revenue expectations between US$61 billion to US$64 billion and gross margin between 37.5% and 38.5%. A lot will depend on the initial response to the new iPhones and performance in regions like China and Europe. We estimate that services will continue to deliver strong performance, especially with the launch of new services, including Apple Card, Apple TV+, and Apple Arcade. Amid the slowdown in China and likely launch of 5G capable iPhone in 2020, Apple will have also have to concentrate its efforts on emerging markets.

The post Apple Q3 FY19: iPhone Revenues Down 12%, But Wearables and Services Bridge the Gap appeared first on Counterpoint.

Meanwhile, overall smartphone shipments in the country fell 4% year-on-year (YoY) during the quarter. This is due to a dip in demand post strong fourth quarter. Some of the key brands were sitting on inventory post-Q4 2018.

Commenting on the results, Research Analyst, Parv Sharma, said, “Indonesia is one of the key South East Asian markets which OEMs are keeping a close eye on. Almost two-fifths of the population lives in rural areas, which is much higher than more developed countries in the Asia Pacific (APAC) region. Further, 4G penetration, as well as coverage, is growing rapidly. This offers a big opportunity for smartphone OEMs to target feature phone and entry-level smartphone users looking to upgrade to 4G devices. This trend of upgrading will drive Indonesia’s smartphone market to grow by 7% YoY in 2019 as per our estimates.”

Entry-level devices in the sub-US$200 price bands dominate Indonesia’s smartphone market, occupying close to 75% of the shares by volume. However, going forward, we estimate the mid-tier segment to gain more traction as more Chinese brands to expand their product portfolio in the mid to high tier segment.

Commenting on the distribution landscape, Associate Director, Tarun Pathak said, “Offline still remains the dominant channel strategy for OEMs. Leading retailers like Erajaya have been successful in forging partnerships with key OEMs, and this is one of the reasons why we have seen that share of the top five brands expanding in the country. Additionally, the government will introduce a new rule in August, which aims to curb the distribution of illegal handsets. We believe this is a step in the right direction and will positively impact the leading retailers in the country.”

Exhibit 1: Indonesia Smartphone Sales Market Share – Q1 2019

Source: Counterpoint Research Market Pulse Q1 2019

Market Summary:

• Samsung led the smartphone market with a 27% share. It has managed to hold on to its market share amid intense competition from Chinese brands.
• For Samsung, the J series (J2 prime and J4 plus) was driving the volumes but is likely to be replaced by A series, which is doing well in other countries. Samsung still has a robust distribution structure and reach.
• Xiaomi’s share has hit the highest-ever level in Indonesia, driven by strong sales of Redmi 6A. Xiaomi has a strong retail strategy in Indonesia, in partnership with Erajaya. It is also expanding its Mi Stores to 40  by the end of Q1 2019. It has also partnered with Lazada, Blibli, Shopee, JD, and Akulaku apart from selling through its own online store.
• A3S was the best-selling model for OPPO followed by F series. OPPO’s portfolio still remains leaner in Indonesia, and the brand is estimated to launch new products faster in the country.
• Local players are now playing only in the sub-US$100 segment with their share reaching the lowest-ever level of 9% during the quarter due to the onslaught by Chinese players.

• LTE capable smartphones contributed to 97% of total smartphone shipments.

• Qualcomm led the SoC segment a reaching its highest-ever market share of 44%, followed by MediaTek, and Samsung, with 38% and 14% share respectively.
• Other brands which did well during the quarter were Realme, Nokia HMD, and HONOR. Realme recently entered the market and managed to get good traction for its new devices like the Realme 3.
• With the ongoing trade war between China and the US, Indonesia is one of the countries which is looking to position itself as an attractive destination for some component players to reduce dependency on China.

The comprehensive and in-depth Q1 2019 Market Pulse is available for subscribing clients. Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our latest research or insights. The Counterpoint Market Pulse is based on sell-through estimates based on retail surveys, vendor polling triangulated supply chain checks and secondary research.

Analyst Contacts:

Tarun Pathak

Parv Sharma

Follow Counterpoint Research
press(at)counterpointresearch.com

The post Market Share of Top Five Smartphone OEMs in Indonesia Reached Highest-Ever Level During Q1 2019 appeared first on Counterpoint.

The Libra Association is an independent not-for-profit organization, headquartered in Geneva, Switzerland. It will govern Libra and oversee the overall ecosystem. There are 28 (Exhibit 1) founding members backing the Libra Association, which includes Visa, Mastercard, PayPal, Uber, and others. It is estimated to reach 100 members by the first half of 2020, by which time the currency will make its debut in the market. Facebook also has created a subsidiary, Calibra, which will let users participate in Libra network. Calibra’s first product will be a digital wallet for Libra and available in Messenger, WhatsApp, and as a separate app.

Exhibit 1: Libra’s Founding Members

Source: Libra Whitepaper

What’s in it for Facebook

Facebook has played a key role in the creation of Libra Blockchain, even though the Libra Association is being shown to be a not-for-profit organization. As per whitepaper, Facebook is expected to maintain a leadership role through 2019. Even after that, Facebook will remain as one of the key founding members. Once Libra launches, Facebook and its affiliates, will have the same commitments, privileges, and financial obligation as any other founding member. This is a smart move by Facebook. Decentralization in the form of the Libra Association means that Facebook has distanced itself from being tagged as a company behind the cryptocurrency and driving the same, especially when the company is facing scrutiny over user privacy. Additionally, its regulated subsidiary, Calibra, will have certain obligations not applicable to the parent company.

From a business point of view, Facebook is likely to bet big on commerce. Enabling transactions is a natural synergy for the company, especially when it has millions of small-medium businesses (SMB’s) relying heavily on its platform for promoting products and buying ads. Facebook has more than seven million advertisers on its platform and 90 million SMBs. More than two billion people use at least one of its services every day. This is undoubtedly the biggest platform for the introduction of any new service on this planet. This can work in favor of Libra as no other cryptocurrency like Bitcoin or Ethereum has managed to get such a large platform. From a consumer perspective, the digital payments piece can fit well with Facebook’s marketplace and future monetization opportunities for WhatsApp.

Libra Set Certain Things Right From Start

Libra has not done any fundamental changes to the existing concept of Blockchain. The software that implements Libra Blockchain is open source. This means the ecosystem is likely to evolve with the scale with developers leveraging the Libra network to develop certain products and services on top of it.

Libra is designed to handle 1,000 transactions per second, much faster than Bitcoin (7/sec) and Ethereum (15/sec), but slower than the traditional payments systems like Visa, which can do around 3,000 transactions per second.

Another thing that works in favor of Libra is that it addresses the unpredictable nature of other cryptocurrencies by reducing volatility. Facebook has designed Libra as a stable cryptocurrency that will be fully backed by a reserve of real assets, The Libra Reserve. Further, a competitive network of exchanges buying and selling Libra will also support the value of the new cryptocurrency.

Libra will be aiming for financial inclusion of the 1.7 billion unbanked people. Reaching this user-base is easier for Facebook. Eight out of 10 leading countries in terms of Facebook usage is a developing country. In most of these countries, users send money outside the countries of origin. Libra will incentivize users to use its payments to services to avoid hidden transaction charges.

Likely Challenges

The regulatory stance of some countries and financial institutions will be one factor which Libra needs to address carefully. Regulatory pressure might end up limiting Libra’s reach as it varies from country to country. Plus Facebook has a lot to learn from FreeBasics here. Additionally, adhering to local KYC (know your customer) requirements regarding customer onboarding will be a daunting task, and it will again vary significantly from country to country.

The Libra Association also needs to understand that Libra is aiming to reach the unbanked, who are also the least tech aware users, with one of the most sophisticated technologies in the payments space. Interface and making the user aware of the benefits involved will be key.

The biggest competition for Libra is from existing wallet companies. They have a headstart and already seen wide adoption. Unless there is a simplicity to use Libra and the benefits attached to it, there can be some barriers to adoption.

Other challenges will come in the form of fraud and ransomware. Cryptocurrencies have become a preferred route for ransomware. There is a chance when tech laggards adopt Libra, the tech-savvy use it for illegal buying and selling and even for ransomware.

However, we believe that this is one of boldest attempt from Facebook in recent years. Payments and commerce is a big opportunity area for Facebook. The combined user-base of WhatsApp, Instagram, and Facebook is close to 2.7 Billion. Hence, this can be the moment when cryptocurrencies see a mass scale adoption. But a lot will depend on whether regulators across the world choose to question Libra or partner Libra.

The post Libra – Cryptocurrency’s Moment to Reach Masses but Challenges Ahead appeared first on Counterpoint.

Although the economic strength of emerging markets will not be good enough to bring back growth to the overall smartphone market, they can certainly help arrest the decline. This is why we believe that the smartphone supply chain will keep a close eye on the emerging markets in 2019.

The IMF defines emerging markets (Exhibit 1) based on the GDP and other economic parameters.

Exhibit 1: Emerging Markets as defined by the IMF

Impact on the Global Smartphone Markets

Emerging markets alone contribute to 59% of global smartphone shipments. Even if one excludes China, they contribute to 32% of the global smartphone market. As per Counterpoint’s Market Outlook, emerging markets excluding China (EMXC) will grow faster (6%) than in 2018 (4%). The growth rate continues to be faster than the overall smartphone market, which is likely to see a second successive year of decline in 2019. Therefore, growth in emerging markets is a positive indicator for certain OEMs looking to expand in these markets.

In 2018, 14 out of 23 emerging markets show positive year-on-year (YoY) smartphone growth. This year, 18 out of 23 emerging markets are likely to grow YoY. The markets which will drive the smartphone growth include Bangladesh (37%), India (11%), Colombia (9%), and Philippines (9%). We believe that the low internet penetration in these countries, in terms of unique subscribers, and a healthy GDP growth predicted for 2019 will propel smartphone sales. The internet penetration in these countries, in terms of unique subscribers, is still below 50%. Other factors which will work in favor of these countries is a healthy mix of sub-US$100 installed base of smartphone users who are likely to upgrade.

Bright Spots Among Emerging Markets

Asian emerging markets will lead the growth and are also likely to benefit from the ongoing US-China trade war. If companies decide to re-think their supply chain, countries like Malaysia, India, Indonesia, Thailand, and India will stand to benefit.

Moreover, the Indian economy continues to perform well with healthy domestic consumption. The 2019 general elections brought a strong government. This is likely to bring in certainty in regulatory and policy frameworks which will aid overall economic growth. Bangladesh, at the same time, is pushing is domestic manufacturing and focusing on financial and digital inclusion of its citizens. An uptick in employment levels drives the Philippines’ growth. This will have a positive impact on the replacement cycle of the smartphones, especially in the sub-US$100 segment.

Overall, the LATAM region is recovering with high growth rates estimated for countries like Peru, Chile, and Colombia. Colombia’s market is undergoing positive smartphone growth with the new government at the center betting big on a digital economy.

Other markets which are likely to see smartphone growth include Indonesia, Pakistan, Peru, Russia, Thailand, and Ukraine.

Exhibit 2: Smartphone Annual Growth Rate in Emerging Markets – 2019 (e)

Strugglers within Emerging Markets

Of course, not all emerging markets have a positive outlook. Some will fare better than others. There are certain emerging markets which will continue to undergo macroeconomic, regulatory, and political challenges. These markets include Argentina, Brazil, Mexico, and Turkey. Brazil’s economy is not picking up so far, and it will most likely not happen throughout 2019. However, the decline will not be as steep the one it experienced in 2018.

Turkey is bracing for a long recession ahead with inflation reaching a 15-year high. Currency in these markets remains volatile too. Argentina is unlikely to grow too, and the upcoming general election in late 2019 will be key in terms of providing a roadmap for certain reforms and economic policies. Mexico remains in the shadows of ongoing trade war and concerns over any upcoming tariffs. However, the US has recently scrapped plans to increase tariffs as part of an agreement between the two countries on immigration issues. But uncertainty still looms over the future.

Emerging Europe is facing a slowdown driven by a recession in Turkey. Russia is likely to grow, but Ukraine faces tighter monetary conditions. The inflationary pressure for emerging European markets will remain throughout the year.

To summarize, we believe that emerging markets will exhibit stronger growth in 2019 as compared to last year. This is a positive trend for the top five OEMs in these markets as their combined share has been steadily increasing over the past few quarters. Users in these emerging markets are now empowered and becoming digitally literate. Financial inclusion is happening, and dissemination of information for users is stronger than before.

The post Smartphone Growth in Emerging Markets Will Continue in 2019 appeared first on Counterpoint.

The segment grew 14% year-on-year (YoY) in terms of sell-in and 18% YoY in terms of sell-through. Growth was driven by new iPhones and launches in a premium segment from Chinese OEMs like Huawei, OPPO, OnePlus.

Overall, Chinese players have scaled up their presence in the premium segment and have expanded the category. Further, they are now eyeing new geographies for growth. Apple remained the market leader capturing 51% share of the premium segment, a significant lead over its nearest competitor Samsung which had a 22% share. However, Chinese brands made their mark as Huawei’s share in the segment reached double digits (10%) for the first time in a calendar year. OPPO (+863%), OnePlus (+209%), and Xiaomi (+149%) were the fastest growing brands in the premium segment.

An indication of the increasing competition in the segment is highlighted by the fact that close to 40 OEMs now compete in the premium segment globally. Of these, the top five players account for almost 90% of shipments. Premium segment contributed to one-fourth (22%) of the global smartphone shipments in 2018.

Lets a take a closer look at how the different brands performed in the premium segment: –

• Huawei’s strong performance was primarily due to the success of the P20 and Mate 20 series, which focussed on camera, power, and design as key differentiating features. It also gained share in the premium segment in China and Europe.
• OPPO’s growth came from its home market China with R15 and R17 series doing well. The brand is actively targeting European countries with its mid-to-high-tier offerings. Additionally, it is also targeting operators in Europe to launch its 5G portfolio outside China, along with new features in its flagship like 10x Zoom.
• OnePlus’s performance came on the back of the OnePlus 6T. In terms of regions China, India, and Western Europe drove four-fifths of its global shipments. OnePlus recorded its highest ever shipments in a single quarter (Q4 2018) in India to lead the premium smartphone segment for three successive quarters and captured 36% market share. Another feat for the brand came in Q4 2018 when it entered among Top five OEMs in the premium segment in the US for the first time.
• Google entered the top five premium smartphone brands in Western Europe in 2018.

Exhibit 1: 2018 Premium Smartphone Segment Market Share

In terms of regions, APAC was the fastest growing region for the premium segment with a growth of 27% YoY. Huawei, OPPO, Vivo, and Xiaomi’s performance in China drove this growth. In terms of countries, China and the US alone contributed to more than half of the global premium market shipments. China’s premium segment grew 37% YoY while the US grew 10% YoY. Other countries where the premium segment grew fast include Indonesia (+54%), Russia (+28%), Canada (22%), Mexico (22%), Thailand (+20%), India (+14%), Brazil (13%), and Japan (10%).  Below are the top five brands in the premium segment by different regions in 2018: –

Exhibit 2: Premium Smartphone Segment Rankings of OEMs by Regions 2018

Source: Counterpoint Research Market Monitor 2018

Going forward we estimate that the premium smartphone segment will continue to grow in double digits. By offering additional features like AI, triple camera, full-screen display, and higher memory configurations, smartphone OEMs are subtly increasing the average selling price (ASP) of devices. This also helps them leverage the gap created by Apple in the premium segment. The next growth cycle in the premium segment will be driven by the emergence of commercially available 5G smartphones. This will help OEMs to not only to target users looking to upgrade but also give Chinese OEMs an opportunity to enter new geographies where 5G will be commercially available soon.

*Pricing analysis is based on wholesale pricing

** Premium segment >$400

The post Apple Maintains Lead in Premium Smartphone Segment, OnePlus Enters Top Five Brands for the First Time in 2018 appeared first on Counterpoint.

LG

At the 2019 MWC in Barcelona, LG simultaneously unveiled the G and V series phones for the first time. The LG V50 and ThinQ 5G and the LG G8 ThinQ, both offer a significant upgrade over the previous versions. As 5G remains the key theme of MWC 19, LG has done a good job of not missing the bus by unveiling the 5G version of the V50.

With 5G set to offer a better device experience, LG has focused on areas that impact content consumption like audio and video. LG G8 ThinQ supports Master Quality Authenticated (MQA) technology, allowing compressed high-resolution audio streaming without compromising sound quality.  It is also the world’s first smartphone with advanced palm vein authentication using a combination of the ToF (Time of Flight) Z Camera and infrared sensors.

LG has decided to give a unique twist to dual screen phones in the form of an accessory. Moto Mods’ moderate success has already led to user awareness about the idea of an accessory which serves as an additional differentiating factor. LG V50ThinQ 5G dual screen comes with a couple of use cases including multi-tasking and gaming. In fact, gaming can be a good segment which LG can leverage while other use cases continue to develop. The gaming mode looks particularly interesting as it gives total control for gamers and amplifies the experience. Although the uptake will depend on the cost, even a high single-digit attach rate can serve as an additional opportunity for LG to sell more displays. LG is yet to announce the prices.

LG has added a bunch of other features focusing on the touchless experience but in the preview, some of these features didn’t work smoothly. Since it was a preview of the devices, LG has time to work on those.

The main challenge for LG is to market these features. This was a key pain point for its flagships in the past. It is highly dependent on the United States and LATAM region but to drive volumes LG can use the new V and G series as market entry products in countries where it doesn’t have a major presence and its consumer electronics division overshadows its smartphones.

Xiaomi

Xiaomi unveiled the cheapest 5G smartphone yet with the launch of Mi Mix 3 5G. The Mi Mix 3 5G has a Snapdragon X50 5G modem providing downlink speeds of up to 2 Gbps and is powered by a Snapdragon 855 processor

It also has a dual-camera setup both in the front and back. The camera setup includes a 12 megapixel (MP) wide-angle sensor and a 12MP telephoto lens on the rear as well as 24MP and 2MP selfie shooters. Xiaomi’s Mi Mix 3 5G is a bezel-less phone as the company has opted for a slider to house its front cameras. The phone’s slide camera feature is different from that of the Vivo and the punch-hole display to house the front cameras in the new range of Samsung Galaxy S10. The phone has a 3,800 mAh battery.

The Mi Mix 3 5G starts at €599 for the 6GB/64GB version and will be available from May through Mi.com and retailers across Europe. Additionally, Xiaomi has also partnered with operators including 3, Orange, Sunrise, Telefonica, and Vodafone to expand its reach in Europe.

Xiaomi surprised everyone with aggressive pricing of its Mi Mix 3 5G version. Other OEMs, especially Chinese OEMs, looking for expansion in Europe will find it tough to get a 5G premium on their first 5G devices. Xiaomi will also be looking to leverage its Mi Mix 3 5G to enter operator portfolios in developed European markets where it has already gained mind share.

Apart from this, Xiaomi also launched Mi 9, which was a good upgrade over its previous Mi 8. It is the first triple camera device within Xiaomi’s portfolio. The camera set up includes a 48MP main lens and an ultra-wide 16MP lens with a 12MP telephoto lens with 2x optical zoom

In short Xiaomi’s latest portfolio is indicative of the company’s desire for Europe expansion with higher average selling price (ASP) devices. But for countries like Spain and smaller western and eastern European countries, we estimate that bulk of its shipments will be driven by its sub-US$200 portfolio.

The post MWC Part 2: The Dawn of 5G appeared first on Counterpoint.

February 22^nd, 2019

The Ministry of Electronics & Information Technology’s Phased Manufacturing Programme is running behind schedule. This has meant that the ‘Make in India’ plan for mobile phones has remained limited to assembly operations.

With the ‘Make in India’ plan for mobile phone manufacturing remaining largely about assembling, India had to import $13 billion worth of components in 2018, the latest analysis from Counterpoint Research shows.

According to Tarun Pathak, Associate Director at Counterpoint Research, “Not many high-value components are being sourced from India. As a result, local value addition in India was at 17% during 2018. This helped the country save US$2.5 billion in forex but increased assembly operations in India led to imports of mobile phone components going up to US$13 billion.”

Counterpoint Research believes that the Ministry of Electronics & Information Technology’s Phased Manufacturing Programme (PMP) is running behind schedule as the implementation of customs duties under Phase III, which targets Display Assembly, Touch Panel/Cover Glass Assembly and Vibrator/Motor Ringer have been delayed.

Exhibit 1: Progress of PMP for mobile manufacturing in India

According to Pathak, the possibility of original equipment manufacturers (OEMs), like Reliance Jio and several Chinese brands, to source chips locally is still nearly four to five years away. “Sourcing of chips locally will happen only once the component ecosystem for low-value components is strengthened and export incentives are brought into force,” he added.

Counterpoint Research finds that Reliance Jio was still catching up on the PMP and imported 40% of Jio Phones in 2018. In fact, Chinese players like Xiaomi, OPPO, and Vivo had transitioned better from semi-knocked down (SKDs) to completely knocked down units (CKDs). These companies also have plans to scale up their local manufacturing operations, albeit limited to assembling only.

Half of the handsets sold in India in 2018 were imported as SKDs while only 34% were imported as CKDs. However, by the end of 2019, handsets imported as CKDs are forecasted to reach 75% while 25% will be in the form of SKDs.

“We think that the government will first push to localize the components or sub-components under PMP to drive value addition. This can lead a transition from SKDs to CKDs quickly over the next two years,” Pathak added.

While there has been a delay in the implementation of the PMP, India has made significant strides in developing its mobile manufacturing ecosystem. Local value addition has risen from a meagre 6% level in 2016 to 17% in 2018 and there are now 120 assembling plants in the country as compared to just two in 2014.

“India competes with China, Vietnam, and Indonesia when it comes to global smartphone manufacturing hubs. While China and Vietnam seem to be way ahead in terms of local value addition, India has surpassed Vietnam to become the second largest mobile phone manufacturer by volume. In doing so, the mobile phone manufacturing ecosystem in India has advanced and made the country a destination of interest for global component suppliers looking to expand their manufacturing,” said Hanish Bhatia, Senior Analyst at Counterpoint Research.

According to Bhatia, India offers a promising proposition for component suppliers, looking to set up a manufacturing base, with its low-cost and educated labor, a strong local market as well as its export potential thanks to the country’s proximity to the SAARC region, the Middle East and Africa.

The post India Imported $13 Billion Worth of Mobile Phone Components in 2018 appeared first on Counterpoint.

February 18^th, 2019

As the penetration of smart feature phones increases across the world, new business and revenue opportunities will be created for the entire mobile value chain.

Over the next three years, nearly 370 million smart feature phones are expected to be sold across the world, according to the latest research from Counterpoint Research. This will introduce an entirely untapped customer base to high-speed internet, apps and services and in doing so, open a whole host of new business and revenue opportunities for the entire mobile value chain.

According to Neil Shah, Research Director at Counterpoint Research the revenue opportunity from increasing sales of smart feature phones is expected to be in the region of US$28 billion over the next three years. Shah adds, “This will be enabled by a potential of more than 300 million smart feature phone users globally by the end of 2021. Software & Services alone will contribute to 71% of this near- to mid-term revenue opportunity, or around US$20 billion.”

Exhibit 1: Global Smart Feature Phone Opportunity Revenues (US$, Billions)

A smart feature phone is a device with a traditional feature phone form-factor and design but with a chipset and an operating system which can support sophisticated smartphone-like features such as high-speed internet access along with an application and services ecosystem. A smart feature phone serves as a perfect middle ground between feature phone and smartphone reducing the barriers to access the digital world.

While the trend to migrate to smartphones is strong, less tech-savvy users and first-time users continue to prefer a feature phone form-factor and user interface (UI). In many African countries and India, literacy rates remain well below 70%. For users in such countries, moving to a smartphone is a steep learning curve which is why there are still two billion active users of feature phones across the world. This is the space that smart feature phones will enter.

“The global smart feature phone demand grew 252% year-on-year in 2018 – albeit from a low base, contributing roughly 16% of the total feature phone volumes. While India is the biggest contributor to this demand, major markets that have driven smart feature phone sales include the United States, United Kingdom, South East Asia and Africa. We estimate that smart feature phones will cross more than half of global feature phone volumes by 2021,” says Tarun Pathak, Associate Director at Counterpoint Research.

One of the key companies that has been driving this growth of smart feature phones is KaiOS. KaiOS is a software platform powering this new segment of phones and helping the digital inclusion of feature phone users with native support for 3G/4G networks as well as a curated app and services ecosystem. Over the last year and a half, eight KaiOS-powered devices have been launched with multiple models launching in 1Q 2019. These models have been launched across North America, Europe, Africa, South East Asia, and India.

Reliance Jio has been fastest to see the opportunity and adopt the platform to acquire tens of millions of 2G feature phone users to its 4G network with its KaiOS-powered 4G smart feature phone. The company’s Jio Phone, is the world’s leading VoLTE-supported KaiOS-based smart feature phone. It was launched at a price of US$20 and is the current exemplar of a smart feature phone value proposition and execution globally. Out of more than 100 million subscribers that Reliance Jio added since the Jio Phone launch in late 2017, the KaiOS powered 4G smart feature phone contributes close to half of those net additions. 

The largest beneficiary from the growth in smart feature phones will be network operators. Existing 2G customers can be moved to a more efficient 4G network. Network operators can then free-up the 2G spectrum and re-farm it for 4G, upcoming 5G or Low Power Wireless Access (LPWA) IoT networks. Further, as customers move to the 4G network, operators can drive voice as well as data revenues increasing their average revenue per user (ARPU).

“Perhaps the biggest benefit of 4G smart feature phone adoption for operators is the opportunity to accelerate the adoption of more efficient technologies with much lower cost/bit metrics with users on 4G/5G networks than on 2G/3G networks. Further, operators have the potential to drive voice as well as data revenues and, in the process, increase the 4G ARPU. It will help operators achieve a return on 4G equipment and network rollouts. We estimate close to US$ 15 Billion in connectivity service revenues will be generated, cumulatively, between 2019 and 2021,” says Varun Mishra, Research Analyst at Counterpoint Research.

This report is available for subscribing clients and for purchase on our research portal. Please feel free to reach out to us at press(at)counterpointresearch.com for further questions regarding our in-depth latest research, insights or press enquiries.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in high-tech industries.

Analyst Contacts:

Neil Shah
+91 993-021-8469
neil@counterpointresearch.com

Tarun Pathak
+91 997-121-3665
tarun@counterpointresearch.com

Varun Mishra
+91 991-502-0142
varun@counterpointresearch.com

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Picture Credit: Neil Palmer (CIAT): Flickr

The post Smart Feature Phones to Create US$28 billion Revenue Opportunity appeared first on Counterpoint.

Market Summary:

• The global, premium smartphone segment grew faster (+19%) than the overall smartphone segment (-5%) in Q3 2018. Growth was driven by new iPhones and flagship launches of Chinese players like OPPO and vivo.
• The premium smartphone segment represented 22% of the global smartphone market share during Q3 2018.
• Close to 40 OEMs compete in the premium segment globally, out of which the top five players account for almost 89% of shipments.
• Apple led the global premium smartphone segment capturing 47% share of the segment, followed by Samsung (22%), Huawei (12%), vivo (5%), OPPO (5%) and Xiaomi (3%).
• Huawei’s share (12%) in the premium segment hit double digits for the first time.
• Within the premium segment, the $400-$600 price-band was the sweet spot as it contributed 46% to the total premium segment by volume.
• There is slightly more brand diversity in the premium smartphone segment now as brands are targeting the premium segment to strengthen their bottom-line profits.
• The mix between price bands remains somewhat unstable. The price bands comprise relatively few high-volume models, therefore a change in a wholesale price of one product that shifts it out of a price band can lead to sharp change in the overall size of the price band itself.
• Samsung led the $400-$600 segment with 25% share followed closely by Apple (21%), Huawei (17%), vivo (10%) and OPPO (7%).
• OnePlus remains one of the fastest growing brands in the $400-$600 segment. OnePlus sales were driven by India, China and the UK. In India, OnePlus continues to lead the premium smartphone segment for the second successive quartercapturing 30% of the market driven by the strong performance of its OnePlus 6. It was also amongst the top five premium smartphone OEMs in France (#4), Germany (#4), Italy (#4), Netherlands (#4), Sweden (#4) and UK (#4) due to strong initial sales of the OnePlus 6.
• In the $600-$800 segment, Apple and Samsung volumes represented 81% of shipments while Huawei share increased driven by P20 series shipments.
• In the $800+ segment, Apple clearly dominated with 80% share during the quarter.
• The premium segment growth for OPPO, vivo and Xiaomi was driven by performances in China. For OnePlus and Huawei, growth was generated outside China. OPPO R17 and Find X drove volumes for OPPO while X23 and Nex series did well for vivo.

Exhibit 1: Q3 2018 Premium Smartphone Segment Competition Trends Across Price Tiers*

Source: Counterpoint Research Market Monitor Q3 2018

• Apple and Samsung sales continue to be driven by developed markets like the USA, China, Japan, Korea and countries in Western Europe.
• Google enters among top five premium smartphone brands in WE during the quarter.
• Below are the top five brands in the premium segment by different regions.

Exhibit 2: Premium Smartphone Segment Rankings of OEMs by Regions Q3 2018

Source: Counterpoint Research Market Monitor Q3 2018

Going forward, we estimate that the premium smartphone segment will grow in Q4 2018 driven by a full quarter of sales of new iPhones. We further expect that vertically integrated companies will leverage their expertise to gain share in the segment. In terms of distribution, premium brands sales are skewed in favor of offline retail. The major MNOs and multichannel stores remain the primary channel for these devices. This is especially true in European markets. This share has been gradually increasing as independent retail stores have been under pressure due to the operators moving away from direct subsidy.

*Pricing analysis is based on wholesale pricing

** Premium segment >$400

The post Premium Smartphone Segment Captures Over One-Fifth of the Smartphone Sales appeared first on Counterpoint.

For the first time in Q2 2018, Facebook released the numbers of users using at least one of its apps (Facebook, WhatsApp, Instagram or Messenger) each month. The number is a staggering 2.6 billion in the third quarter up from 2.5 billion a quarter ago. Facebook reached a milestone of over one billion active users during second quarter of the year. With over 1 billion Stories shared on the platform every day, Facebook is well-positioned to leverage the growth of Stories and Instagram. This is the best bet for the company to realize better monetization opportunities. A few key points highlighting growth opportunities for Facebook over the next couple of years:

• While passive consumption of videos has displaced interaction on Facebook lately, Instagram which is more interest based, has become increasingly popular within its users enabling them to share, explore and connect with people having common interests in a better and controlled way.
• Stories on Instagram is one of the key activities driving users to the platform. There are over 400 million people who create Stories daily on Instagram. The engagement is far higher than it is on Facebook or WhatsApp Stories. Hence, it makes sense for Facebook to divert resources towards making immersive ad experiences around Instagram Stories which is already doing well.
• Ads in Stories are likely to perform better over ads in feeds as the former appears less intrusive and consumption of Stories is an activity initiated by the consumer. Additionally, shopping within Stories is another bigger opportunity for both the company and its advertisers. As per Facebook, 90 million people tap to reveal product tags and posts every month to learn more about them. There are more than 25 million Instagram business profiles and two million advertisers, which presents a great opportunity for Facebook in this space.
• As per Facebook, it is leading in Stories in basically every country. This says a lot about momentum and opportunity ahead.
• During the quarter, ads in Instagram Stories contributed impressive growth for Facebook although these ads were monetized at lower rates compared to Feed Ads. It is early times for Facebook to develop its ad products which are better optimized for Stories. This is an important space where Facebook needs to put more resources.
• Facebook has started rolling out ads in Facebook Stories from third quarter onwards, but we are not sure if that will be as effective as the feed advertisement on the platform. One of the assumptions behind the statement is users will be unwilling to create multiple Stories on multiple platforms. The Stories on Instagram already gives an option to publish on Facebook. This might restrict the need for creating a separate story on a different platform. The future of Stories might demand seamless flow between these three platforms and not mutually exclusive of each other.
• Another potential opportunity within Instagram is its “Explore” section in Instagram which is growing fast and responsible for 20% of the time that people spend on Instagram. As per Facebook, it has not built any ad experience around it yet, but that can be a good opportunity for advertisers.
• While Stories and Explore can be a good revenue opportunity for Facebook on Instagram, the revenue opportunities for Messenger, Facebook or WhatsApp can demand a different course of action. Passive consumption on Facebook is a challenge and private messaging is more aligned in favor of WhatsApp. Hence, Feed ads are likely to be popular. Going forward, there is the opportunity for the platform pivoting to new use cases for users.
• Market Place is one such example which has seen good traction recently. As per Facebook, 800 million people use market place. The nearby shopping experience is likely to emerge as an important category. Another area which Facebook mentioned in its earnings is room for rolling out services like Dating, Job, Fund raising and other opportunities for small medium businesses on Facebook. This is a good idea. Imagine a scenario where a candidate is swiping left or right as a match for its dream job and similar activity is happening on other side from employer side. We are not sure if a job applicant would like to use their Facebook profile for such activity, but it is a potential new model.
• For WhatsApp and Messenger, Facebook is likely to explore paid messaging by enabling businesses to pay to send messages to users. There are more than three million accounts on WhatsApp Business—great opportunity.
• The only challenge here is Facebook rightly assumes that paid messaging will make businesses think twice and be more selective. There will be millions of businesses exploring this option. There remain challenges for ad positioning and profiling of users for Facebook. WhatsApp has an image amongst its users as being non-intrusive and a secure platform. So, Facebook should be very careful in monetizing paid messaging or ads on status. A potential use case may be a premium model where only selected activities can be allowed for certain businesses like Travel or Hospitality where a customer is getting the useful confirmation or registration notifications directly on WhatsApp.
• Payments is another revenue opportunity for Facebook.
• Payments is one segment which also helps the company to achieve beyond its core mission of connecting people to greater financial inclusion.
• Facebook has already started rolling out payments within WhatsApp. Even its beta mode generated lot of excitement within users–especially in emerging markets like India. A lot of small and medium business’ depend only on WhatsApp and Facebook pages as their primary identity for their business. Additionally, strong traction for Facebook Market place also presents an opportunity in payments the space. We will explore this opportunity in a separate blog post.

To conclude, we believe that Facebook has achieved something truly remarkable in connecting almost a third of the population of the planet. And, it can add more users as 30% of the world’s population is still not connected. However, the growth of the company will not depend on how many more people it can connect, but how relevant it can be for its existing users. The privacy and security of users’ data will be of utmost importance. The Cambridge Analytica scandal was a salutary lesson. It has started investing more in this, as a result. Facebook now needs to create more monetization opportunities from its platforms to offset the investment in implementing security and privacy. Instagram along with payments can be its big bet in the advertisement space.

The post Facebook Needs to Bet Big on Instagram and Payments for Monetization Opportunities Ahead appeared first on Counterpoint.