A couple of tie-ups from the hot smartphone space are making headlines these last few days, with up-and-comer Xiaomi and fast-fading global giant Nokia (Helsinki: NOK1V) both looking to Internet partners to boost their prospects. The first of the tie-ups will see Xioami partner with leading Internet portal Sina (Nasdaq: SINA) to sell Xiaomi’s second-generation smartphones online. Meantime, Nokia is tying up with Jingdong Mall, China’s second largest e-commerce firm, in a bid to reverse its downward slide in the world’s largest mobile market.
Tag Archives: Nokia
ZTE, Huawei Scale Back Invesments 中兴、华为收缩战线
A couple of months after suffering a major setback in the US, hobbled telecoms equipment giants Huawei and ZTE (HKEx: 763; Shenzhen: 000063) are trying hard to convince the world that they are still committed to expansion in the west with 2 new investment announcements. But neither announcement looks very exciting in terms of size, and both look like feeble efforts to try to prove that neither company is ready to admit a slowdown in its global expansion. Both cases involve investment in new product development, with ZTE announcing a plan to invest in the US and Huawei focusing on Europe.
News Digest: December 5 报摘： 2012年12月5日
The following press releases and media reports about Chinese companies were carried on December 5. To view a full article or story, click on the link next to the headline.
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- US Charges ‘Big Four’ Accountants Over China (English article)
- ZTE (HKEx: 763) Forms Strategic Tie-Up With China Development Bank (HKEx announcement)
- Nokia (Helsinki: NOK1V), China Mobile (HKEx: 941) In Lumina 920 Deal -Source (English article)
- Tencent (HKEx: 700) Microblog Adds Intelligent Keyword Search Feature (English article)
- Jingdong Mall, Winekee Partner with French Wine Estates (English article)
Chinese Smartphones on the Rise 中国智能手机崛起
Chinese smartphone makers have surged in their home market over the last year, coming from out of the blue to challenge big global names like Apple and Samsung. But their rise could be short-lived if they fail to innovate, paralleling a similar rapid rise and fall a decade ago for names like TCL (HKEx: 2618) and Ningbo Bird that are now just footnotes in the history of China’s large but highly competitive mobile market. The rapid rise of Chinese brands over the last year has been nothing short of remarkable, as China gets set to overtake the United States as the world’s largest smartphone market. At the end of last year, the market was still dominated by foreign names, with Samsung (Seoul: 005930), Nokia (Helsinki: NOK1V) and Apple (Nasdaq: AAPL) occupying three of the top four slots to control more than half of the market collectively.
Xiaomi Explores Internet TV 小米开发电视盒
Homegrown smartphone sensation Xiaomi is looking more and more like a Chinese version of global tech giant Apple (Nasdaq: AAPL) these days, following the latest reports that the company is preparing to launch an Internet TV product. I’m sure that Xiaomi’s marketing-savvy founder Lei Jun loves the comparisons his company is getting to the world’s biggest tech company, which of course would include the inevitable comparisons to Apple co-founder Steve Jobs. Perhaps Lei will even change his company’s English name to “Little Rice”, which is what Xiaomi means in Chinese, to play on Apple’s own food-related associations.
Lenovo Headed for M&A Hangover 联想激进并购或留下後患
I hate to sound too negative on PC giant Lenovo (HKEx: 992), as I really do admire this company for its noble aspirations to become China’s first truly commercial global tech giant. But that said, I have to say that I’m also increasingly concerned about Lenovo over the next 2-3 years, as its fixation with global acquisitions seems to be going on steroids these days. The company’s growing addiction to global M&A was on display once again in the headlines today with Lenovo’s announcement that it would acquire Stoneware, a US developer of cloud computing products and services. (company announcement)
Lenovo Waltzes With EMC, Eyes Nokia 联想“牵手”EMC
There are a couple of interesting news bits today on PC giant Lenovo (HKEx: 992), including a smart-looking new tie-up with data storage giant EMC (NYSE: EMC), and rumors that the company is weighing a potentially disastrous bid for struggling cellphone giant Nokia (Helsinki: NOK1V). All this comes as analysts and Lenovo itself are predicting it could overtake struggling Hewlett-Packard (NYSE: HPQ) for the title as the world’s biggest PC maker by the end of this year, becoming the first major Chinese high-tech brand to take such a global title.
Huawei Set For Europe Smartphone Blitz 华为智能手机全球营销首选欧洲
Telecoms equipment giant Huawei may be a familiar name to industry insiders, but as a consumer brand it has a long way to go as it tries to develop its consumer-oriented smartphone business. In pursuit of that aim, the company is gearing up for a massive marketing blitz that looks set to target the lucrative European market first, to be followed perhaps by an eventual try at the more difficult US market. The choice of Europe for its first global smartphone offensive looks smart, mirroring a similar path for the rise to prominence of Huawei’s core networking equipment business staring in the mid 2000s.
Huawei Goes on the Offensive 华为发起攻势
Maybe I’ve become a bit jaded after writing about Chinese companies for so long, but I’ll openly admit that I was quite encouraged by the latest reports that telecoms equipment giant Huawei has lodged a complaint in Europe accusing a company of monopolistic practices. The reason for my excitement is that after years of watching Chinese companies constantly assume a defensive posture on the global stage, it’s refreshing to finally see one go on the offensive to fight what it believes is unfair treatment. Whenever Chinese companies appear in the headlines due to conflicts overseas, the chances are nearly 100 percent that those companies are coming under attack by local interests, sometimes over allegations of unfair subsidies, and other times due to nationalistic concerns. In nearly every case, the accused Chinese company is likely to quickly assume a defensive posture, complaining that it’s being treated unfairly and arguing why the allegations are untrue. So it’s nice for once to finally see a Chinese company take the offensive and fight for its right when it believes it is receiving unfair treatment in the market. In this case Huawei lodging its anti-monopoly complaint after failing to license key 3G technology patents from a company called InterDigital (Nasdaq: IDCC). (English article) Huawei is accusing InterDigital of extortion, saying the company made “unreasonable and discriminatory demands” for rights to the patents for its 3G wireless technology. Huawei filed its complaint after it was sued in the US last year for patent infringement by InterDigital, which also sued Nokia (Helsinki: NOK1V) and LG Electronics (Seoul: 066570). So from that perspective, Huawei’s latest action is a bit reactionary to InterDigital’s lawsuit, and in fact this kind of suit and countersuit has unfortunately become quite common in the technology industry. But from my perspective, this kind of action by Huawei at least shows it finally realizes the global market is a tough and competitive place, and the only way it will be able to survive and succeed there is to play by the same rules as other major global companies. That means that it, as well as other Chinese companies, will need to use more aggressive tactics, not only when they come under direct attack but also when they are entering markets where local interests might want to use excuses like national security, unfair subsidies and broader xenophobic fears to keep them out of the market. Huawei tried out its legal attack skills at home last year, when it sued crosstown rival ZTE (HKEx: 763; Shenzhen: 000063) for patent infringement. (previous post) Now it appears to be taking its more aggressive strategy to the global stage, which, combined with a well-funded public relations campaign, could finally help it win better access to Western markets in the next couple of years.
Bottom line: Huawei’s new anti-monopoly complaint in Europe reflects a new more offensive posture that more Chinese companies need to take to succeed on the world stage.
Related postings 相关文章:
◙ Huawei Follows ZTE to Lower Profits 继中兴之后华为利润也降低
◙ Beijing Help Undermines Huawei Image Drive 中国商务部替华为出面或适得其反
ZTE Results: Waiting for Returns 中兴坚持低成本手机策略 亟需尽早盈利
I’m feeling slightly artistic this morning, hence my choice of headline for this posting which is a reference to the famous Samuel Beckett play “Waiting for Godot,” about 2 people excitedly waiting for a person who will probably never appear. The same story could be true for ZTE (HKEx: 763; Shenzhen: 000063), whose just-released results showed plunging profits and rapidly rising costs as the company takes a risky bet on the low-cost smartphone market that may bring in lots of new revenue but never pay any returns in the form of new profits. (results announcement; English article) Let’s take a closer look at the earnings, which show the company’s profit plunged nearly 50 percent from a year earlier in the fourth quarter, accelerating from a 40 percent decline in the previous quarter as profits for the year fell 37 percent. A closer look at the company’s income statement shows that costs rose sharply, with R&D and marketing expenses up 20 percent and 25 percent, respectively. Furthermore, the company’s annual profit would have tumbled even more if not for a big jump in one-time investment gains. ZTE has been quite direct about its desire to become a top-five cellphone maker in the next 2-3 years, and has embarked on a focused strategy to achieve that goal by rolling out a new line of lower cost smartphones priced very aggressively. That goal is certainly commendable and I applaud the company for staying focused on its aim despite the profit erosion that is clearly a cause of concern for investors. The company’s Hong Kong-listed shares are down 45 percent over the last 52 weeks, and have lost around 20 percent of their value so far this year, even as the broader market has rallied about 15 percent. The cellphone gamble is at once both a smart move and a very risky one. On the one hand, ZTE realizes its need to diversify beyond its core networking equipment business, which has run into numerous roadblocks in the last few years from western markets concerned about security issues. Cellphones are much less controversial and have steadier sales, and ZTE is drawing on its expertise as a low-cost manufacturer to focus on the lower end of the booming market for smartphones that can take advantage of high-speed 3G and 4G wireless networks. The only problem is that ZTE is hardly the only company to notice the trend, and is joining a very crowded market that includes heavyweights like Apple (Nasdaq: AAPL), Samsung (Seoul: 005930) and Nokia (Helsinki: NOK1V), not to mention hometown rival Huawei Technologies, which is making a similar aggressive smartphone play. At the end of the day there’s no reason a few companies can’t succeed in the low-cost smartphone market, and ZTE could certainly be one of those. But unless it can start to show some profits by the second half of this year from its cellphone gamble, look for trouble ahead for this company and continuing downward pressure on its stock.
Bottom line: ZTE’s latest results reflect its ongoing push into low-cost cellphones, but it needs to show returns by the second half of this year or risk losing investor confidence.
Related postings 相关文章:
◙ Baidu, ZTE Earnings: More of the Same 百度和中兴财报：看上去没变化
◙ Huawei and ZTE: Swapping Networking for Cellphones? 华为和中兴：转型进军手机市场？
◙ ZTE Faces More Profit Erosion With Latest Low-Cost Moves 中兴通讯以低价机抢占市场恐损及获利
Nokia Bets on China Telecom 诺基亚联手中国电信
The arrival of spring in China is bringing in a sudden surge of tech and telecoms VIPs, no doubt salivating over a market with more than a billion mobile subscribers and 500 million Internet users and growing. First came Apple (Nasdaq: AAPL) CEO Tim Cook, whose visit has included courtesy calls on the nation’s 3 telcos as well as his most recent visit with vice premier Li Keqiang, tipped to become the country’s new premier next year. Now he’s being followed by Nokia (Helsinki: NOK1V) CEO Stephen Elop, who has attended a high profile Beijing event to announce the launch of company’s first smartphone in China using Microsoft’s (Nasdaq: MSFT) latest Windows mobile operating system. (English article; Chinese article) But wait — there’s more. Apparently none other than Facebook founder and chief executive Mark Zuckerberg has also been sighted in China, visiting my own city of Shanghai just a month before the company prepares to make its multibillion-dollar IPO. I already talked about Cook’s visit yesterday (previous post), so will focus this time mostly on Elop and Nokia, which used to dominate the China cellphone market but has seen its share drop sharply in the last 2 years, mirroring a global trend. Elop is hoping to reverse the slide by retiring Nokia’s old operating system and betting on Windows new mobile OS. I found it both interesting and intriguing that Nokia has chosen the smallest of China’s 3 mobile carriers, China Telecom (HKEx: 728; NYSE: CHA), as partner for the launch of its first Windows-based smartphone in China, rolling out a Lumina model that will run on the carrier’s 3G network based on a technology called CDMA EVDO. The gamble on China Telecom looks like a smart move to me, as this telco is clearly the more aggressive and better organized of China’s 2 major carriers that use global technology in their 3G networks. The other company, China Unicom (HKEx: 762; NYSE: CHU), has been plagued by operational and management issues; and China’s third major telco, China Mobile (HKEx: 941; NYSE: CHL) uses a homegrown technology that most major developers have shunned so far. By signing up with China Telecom as its first partner, Nokia can be assured the carrier will give its phones special attention, unlike Apple’s iPhone, which is now offered by both China Telecom and Unicom. China Telecom has said it hopes to add 50 million or more 3G users to its network this year (previous post) as it aggressively chases the market in its drive to steal share from its other 2 rivals. Obviously Lumina phones will account for only a small portion of that, assuming that Chinese consumers like them. Still, that could translate to 3-5 million handset sales if the models prove popular. Meantime, here’s just a quick take on Zuckerman, who was seen shopping with his girlfried in Shanghai’s trendy Tianzfang district. (Englilsh article) The reports say Zuckerberg said he was on vacation, and I believe that’s probably true, since he was in Shanghai and not Beijing and he has much bigger issues at the moment with his company’s upcoming IPO. But he clearly still has his eye on the China market, and I wouldn’t be surprised to see him make another more formal China visit sometime later this year after the IPO.
Bottom line: Nokia’s pairing with China Telecom for its first Windows smartphone launch in China looks like a smart move, with sales of up to 5 million units possible this year.
Related postings 相关文章:
◙ Nokia Looks For Fresh China Start With New Country Chief 诺基亚中国区新官欲扭颓势
◙ China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城
◙ Nokia Facing China Backlash After Years of Dominance 诺基亚手机在华“失宠”
