Bottom line: A new arbitration claim by a LeEco supplier could trigger a domino effect that sends the company into crisis, while TCL’s first BlackBerry model is likely to get lukewarm reviews when it debuts in March.
TCL teases first BlackBerry model at CES
We’ll close out the week with a couple of smartphone headlines, which seems appropriate since the world’s biggest consumer electronics show, CES, is taking place this week in Las Vegas. All 3 companies in the news are showing off their wares at CES, including cellphone stalwart TCL (Shenzhen: 000100), which is teasing us with video of its first model under a new tie-up with struggling smartphone pioneer BlackBerry (Toronto: BB).
Meantime, the other company on my radar, the cash-challenged LeEco (Shenzhen: 300104), was also in CES headlines earlier this week after showing off a sexy new energy car it’s helping to develop. But the company has just landed in a far more ominous headline here in China, where one of its smartphone manufacturing partners is calling for arbitration to try and get cash for a growing pile of unpaid bills. Read Full Post…
Bottom line: Huawei’s revenue growth for 2017 is likely to drop by more than half from 2016’s rate of 32 percent as it cuts its money-losing businesses, with the biggest slowdown likely to come in its smartphone unit.
Huawei to focus on profitability in 2017
Quality over quantity is a growing theme in China these days, as the nation puts aside its previous pursuit of high growth at any cost in exchange for more sustainable expansion in high-quality areas. After starting at the top in Beijing, that theme is trickling down the corporate food chain to telecoms giant Huawei, whose New Year’s message hints that company growth could slow sharply this year.
Or course everything is relative, since Huawei has just announced preliminary results that show its revenue for 2016 jumped an impressive 32 percent to 520 billion yuan, or a whopping $74 billion. To put things in perspective, its biggest global rival Ericsson (Stockholm: ERICb) is seeing its sales contract, and is expected to post about $65 billion in revenue this year. Read Full Post…
Bottom line: ZTE’s move into smart cars and Gome’s into smartphones follow a typical Chinese pattern of herd mentality investing, and are both likely to fare poorly.
ZTE buys car maker Granton
A couple of headlines are shining a spotlight on the herd mentality you often see among Chinese companies looking for the next big growth opportunity. One of those has telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063) buying a small bus maker, parroting a trend among a growing number of firms who see the future in smart vehicles. The other has the increasingly irrelevant electronics retailer Gome (HKEx: 493) rolling into the smartphone business, an area in desperate need of consolidation due to cutthroat competition. Read Full Post…
The first third-quarter smartphone sales data are out, revealing that Huawei retained its leading position in the fiercely competitive Chinese market. But the high flying Huawei also saw its share drop by more than one percentage point, indicating its momentum may be slowing. At the same time, other reports are saying that Meizu, the Alibaba-backed (NYSE: BABA) smartphone brand that isn’t in the China top 5, has signed on a small group of new investors in a deal that hints at a possible upcoming IPO.
Let’s jump right in with the big-picture numbers, which are coming in new quarterly data from TrendForce. According to that data, Huawei controlled 19.1 percent of the Chinese smartphone market in the third quarter, down from 20.4 percent in the previous quarter. (Chinese article) Total smartphone sales in China reached 168 million for the quarter. Read Full Post…
Bottom line: Apple will need to lower its prices to stabilize its position in China, while Huawei could also soon face pricing pressure due to growing challenges from up-and-comers like Oppo and Vivo.
Huawei’s sales surge in Q3
Two of China’s top smartphone brands have been in the headlines in recent days, spotlighting a rapid ascension of the homegrown Huawei and the equally rapid decline of global giant Apple (Nasdaq: AAPL).
On the upside of the story, the surging Huawei announced it recently passed the 100 million mark in smartphones produced this year, reaching the milestone two months faster than in 2015. Meantime, Apple’s CEO was in China for at least the third time this year, announcing a new research and development center in a push to revive his company’s fast-fading position in its largest market after the United States. Read Full Post…
Bottom line: LeEco’s major new push into the US smart TV market could achieve some success due to its recent Vizio purchase, though its concurrent smartphone drive will be a dud due to lawsuits and mediocre product quality.
LeEco revs for US smart TV launch
Watch out, Comcast (Nasdaq: CMCSA) and Apple (Nasdaq: AAPL). Chinese online video superstar LeEco (Shenzhen: 300104) is taking direct aim at the lucrative US online video and smartphone markets, with plans for major new product launches later this month. I’ll admit I’m doing a bit of educated guessing here, since the company formally known as LeTV hasn’t made any formal announcements yet on its US ambitions.
But all the signs certainly point in that direction, following LeEco’s headline-making $2 billion July purchase of Vizio, a struggling maker of cheap, no-name TVs that is one of the biggest and also most obscure names in the huge US market. Added to that is LeEco’s recent issue of invitations to an event set for October 19 in San Francisco, where it says it will announce its “disruptive vision of a connected ecosystem of content-driven smart devices to the US market.” (English article) Read Full Post…
Bottom line: Lenovo’s big job cuts at Motorola could auger a write-off of the brand in the next half year, while Xiaomi’s huge offline expansion looks necessary but will further undermine its trendy high-tech image.
Lenovo slashes jobs at Moto
Two former smartphone high-flyers are in the headlines today, with PC giant Lenovo (HKEx: 992) and Xiaomi both taking steps to try and regain their former glory. Lenovo’s move looks like a major retreat for its struggling Motorola brand, which has just slashed more than half of its staff. Meantime, Xiaomi has just rolled out two higher-end models in a bid to go upscale. But what caught my attention were details of the company’s plans to sharply boost its offline presence in the latest reports.
Both stories reflect companies in transition, after each tumbled from the ranks of China’s top smartphone brands due to failure to build a loyal customer base. Lenovo bought Motorola for $2.9 billion 2 years ago and was hoping to position the faded brand as its premium product line. Meantime, Xiaomi skyrocketed to fame 3 years ago partly on an online-only sales model that helped it control costs and position itself as a trendy, cutting-edge brand. Read Full Post…
Bottom line: Smartisan’s plummeting value and big losses point to a possible sale or closure of the company by year-end, while LeEco’s weak smartphone sales reflect the market’s overheated condition.
Smartisan value gets hammered
Separate stories from 2 of China’s decidedly second-tier smartphone brands highlight ongoing stress in the overheated sector, even though a major casualty has yet to emerge. But that could change soon, with word that the asset value of high-brow brand Smartisan has plummeted over the last year, as disclosed in a new filing by one of its investors. Meantime, online video superstar LeEco (Shenzhen: 300104) has disclosed sales figures that look quite weak for its own smartphone business, which it launched more than a year ago with big hopes.
I’ve previously predicted we would see one or two major casualties from China’s crowded smartphone sector this year, though we have yet to see any big names close or get purchased. But there are still 3 months left in 2016, so perhaps we’ll see one or two mid-tier players finally decide to call it quits. Read Full Post…
Bottom line: The iPhone 7 series of smartphones will log lower sales in China at their launch than the previous iPhone 6 series, due to minimal changes and similar designs to their predecessors.
iPhone 7 to get tepid China reception
By Xiaohan Tay
Apple(Nasdaq: AAPL) announced the launch of its latest iPhone 7 and 7 Plus on 7 September and there were a few things that stood out. The new iPhone is finally IP67 certified and water resistant, has a better dual camera with a lower aperture, and longer battery life. These are upgraded features that consumers will appreciate. Read Full Post…
Bottom line: Xiaomi’s progress in India shows its global expansion is moving ahead despite a recent setback in Brazil, but it will need to replicate that success in other markets to revive its sputtering fortunes.
Xiaomi wristband wins North Korean fans
Former smartphone sensation Xiaomi is in a couple of headlines as the week winds down, both showing how the company is looking to foreign markets to offset its sputtering business in China. The bigger of the items shows how quickly Xiaomi is advancing in India, where it has consolidated its position as the third largest brand just 2 years after entering the market. The second item is a bit quirkier, saying that Xiaomi’s wearable fitness band has become a hot-seller in North Korea, a market that isn’t exactly known for its consumer culture. Read Full Post…
Bottom line: Xiaomi could launch in the US within the next 12 months and benefit from its recent tie-up with Microsoft, but it will face a big uphill battle due to stiff competition, lack of name recognition and unexciting models.
Xiaomi eyes US — again
Following several recent false starts, fading Chinese smartphone sensation Xiaomiis saying it’s aiming to enter the tough US market soon. We’ve heard similar talk before, and at one time such a move would have been quite exciting and controversial when some were comparing Xiaomi to a China’s homegrown answer to Apple (Nasadq: AAPL). But Xiaomi’s star has faded considerably over the last year, partly due to intense competition in China but just as much due to a reputation for shoddy quality and unexciting phones. Read Full Post…
