People Really Love Small Cheap Computers

“China produced 621.021 million handsets in total during January-July 2012″

Wow! That’s multiples of the count of Wintel PCs. IDC reports 40% are smart phones. We know that share is increasing and has already surpassed Wintel. We know that people are doing more than talking with them. This is the biggest assault on the Wintel monopoly since the early days when all hope was extinguished by various lock-ins.

A clue to understanding the phenomenon is that notebooks continue to leave other formats of x86 PCs in the dust. People value mobility and compact systems. The smart thingies are the epitome of that. Even if people only rarely move station, they want that capability. Others are always on the move (e.g. restless youths and salesmen) and love to remain connected for the networking effect. Further evidence of that is tracked in Wikipedia’s statistics. 20% of their activity is mobile and that share is increasing. A year ago it was 10%. 100% per annum growth is a definite sign of disruptive technology.

see China turns out over 621 million handsets in January-July.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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14 Responses to People Really Love Small Cheap Computers

  1. JR says:

    @ Clarence Moon

    You are a marketing person apparently.

    How long do you think the iPhone will maintain it’s high price and hence it’s huge profit margin.

    Samsung have not done too badly in Q2 2012.

    Read this if you are capable of understanding it. You obviously did not read it the last time I posted it.
    http://www.businessweek.com/ap/2012-08-15/a-look-at-recent-tech-industry-earnings

    — July 6: Samsung Electronics Co. estimates its second-quarter operating profit at 6.5 trillion won to 6.9 trillion won ($5.7 billion to $6.1 billion), a 79 percent jump from a year earlier based on the midpoint of that range. Analysts say the sharp rise in operating profit was driven by the success of its Galaxy line of smartphones. However, Samsung’s stock fell as lower-than-expected overall sales underlined the threat from Europe’s economic malaise.

  2. Clarence Moon says:

    Apple is down to 18% of smart phones shipping these days so Android/Linux is succeeding…

    That is a rather distorted view of things, Mr. Pogson, and perhaps you are somewhat unaware of how things work in product markets. It is not Apple vs Android at all. It is Apple vs Samsung vs HTC vs Nokia vs RIM vs Sony Ericsson vs Motorola vs others, don’t you see? HTC is willing to stick a knife in Samsung’s back if the opportunity arises and vice-versa. They are not some sort of allied alliance out to unseat the iOS kingdom.

    All the financial evidence shows that Apple is in the lead in terms of dominating the desirable market segments and is moving away from the pack who squabble with one another over what is left after Apple takes their share like hyenas fighting over the lion’s leftovers. Maybe Microsoft can change all that, but the issue is in doubt.

    Even Mr. O seems to understand that there is no Android, Inc competing in this market. He seems to be color blind as well as his claimed dyslexia in terms of who can survive based on the charts presented, but you can’t have everything.

    One thought that occurs to me when pondering all this is that Google’s picking Motorola looks pretty stupid. They were on the ropes prior to Google coming around. Perhaps the first new phone they produce should be called the “Android Albatross”!

  3. oiaohm says:

    Clarence Moon You are forgetting the 25 cent stamp example to a post office. Those small customers are just as important as ones that make you large profit.

    Google main reason for acquiring Motorola was its patent stock pile to protect itself.

    Clarence Moon
    “The conventional wisdom is “out of business” if you pay total attention to the analogy that you try to draw with MS DOS. There were a lot of companies making PC clones along with IBM making the “real” PC in the DOS days, now there are just a few and they have sorted themselves out into expected product strata.”

    There is a difference. Look at Phenom site http://www.digitaltrends.com/mobile/android-and-apple-marketshare-versus-profit/ Not the last year but the first year.

    2006 everyone is squeezed by Nokia. All the players in the mobile phone market are use to competing with each other on tight margins. Lot of the players at the start of the DOS age were not so made some stupid mistakes and died. The phone markers will have more endurance.

    One thing the mobile device makers avoid is selling under cost.

    The 2011 and 2012 estimates does not have apple growing market share.

    Clarence Moon yes there is a serous risk that all the brands we know vaporise replace by china based companies. Since that is where lots of the devices are made. This is the reality companies have to become aware of is not owning your factories put you at risk of being killed by the factory competing against you.

    “Apple’s brand commands a significant price differential on its own and the Android makers”

    Apple as always got a signification price differential over there competitors. No other phone maker before iphone or since has made that percentage mark-up on phone. Apple is being there normal abnormal in the market. Same applies in mp3 players and everything else.

    Just to really kick your stupidity in the teeth Clarence moon.
    http://www.phonearena.com/news/Sony-ekes-out-small-operating-profit-cites-7.4-million-phones-sold-strong-performance-of-the-Xperia-S_id32927
    Every department of Sony has taken hits the only one go grow and bring in more profit for Sony as been the Android phone.

    Yes apple is taking the Lion share. The Android makers themselves are not doing too badly. Lot of companies are being propped up by the Android phones they are producing. This is why those companies are not going to pull out. They pull out they die.

    40 to 60% profit after advertising and build costs is not a problem. Android you need to do bugger all advertising to move it. Since the advertising cost is shared between all vendors.

    Clarence Moon
    “struggle to make up for that with price cutting.”
    This is really bull. If you know sony numbers they are taking a bigger percent profit per phone now then when they were just feature phones.

    So its not price cutting. The Android makers are cutting cost by improving production effectiveness. Yet in the process they are increase percentage per unit. No one at moment is selling there phones under cost. Blood baths only happen if that happens.

    Nokia use to sell some entry models under cost. That nokia has been pushed out and Apple has taken there lead profit location it is better for makers.

    Clarence Moon the reality here is without factories you don’t have phones. The factory makes the same amount of money or more if it spits out an Android vs a iphone. Apple does not design silicon.

    Samsung and Motorola do.

    Also people fail to read because most don’t know that HTC for silicon uses ST-Ericsson. So Sony takes income from all HTC and all Sony phone sold.

    HTC is having to license so there is a chance they will go under.

    Clarence Moon Dell, HP, Acer, Asus, Lenovo, Toshiba name the thing they all had in common that kept them alive in the MS-Dos age.

    They all had there own factories and the means to produce almost everything. As the fight in the MS-Dos age got harder the ones without there own factories got pushed a side. Late on as those factories moved to china and other places we started seeing the parts to make white box computers appear.

    Clarence Moon I am expect the dos age to follow out perfectly. Right down to the companies not owning there factories ending up under cut by the factories they are using.

    Some companies like Sony and Motorola may have low profit for a time but if there management is sane they will make it out the other side.

    Dell out of the PC makers is the most at risk. It does not have any of its own silicon production.

    Clarence Moon remember at the mobile phone conferences all the Android vendors buy up a section of floor space each then join those up to do a unified display. Microsoft entering this market is going to have to spend lots of money particularly if they don’t get vendor support to compete against these displays.

    This is the true reality. Apple and Microsoft will run into the same problem. 1 vendor is only allows to buy so much floor space. Android vendors are party cheating the rules.

    This funny problem is the same problem IBM run into with OS/2 warp trying to take on the Microsoft Windows and Dos as a late entry. Does not bode well for surface.

  4. Clarence Moon ignoring costs, wrote, “To make progress against Apple, the Android vendors can only feature price, keeping themselves poor by comparison.”

    Android/Linux OEMs have costs as low as or lower than Apple so they can make good profit at lower selling prices. OEMs are not fools. They can and do maximize profit by balancing margin/prices and unit sales. Apple is down to 18% of smart phones shipping these days so Android/Linux is succeeding and very few of the OEMs shipping it have lost money. OTOH Nokia and others are in deep do-do. The only place that Apple is beating Android/Linux appears to be in tablets at the moment. MacOS is not doing any better than GNU/Linux which is growing rapidly in unit sales.

  5. Clarence Moon says:

    He must not have noticed Android/Linux seriously shoving iPhone to the back of the bus in 2011 and out the back door in 2012.

    My claim was in regard to the profitability of the Android device companies, Mr. Pogson, not to their ubiquity. As Phenom points out, Apple remains as the profit king. To make progress against Apple, the Android vendors can only feature price, keeping themselves poor by comparison.

    Apple’s brand commands a significant price differential on its own and the Android makers, even brands like Sony, struggle to make up for that with price cutting. They cannot long survive under such circumstances and most likely only one or two will be around in a few years. My bet is on Samsung and maybe HTC. Google will tire of Motorola shortly and goon up their business, harming the other Android vendors in the process. Everyone else will tire of working so hard for so little profit and exit the business.

  6. Clarence Moon says:

    Clarence Moon really where is there for the Android makers to go.

    The conventional wisdom is “out of business” if you pay total attention to the analogy that you try to draw with MS DOS. There were a lot of companies making PC clones along with IBM making the “real” PC in the DOS days, now there are just a few and they have sorted themselves out into expected product strata. Apple is a highly differentiated, vertically integrated enterprise, even more so with their own increasing number of stores. Dell conquered the mail-order/on-line niche long ago. HP absorbed the bulk of the shopping good business and Acer, Asus, Lenovo, Toshiba, and others fight it out to be the leading low price producer.

    Other than hardware features, there is nothing to distinguish these suppliers from one another and the same is pretty much true of phones today.

    Microsoft is working to liven that situation up, I think, with the Nokia partnership and the introduction of Surface. If they are successful, they will merely provide another vertical world alongside Apple and there is no such thing in the PC world to compare that to.

  7. Phenom says:

    No, Pogson. In 2011 the story just went on:
    http://www.digitaltrends.com/mobile/android-and-apple-marketshare-versus-profit/

    Wanna bet that picture will remain unchanged in November 2012?

  8. Clarence Moon linked to an article from 2010 to declare Android/Linux not doing too well for OEMs today… He must not have noticed Android/Linux seriously shoving iPhone to the back of the bus in 2011 and out the back door in 2012.

  9. oiaohm says:

    Clarence Moon Of course you fall back on 2010 figures.

    Before Android grew.

    http://www.forbes.com/sites/greatspeculations/2012/01/06/apple-getting-best-of-the-android-vs-iphone-economics/

    I am expecting apple to keep the best economics. Apple for a long time had better economics than Microsoft. PC vs Apple age.

    Clarence Moon
    “How long and why they might stay the course is still up in the air.”

    The makers of Android devices do not have the option to make Apple devices in most cases so can make zero profit at all from a idevice. They are mostly making a decent 40% on the hardware costs(including licensing patents and design) making android devices.

    Clarence Moon android market share is still growing. It has crossed the 50 percent mark. When it crosses 70 percent mark just like the PC age we will see application makers if the idevices start defection like they did before in the PC age.

    Microsoft most likely will be forced to release surface on arm at a very low profit margin even possible negative margin to get a foot hold.

    Basically the Android makers have three choices basically. Go Microsoft and risk being in the gun path as MS has to fight to get market share. Go android make some profit. Or go own OS and hope consumers like it.

    There is no go iphone or ipad for them.

    Clarence Moon really where is there for the Android makers to go. It is the MS-Dos age all over again.

  10. Clarence Moon says:

    Legions of fandroids to the contrary, the Android evolution has not generated much in the way of cash for its OEMs.

    How long and why they might stay the course is still up in the air.

  11. kozmcrae says:

    Phenom wrote:

    “No, people do not love small cheap computers. Poor people love cheap smartphones.”

    You are a piece of she it Phenom. You don’t even know what poor is.

  12. oiaohm says:

    Phenom
    http://arstechnica.com/apple/2012/08/users-choose-androids-over-iphones-due-to-larger-screens-android-market/

    Really its not as simple as you say.

    The great china firewall does not help iphone either.

  13. Phenom says:

    No, people do not love small cheap computers. Poor people love cheap smartphones. Rich people love expensive smartphones.

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