LG has been investing in mid-range and lower-end devices for a long time but has also at least pursued a logical business policy toward the top models, but not after the LG G6. After that, the mobile department starts to crumble, often changing its decisions to exit or return to certain markets. Unfortunately, the latest rumor suggests that LG will soon give up the production of smartphones by shutting their phones business down or selling it.
Huawei destroys the competition in Chinese smartphone market
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In the price competition in overseas markets, the use of low-cost strategies will often open the market quickly, but at the same time will quickly fall into a price war. Taking into account factors such as comprehensive price positioning,
This, mind you, is not the same 'blacklisting' that destroyed Huawei's smartphone market share worldwide, that's a much more complex ban on any US companies, or even companies using US technology, doing business with Huawei.
Not that we would have expected anything else, of course. It remains to be seen what the new Biden administration will do about the Trump administration's various bans aimed at Chinese companies. For the good of competition in the smartphone space across the world, let's hope they will be overturned. No announcements to that effect have been made so far, however.
Overholt: I agree with everything you say: if we had the market access, the competition in so many areas would make their subsidies impossible to sustain. They would go bust trying to keep Huawei and UnionPay and every other second sector of their economy going on a subsidy basis, so I agree we should keep hammering them about the subsidies. It's a real issue. But we need to be clear about priorities of the issues.
McFadden: Okay, this one comes from Dr. Bernard Fennell from the National War College. One key argument of markets is that they produce the most efficient allocation of capital, and that competition drives innovation. Government involvement, by that logic, reduces economic efficiency. This position is quite well-supported empirically, so how is it that China's state-led economic policies are successful, and if a centrally planned or at least directed economy is competitive, then why are we so committed to free-market capitalism?
Huawei this month struck a deal to sell its budget brand Honor to a Chinese government-backed consortium, which may heighten competition in the smartphone arena. But the threat from Huawei itself is likely to diminish until it can somehow get around a ban on American software and circuitry, such as by building its own Android-based operating system of apps.
In addition, after the rise of neoclassical economics and the consumer movement in the 1970s, policymakers believed they knew the optimal market structure: competition. The 1996 Telecommunications Act was the culmination of this hubris. As a result of this legislation, not only were tens of billions of dollars in capital spending poured down the drain, but Lucent and Nortel were driven off a cliff, stupidly financing the equipment investment of hundreds of telco entrants that soon went bankrupt.
The COVID-19 pandemic has disrupted operations for companies all over the world. But some have felt the pain more than others. Apple and Huawei managed to grow their shares of the smartphone market in the second quarter of this year, at the expense of Samsung and Xiaomi. Not only did Huawei and Apple find a way to connect with consumers at a time when those consumers were distracted, they also found a way to keep their supply chains moving.
Information technology market research outfit Gartner gathered the numbers. For the three-month stretch ending in June, shipments of Huawei smartphones "only" fell 6.8%, from 58 million units to 54.1 million. Apple's iPhone shipments fell ever so slightly, from 38.5 million units in Q2 of 2019 to a little less than 38.4 million -- a 0.4% year-over-year decline. Samsung's shipments tumbled 27.1%, and up-and-coming Xiaomi's slipped 21.5%. Chinese electronic company Oppo's unit shipments were off nearly 16%.
Gartner's estimates jibe with the comparable Q2 smartphone market report from IDC. IDC's numbers, however, suggest Apple's shipments actually grew from 33.8 million to 37.6 million, leading to an even bigger gain in market share.
It should be noted that China -- where Huawei is based -- was the big driver of Huawei's growth last quarter. IDC indicates that of the 55.8 million smartphones it delivered during the second quarter, 39.7 million of them were ultimately delivered to Chinese distributors. Apple made progress in China last quarter as well, but it remains a minor player in that market. It still only sold 7.3 million iPhones in China in Q2, upping its market share in that country to a still-modest 8.3%.
Rivals have reason to remain worried, as the company is clearly doing something right even if most of its success is fostered from within its own country. China is home to roughly 1.4 billion people, and according to NewZoo, around 850 million smartphone users. That makes it the world's biggest market. It can't be ignored by phone manufacturers.
That's a worst-case scenario ultimately rooted in a U.S.-China trade war that's frequently taken aim specifically at Huawei. That battle escalated in August when the United States' Department of Commerce and the Bureau of Industry and Security required U.S. companies to obtain a special license before supplying Huawei and its affiliates with computer chips. Ming-Chi Kuo, an analyst with Tianfeng International, fears this latest layer of restrictions has the potential to squeeze Huawei out of the smartphone market. At the very least, a lack of access to the best smartphone semiconductors would mean the loss of recently won market share. Its competition would step up to claim their piece of that share, but if Samsung's steep deterioration of market share is about more than COVID-19 turbulence, Apple then looks best-positioned to win the bulk of that business.
I can shorten all this text and analyzing into few words everybody alreadyknows: because of Elop. Elop killed MeeGo, Elop killed Meltemi, Elop chose an OS that was inferior, lacked features and was even more late in the ecosystem war than MeeGo ever was and went all-in with it. All that money and R&D muscle from Microsoft and the global market share is still hovering around 2%. I claim that even Symbian would have more market share today if it were alive and patched. Nokia's HW was definitely up to par with competition so the only problem is/was the OS and ecosystem. And lets face it, Microsoft is not exactly the most hip and loved brand in the world today.
There was a time when the market was "nascent". At that point, all you need is the right price & product with an incredible supply chain and you can wipe out your competition. Nokia did that brilliantly. And grew as a result.
5G telecommunications equipment provided an especially compelling case for U.S. restrictions, because the United States faced a closing window of opportunity to prevent Chinese dominance of a strategic technology. But each technology area has a different strategic profile, and few of them will present as clear-cut a case for so many restrictive measures. AI software, social media platforms, smartphones, drones, Internet of Things devices, routers, advanced batteries, semiconductors, cloud services: they all have distinct national security implications, economic impacts, marketplace dynamics, supply chains, and innovation trajectories. In many cases, strong new U.S. government technology controls could do more harm than good.
While certainly possible, more likely, it's the 76% market share that Google enjoys over the mobile OS market that is Google's real concern. Losing the second-largest smartphone manufacturer in the world as a customer would be bad enough, but if that company then went out and created its own mobile OS, it'd be a bit of a long shot, but they could start cutting into Google's market share.
It may be unavoidable though, North America may never be seriously open to competition from Chinese technology, and European sales will always depend on Google services, which will always be susceptible to getting cut off again. For Huawei, Europe will never be a reliable market so long as it has to rely on Android. Only producing better products than Google can force open that market for good. On the plus side, you can't lose what you'll never have, so there isn't much stopping China from just making it official and going all in on building its tech industry to openly compete with whatever America has going.
American companies have never faced real competition for software services from anywhere other than other American companies, and that 'competition' for the past decade and a half was just so they'd get noticed by the bigger guys who would then swoop in and buy the company outright. That isn't real market competition, that's a reality television show.
Last year, Huawei grew rapidly in overseas markets but lost its home crown to domestic rival Oppo Electronics Corp. The firm said it would streamline its smartphone product lineup and improve supply chain management.
"Our research shows that if a firm's smartphone sales exceed 10 percent share in a single market, it will have bigger say in its ties with retailers and handset parts makers. Huawei needs to work in this direction," she added.
Apple Watch walked into a hyped-up market for smartwatches and destroyed the competition, despite constant reports that claimed it wasn't selling well and that consumers really wanted a round watch. Apple then more stealthily introduced another wearable: AirPods, and immediately changed how people listen to music.
Apple certainly continues to face a series of difficult challenges: growth in smartphone sales continues to slow; a strong US dollar has made Apple's profits earned overseas appear to be smaller; and increasingly desperate competitors are now dumping products into the market, including Google's fire sale clearance of Pixel models in the US; Samsung's lower end, high volume A series phones being pushed out globally; and Huawei's phones forced from western markets into China's domestic sales. 2ff7e9595c
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