Tech in 2019: what’s in store for APAC
Posted: January 4, 2019 Filed under: Uncategorized | Tags: AI Speech Lab, apac, apple, china, cybersecurity, deep tech nexus, hacking, huawei, india, microsoft, modi, MSS, SGInnovate, singapore, smart cities, state sponsored cyber espionage, trump, US Leave a comment
In today’s globalised business world, what happens in Shenzhen or Singapore may be just as important as trends closer to home. To that end, I recently offered IDG Connect the following round-up of the past year in APAC, and a few notes on what we can expect from the months ahead. As Apple’s dire performance in China has shown, Asia increasingly matters to Western tech firms, their customers, shareholders and partners:
Asia’s technology market had more global exposure in 2018 than in many recent years. There’s just one problem: most of it was negative. President Trump has begun a de facto trade war with China which has now morphed into a full-fledged stand-off on several fronts, with cyber-espionage and perceived unfair Chinese trading practices at the heart of US grievances. As we head into 2019 expect tensions to increase, with other south-east Asian nations potentially benefitting as US firms pull their supply chain operations from the Middle Kingdom.
It could be an extremely nervy time for Silicon Valley CEOs.
The trade war continues
The tit-for-tat trade war started in 2018 might have so far steered largely clear of tech goods, although some firms have begun to warn of an impact on profits. But the industry has certainly been at the heart of the stand-off between the world’s superpowers. In January a deal between Huawei and AT&T to sell the former’s smartphones in the US collapsed after pressure from lawmakers worried about unspecified security concerns. Then came a seven-year ban on US firms selling to ZTE — the result of the Chinese telco breaking sanctions by selling to Iran, and then lying to cover its tracks. Although part of the ban was subsequently lifted temporarily, it highlighted to many in the Chinese government what president Xi Jinping had been saying for some time: the country needs to become self-sufficient in technology. It was reinforced when Huawei became the subject of a similar investigation.
This is about America, and Trump in particular, fighting back against what it sees as years of unfair trading practices by China. The argument goes that the Asian giant has been engaged in cyber-espionage on an epic scale to catch up technologically with the West, and unfairly forces IP transfers on foreign firms as the price for access to its huge domestic market. Thus, the coming year will see a ratcheting up of tensions. China on the one side will look to increase its espionage in areas like mobile phone processors to accelerate plans to become self-sufficient. And the US will continue to find ways to crack down on Chinese firms looking to access its market — probably citing national security concerns. There are even reports that the US has considered a total ban on Chinese students coming to the country over espionage concerns.
“Technology CEOs the world over with supply chain dependencies in China — so probably all of them — should be increasingly nervous and focused on their firms’ efforts to have viable contingency plans for a US-China technology cold war,” wrote China-watcher Bill Bishop in his Sinocism newsletter. That could spell good news for other ASEAN nations like Vietnam, where Samsung has made a major investment in facilities — although few countries in the region boast the infrastructure links and volume of skilled workers China does.
Cybersecurity takes centre stage
As mentioned, cybersecurity and online threats are at the heart of the Sino-US stand-off. The stakes got even higher after a blockbuster report from Bloomberg Businessweek which claimed Chinese intelligence officers had implanted spy chips on motherboards heading for a US server maker. Although the claims have been denied by Apple, Amazon and the server maker in question, Supermicro, they will confirm what many have feared about supply chain risk for a long time and accelerate efforts in 2019 to move facilities out of China. Further fanning the flames is a US indictment alleging Chinese spies worked with insiders including the head of IT security at a French aerospace company’s China plant to steal IP.
In a move likely to enrage China, the US also recently arrested and charged a Ministry of State Security (MSS) operative with conspiracy to steal aviation trade secrets. A major backlash is likely to come from Beijing. But more could also come from Washington after a combative congressional report from the US-China Economic and Security Review Commission called for a clampdown on supply chain risk and warned of China’s efforts to dominate 5G infrastructure and IoT production.
Aside from state-sponsored attackers, there’s a growing threat from Chinese cyber-criminals, according to one security vendor. Western firms suffer millions of attacks per year from financially motivated Chinese hackers, according to IntSights. Expect that to increase in the future as the state encourages criminals to focus their efforts outside the country, or even to team up with hacking groups at arm’s length. Also expect the country’s Cybersecurity Law to have a growing impact on how Western firms do business there. Ostensibly meant to vet such firms for interference by the NSA and CIA, the law could also serve as a pretext for Chinese officials to access sensitive IP and source code belonging to Western firms operating in China.
For other countries in the region, improving cybersecurity is vital to their efforts to attract more foreign IT investment and nurture start-up friendly environments. Although there are pockets of good practice, APAC is thought to be among the least mature regions worldwide. AT Kearney has called on ASEAN nations to increase cybersecurity spending to around $170 billion, warning that they are in danger of losing $750 billion in market capitalisation otherwise.
The threat from Chinese spies and local hackers is compounded by the growing danger posed by North Korea. Its state-sponsored hackers are acting with increasing impunity. FireEye recently identified a new group, APT38, which was responsible for the attacks on Bangladesh Bank and other financially motivated raids. Expect more attacks aimed at raising funds for the regime, as well as destructive campaigns and politically motivated information theft.
Taking a lead
On a more positive note, APAC is increasingly seen as a leader in emerging digital technologies: led by the two regional giants of India and China but also mature nations like Singapore, Taiwan, Hong Kong and South Korea. Microsoft believes that digital transformation will inject over $1 trillion to APAC GDP by 2021, with artificial intelligence (AI) a key catalyst for growth.
AI continues to be major focus for the region. Singapore is a leader in AI thanks to heavy government investment in schemes such as AI Singapore (AISG) and its AI Speech Lab, while government-owned investment company SGInnovate has recently unveiled its Deep Tech Nexus strategy. India is also is also poised to become “one of the most active centres of expertise in AI” according to experts, thanks to government backing.
Asia is leading the way on smart city projects. Investment in initiatives was set to reach $28.3 billion in 2018 in APAC (ex Japan), and is forecast to reach $45.3 billion in 2021 — partly out of necessity. The region’s cities are forecast to add another one billion citizens by 2040, which will require up to 65% of the UN’s Sustainable Development Goal targets to be met.
India’s Modi government has led the way with an ambitious plan to transform 100 cities, although 2019 will be a crucial year, given that recent reports claim 72% of these projects are still only at the planning stage. Many more examples are springing up all over the ASEAN region, however, from flood awareness programmes in Danang to a free public Wi-Fi and CCTV camera network in Phuket. IDC celebrates some of the best examples each year, showing the breadth of innovation in the region.
However, governments will need to do better in 2019 to tackle major barriers to digital transformation identified by the UN. These include excessively top-down approaches; security, privacy, and accountability problems; and digital exclusion. It claimed just 43% of APAC residents were internet users in 2016. There’s plenty of work for governments and the private sector to do next year.
Is a Full-Blown US-Sino Trade War on the Cards?
Posted: January 22, 2018 Filed under: Uncategorized | Tags: apple, AT&T, canalys, china, forrester, huawei, idg connect, qualcomm, trade war, US Leave a comment
The US and China have rarely seen eye-to-eye. But with years of appeasement getting it nowhere fast, the US is now not only talking tough on trade with its biggest rival but also taking steps to harm the business interests of Chinese firms. Here’s my latest for IDG Connect:
This month a deal between Huawei and AT&T to sell its smartphones in the US collapsed after pressure from senators worried about unspecified security concerns. It was a major blow to the world’s third largest device maker and could result in tit-for-tat retaliation by Beijing. In China, Apple announced it would be handing over management of iCloud services to a local government-owned partner — in order to comply with Chinese laws created as a result of escalating tensions and protect its revenue stream in the Middle Kingdom.
These two tech giants are at the center of what could well become a major trade dispute between the world’s pre-eminent superpowers. If it continues to escalate, it could spell disastrous news, not just for IT buyers, but the global economy.
A long time coming
It’s a battle that’s been brewing for years. On the one side, US firms — and technology players in particular — are desperate to access China’s vast market of over one billion internet users. To do so, they’ve been prepared to put up with strict Chinese laws which demand partnering with domestic firms, and technology transfers which can expose IP to the local partner. Along with out-and-out IP theft in the form of cyber espionage — carried out with the blessing or perhaps even backing of the government — this has helped Chinese firms catch up fast in the technology stakes over the past few decades. Censorship of various US platforms — think Twitter, Facebook and Google — also helped to provide a useful vacuum for local players to thrive.
China’s new Cybersecurity Law (CSL) may overlap with GDPR, but could still deliver the opposite effect from the intended one. How will China’s GDPR-like Cybersecurity Law impact business?
Now the US is hitting back. The first big move came when lawmakers effectively banned Huawei and ZTE from touting for telecoms infrastructure contracts in the US, citing national security concerns. Then came the NSA leaks and revelations from the portable USB drives of Edward Snowden, describing how US intelligence had been spying on China for years by intercepting and bugging US-made Cisco routers. That was all Beijing needed to escalate its own policy of prioritising homegrown products and putting yet more roadblocks in the way of US firms.
Huawei rival Cisco was hardest hit, seeing its China market share reportedly plummet over 30%. But some reports suggest that the number of government-approved foreign tech firms in China fell by a third between 2012 and 2014, while those with security-related products fell by two-thirds.
Microsoft has also been singled out, with Windows 8 banned for government use, while Qualcomm was hit with an anti-trust fine of nearly $1bn. Then China introduced a rigorous new Cybersecurity Lawwhich — although seemingly designed to improve baseline security for local organizations — could also provide a legal basis for forcing US firms to hand over source code during national security ‘spot checks’.
This law is the reason Apple has been forced to transfer local iCloud operations to partner Guizhou on the Cloud Big Data (GCBD). It claims to have “strong data privacy and security protections in place” and says that “no backdoors will be created into any of our systems”. But experts are sceptical. Threat intelligence firm Recorded Future previously claimed that the law could give the government “access to vulnerabilities in foreign technologies that they could then exploit in their own intelligence operations.”
That’s not all. By handing over local control of iCloud accounts to a Chinese partner, Apple may be putting at risk the privacy and security of employees of US firms operating in China.
“This latest move by Apple to essentially cede control and operation of its cloud services in China to the Chinese government is part of a larger and disturbing trend by Western technology companies to limit user privacy in exchange for continued access to the Chinese market,” Recorded Future director of strategic threat development, Priscilla Moriuchi, told me.
Hackers could have a head start on researching exploits that US firms have not yet caught wind of. Why does China spot security vulnerabilities quicker than the US?
“Per Apple’s security procedures, GCBD would have access to metadata about Chinese users’ iCloud documents, as well as complete access to any unencrypted @icloud email activity.”
While it’s not clear if this is the case for foreign firms operating in China, the vagueness of the CSL certainly makes it possible.
The big freeze
Now the speculation is that President Trump could escalate what is already a de facto tech Cold War by imposing unilateral sanctions on China in retaliation for claimed IP theft and forced tech transfers. So is a full-blown trade war looming?
China-watcher Bill Bishop is pessimistic of future US-Sino relations. In his popular Sinocism newsletter he had the following:
“I think the forced termination of the Huawei-AT&T deal significantly raises the likelihood that a major US consumer electronics firm with meaningful operations in China will be smacked down at the first sign of a real US-China trade war.
“Beijing assumes the US government is so paranoid about Huawei because it uses US firms to do what it says Beijing does with Huawei, and the Snowden revelations confirmed many of those suspicions. If anything, Beijing has been remarkably tolerant of some US consumer electronics firms given the treatment of Huawei and what we learned from the documents Snowden stole.”
Given the large percentage of US tech firms with manufacturing facilities in China, a trade war would have a catastrophic impact on global supply chains, making parts and products more expensive, reducing choice for IT buyers in the West and devastating parts of the US economy. If the revenue made by large multi-nationals in China were to dry up, jobs would be lost — not only in those firms but all their partners, suppliers and local economies.
Canalys analyst, Jordan De Leon explained just how reliant on foreign suppliers both Chinese and US organisations are.
“In the US Lenovo is the fourth-largest PC vendor and has a massive installed base. It also has key clients in its datacentre business in the US. Similarly, in China, Dell is number two and HP is number four in PCs,” he told me by email.
“In the event of a trade war, though unlikely, these three brands will be impacted. The extreme scenario is if there is legislation that is made to totally ban US-products in China and vice versa, which means businesses in those markets have to comply. China is also an important market for Apple, not to mention the fact that China is a vital manufacturing base for Apple.”
However, Forrester principal analyst, Andrew Bartels, believes strong opposition from big business could be enough to prevent Trump from creating such a scenario.
“A US-China tech war is more likely than US-China trade war, despite Trump’s periodic Tweets, because there are strong institutional forces built around supply chains that would cause big businesses to resist through legal and political action any imposition of trade barriers,” he told me by email.
“The US-China tech war is kind of in an uneasy truce, with the US government tacitly accepting that the Chinese government is favouring its own technology developments and vendors in China, and the Chinese government tacitly accepting that the US is going to put up barriers periodically to Chinese firms buying US companies.”
Ultimately, this dynamic should be enough to temper the policies even of a dogmatic populist like Trump. This is a numbers game, and China has the numbers — both in the size of its domestic market, and the $340bn+ surplus it’s running with the US. Acting tough with Beijing can be a dangerous game to play, and the tech industry is first in the firing line.
Foxconn and the Bot Army Ready to Go to War with the UK Workforce
Posted: June 21, 2016 Filed under: Uncategorized | Tags: apple, china, five year plan, foxconn, IHS, industrial bots, robots, workforce Leave a comment
News emerged a few days ago that Foxconn had effectively laid off 60,000 workers in China and replaced them with robots. “So what?” you might think. And to be honest, if it keeps the cost of our tech devices down, then good for Foxconn, right? Well, unfortunately it’s not that simple.
The changing dynamics of the Chinese labour market could have a profound effect on us here in the West, and even portend similar disruption to our own workforce in the not-too-distant future.
These stories have been doing the rounds for years because – well – contract manufacturers like Foxconn and others have been investing significant sums into robotics for years. Why? The answer’s pretty simple, according to IHS analyst, Alex West.
“Robots don’t need to stop working, but they don’t get drowsy, distracted or depressed either, so quality and consistency of manufacturing is enhanced. With the developments in AI and predictive analytics, robots are also far less likely to get ‘sick’, reducing downtime,” he told me.
To that I’d add that they don’t go on strike, commit suicide or complain to the papers about poor working conditions – all problems Foxconn for one has encountered. But robots can also add value in other ways, such as helping firms win business from their rivals, according to West.
“Robots are evolving, becoming more intelligent as AI solutions help them to ‘learn’ on the job, but also becoming far easier to program and integrate on production lines,” he continued. “Collaborative robots are also making robotic solutions safer and easier to install without the additional safety concerns and equipment.”
There’s clearly a drive for this in China, the tech manufacturing centre of the world. The Chinese government has made investment in robotics a priority in its 13th Five-Year Plan, with IHS forecasting a 30% CAGR. But this threatens to create social instability as human workers are shelved in favour of machines. Foxconn and others claim bots are only used for repetitive tasks that humans don’t want anyway. But there’s no guarantee that there are enough skilled roles to fill the gap.
“Dull, repetitive jobs on the plant floor will be replaced by a range of higher-skilled positions such as robot/systems integrators, programmers, and data scientists supporting enhanced AI,” argued West.
“However, there will be less of these more advanced roles, and some of the type that existing workers will not have the skillsets to be able to transition to.”
This might seem a long way from the UK. But our workforce is also facing a robot invasion – not from these industrial bots, but service robots like Softbanks’ Pizza Hut-serving Pepper. In fact, a Deloitte study has claimed that 35% of UK jobs have a high chance of being automated in the next decade or two.
Robots still only account for 0.3% of all machinery produced in China last year, according to West, so there’s still a long way to go. But it’s probably time to start getting nervous in the UK.
Can Surface Rescue Microsoft’s Mobile Plans?
Posted: May 24, 2016 Filed under: Uncategorized | Tags: android, apple, foxconn, IDC, iOS, lumia, microsoft, microsoft mobile, smartphone, windows mobile, windows phone Leave a comment
What is Microsoft’s future in the mobile space? It’s a question that’s generated more than a few column inches over recent years. Now with Redmond agreeing to sell the feature phone division to Foxconn and licence the Nokia name, things have perhaps started to get a little clearer.
First, the bad news. IDC is predicting Windows Phone’s market share for 2016 will stand at just 1.2% this year – that’s down from 2% last year, 2.7% the previous year, and 3.3% in 2013. The firm is clearly not getting any OEMs on board for future devices anytime soon, and there was no mention of new Lumias in the Foxconn announcement – just that it would support current devices. From this – and speaking to a few experts for an upcoming feature – I think the smart money’s on a Surface handset.
Surface has done pretty well in the tablet/laptop space – albeit after a few iterations. And a high-end Surface handset would show off the best features of Windows 10 Mobile, as Microsoft finally harmonises its OS across all platforms. It could have crack at competing with the Samsung Galaxy range and potentially the iPhone. Whether this is enough to prop up Microsoft’s mobile hardware business is unsure, however, and more job cuts could be on the way.
A Surface smartphone could appeal in particular to business executives and the like, according to IDC analyst Susana Santos. “It’s a strategy that makes sense, but it takes time. It’s too early to say if it’ll work or not. It certainly won’t help with its volumes. These devices are more expensive and not as easy to sell,” she told me.
With the business market set to rise only to 20% of the global smartphone market, according to IDC, this is also a concern if Microsoft can’t persuade those BYOD consumer/employees to migrate away from their iOS or Android handsets. It’s been said many times before, but Microsoft is in many ways still a victim of its lack of vision a decade ago, which let Apple and Google steal the hearts, minds and wallets of consumers.
And what of its chances of getting those sought-after OEMs on board?
“Of all companies, Microsoft knows the value of a developer and application ecosystems, but has been poor to drive this agenda in the mobile realm. I’d expect it to continue with Windows phone, but play mostly in the higher-end,” Quocirca’s Rob Bamforth told me by email. “The words it has used seem to indicate an interest in mobile computing devices, with telephony capabilities, rather than emphasis on ‘handsets’, so I think that means higher-end pricing and positioning – and perhaps a closer connection to Lync/Skype for Business and Skype Meeting. Perhaps we might be looking for a Skype Surface.”
The question is whether Redmond can maximise its IP and engineering talent in this space, “gluing the bits together in a way that Apple seems to mange elsewhere”, according to Bamforth. If it can, it’ll be the greatest comeback in the history of computing.
How Long Before We Get to Live in Genuinely Smart Homes?
Posted: March 31, 2016 Filed under: Uncategorized | Tags: alexa, amazon echo, apple, google, HomeKit, Nest, samsung smartthings, smart home, strategy analytics Leave a comment
What will the smart home of the future look like? Despite drawing the crowds at CES this year, it’s clear that the industry is still in its very early stages. Yes, the big boys are all involved – Amazon, Apple, Google et al. – but at the moment it’s a messy hotchpotch of competing standards, point products and exaggerated claims.
I may be biased of course, as my house is about as dumb as you can get – save for a couple of Sonos speakers dotted around the place.
But where I see things really coming together over the next few years is when we start to get more industry alliances, partnerships and/or M&A to consolidate competing platforms. At CES more than 10 smart home vendors announced integration with Amazon’s Echo/Alexa, for example, which begins to tie together a bunch of disparate tools for the smart home. Apple’s HomeKit, Google’s Nest ecosystem and Samsung SmartThings all have similar potential.
Strategy Analytics’ senior analyst, Joe Branca, claimed the biggest challenge facing the industry as a whole is finding a business model that works for vendors and their customers.
“The price point for solutions offered by traditional security companies helps to prevent a lot of consumers from buying into the smart home concept,” he told me when I interviewed him for a recent feature article.
“Our data shows, however, that there’s a strong interest in the benefits offered by security and smart home solutions – not to mention digital health and elderly care solutions – but at a lower price point than what’s available in the market at present.”
However, there may be other ways to subsidise the cost for consumers – for example, by getting insurance companies and marketers on board. The latter would be prepared to access user-generated data while the former benefit from more safe and secure houses, he claimed.
“Other big challenges have to do with customer service and installation,” Branca added.
“With multiple product and service offerings part of a single smart home ecosystem, consumers want to know who they will speak to when they need assistance. With regard to installation, DIY products have gotten a lot of praise, but we believe that to succeed with a mass market offering, installation by trained professionals is key.”
That’s a problem the Silicon Valley giants may need to partner up on to solve.
So what of the future?
Branca reckons more personalised, seamless, user-friendly experiences. I’d agree, but I think the usability and interoperability problems will still mean homes full of point products rather than smart ecosystems. As for the vendors, he argued that firms will end up transitioning to service-based business models.
“The real opportunity for smart home is in services that generate recurring revenue, and not simply the sale of hardware,” he concluded. “In the US, the security model is well-established. However, there is both an opportunity for security services that don’t fit the traditional mould – i.e., services that are lower cost and/or are a better match for renters or apartment owners – and services outside of security, including home maintenance and repair, for example.”
Long story short: I can’t wait for the smart home of the future, but I think I’ll be forced to for several years yet.
Will Apple’s China pivot come back to haunt it?
Posted: May 1, 2015 Filed under: Uncategorized | Tags: android, apple, apple watch, apple watch china, backdoors, censorship, china, cyber security, financials, IDC, idg connect, iphone 6, nsa, snowden, tim cook Leave a comment
Apple had a rip-roaring second quarter, as I’ve just reported here for IDG Connect. But the financials were about more than putting yet more dollars in the bank. In years to come, the quarter may well be seen as a tipping point – the point when the Cupertino giant came to rely way too much on China.
Although sales in China have yet to surpass the Americas, that point is not too far away. But the quarter did see iPhone sales from the Middle Kingdom overtake the US, and it also witnessed total revenue from China leapfrog that of Europe – two pretty significant milestones.
Apple is in a position that its American rivals and counterparts – Google, Microsoft, Amazon, Facebook etc – would dearly love. They’ve all been either banned or investigated for anti-trust dealings – in other words harangued by the authorities. These firms face an uncertain future in the world’s soon-to-be largest technology market. But while Apple is largely loved by consumers still in style-obsessed China, its days too could be numbered.
Certainly the government has been making life difficult for US tech firms over the past year or two. The revelations from NSA whistleblower Edward Snowden has given it the perfect excuse to request stringent security checks on products destined for the public sector market. It’s a de facto ban for many providers. Beijing is trying to do the same with the banking industry. And it will get its way, eventually.
Kowtow time
What does it mean for Apple? Yes the firm is a large investor in the country. But that won’t count for much if or when Beijing wants to apply some pressure. Apple has already been forced to comply with its unpalatable censorship demands, withdrawing apps from its store. It was notably silent when the authorities launched a Man in the Middle attack on iCloud last year. And CEO Tim Cook was forced to make a grovelling apology when a state TV-led witch hunt found issues with its customer service in the country. Cook has reportedly also agreed to give the government access to its source code in a bid to pacify regulators and ensure its devices are approved. This in itself could backfire if Beijing uses that intelligence to create backdoors to spy on Apple users outside the country.
Then there’s the issue of growth. China is not necessarily the license to print money many think it is for Apple.
IDC analyst Xiaohan Tay told me smartphone growth will begin to slow in the country over the coming years.
“Most of the growth in the smartphone market will come from the lower end segment of the market. As Apple is a high-end product in the China market, most of its growth will come from replacement users which are the Apple fans, as well as those who may be using the higher end Android phones at the moment,” she added.
“The new iPhones were a hit in the Chinese market as consumers were awaiting the release of the larger screen sized phones from Apple for the longest time, and this helped to drive growth in the past two quarters since the new iPhones were launched in China.”
Growth will continue, but at a slower rate, although the Apple Watch represents a great opportunity to arrest that slide, she added.
“The die-hard Apple fans as well as the middle and upper-middle class consumers in the cities will help to sustain the growth,” said Tay. “I believe that Apple’s high prices actually makes its phones more desirable for the consumers. Owning an iPhone represents a status symbol that the average consumer wants to work towards.”
Plenty of positives for the future for Apple in China, then. But what the Middle Kingdom giveth it can also taketh away. In my opinion, Cupertino had better disperse its eggs into other BRIC baskets if it wants to avoid a nasty surprise down the road.
Indonesia’s 20 per cent smartphone tax likely to backfire
Posted: April 11, 2014 Filed under: Uncategorized | Tags: apple, blackaberry, canalys, foxconn, foxconn indonesia, import tax, indonesia, iphone 4, jakarta post, mobile phones, smartphones, the register Leave a comment
This week news emerged that the Indonesian government is planning to levy a 20 per cent luxury goods sales tax on all smartphones made outside the country. It’s an old fashioned piece of protectionism which could hit mobile phone makers in the region pretty hard and is unlikely to have the desired outcome.
As I mentioned in my story for The Register, Indonesia is a growing smartphone market with massive potential – as the world’s fourth most populous nation.
Firms that might be particularly dismayed by the tax include BlackBerry, which counts Indonesia as one of its few remaining strongholds, and Apple, which only recently restarted iPhone 4 production to target budget conscious locals.
If the rumours are true it can be seen less as an attempt to spur local handset makers, of which there are few, and more as a means to persuade more global manufacturers to locate facilities in the country.
Foxconn has already stolen a march on its rivals here by announcing a $1bn investment in facilities there.
Canalys analyst Jessica Kwee told me that, seeing as most domestic smartphone makers are focused on cheap, low-end handsets it’s unlikely that high-end users will be persuaded by the tax to buy local.
“What I think is more likely to happen is that the extremely wealthy would continue to buy their premium phones as is,” she said.
“Then other users will resort to the grey market to source their high-end phones – either via grey importers, by buying when they travel to nearby countries like Singapore or Malaysia, or by requesting from their friends etc. The latter would certainly not benefit the government.”
It’ll be interesting to see whether the government follows through with its plans. After all, at one stage it was mooting the tax only on handsets over Rp 5 million (£260), which I still reckon is the most likely outcome.
China’s mobile cyber crime underground…and me on the Beeb
Posted: March 7, 2014 Filed under: Uncategorized | Tags: android, apple, bbc, bbc newsday, beijing, censorship, china, china malware, communist party, iOS, mobile cybercriminal market in china, mobile malware, trend micro Leave a comment
I was on BBC Newsday, a World Service breakfast programme, on Wednesday talking about the Chinese cyber mobile underground story I wrote up for The Reg this week.
It’s based on a Trend Micro report – The Mobile Cybercriminal Underground Market in China – published this week by its Forward Looking Threat Research Team, which reveals once again the sophistication and commercialisation of the underground networks via which cyber criminals trade goods and service.
Although the report itself doesn’t throw up a huge amount of new data it’s interesting to see evidence that such networks exist in China, selling common attack kits like premium service abusers, SMS Forwarder Trojans and spam.
Typically, being broadcast journalism we were kept strictly to 5 minutes of short, sharp soundbursts by the BBC which allowed for little meaningful discussion of the topic besides “what’s the Dark Web”? “How do I get on it?” and Who’s behind these attacks?”. I had a better chat with the researcher the night before.
That said, it’s an important topic to air publically.
Although we didn’t cover this in as much detail as I’d have liked, the real message to listeners of the program – which apparently has among the highest audience numbers on the planet – is to be more vigilant when downloading apps online and make sure they install basic AV on smartphones.
In China, where unregulated third party Android stores are the norm and mobile AV is rare, the cyber criminals have it made.
The only light I can see on the horizon in this part of the world is for the government to follow through with its planned regulation of the mobile app space. This would force industry to self-regulate and clamp down on malicious apps either pre-loaded onto phones or uploaded to web stores.
The only problem is that any new regulations are also likely to restrict content deemed “offensive” to Beijing – in other words censorship by the back door.
Apple’s shipment struggles as market share sinks in China
Posted: February 20, 2014 Filed under: Uncategorized | Tags: apple, apple china, china, china mobile, china smartphones, coolpad, cupertino, huawei, IDC, iphone, lenovo, market share, samsung, smartphone market, xiaomi Leave a comment
Last Friday I reported how China’s smartphone market had hit its first major slowdown in 27 months, as the growth engine of Asia slowly matures.
Well, I’ve been back to the analyst house where those stats came from to ask specifically who the biggest handset winners and losers are in China at the moment.
Unsurprisingly Samsung remains number one with a market share of 19 per cent, followed by local players Lenovo (13 per cent), Coolpad (11 per cent) and Huawei (10 per cent).
Apple rounded out the top five with a 7 per cent share – which various reports have shown was a one per cent improvement on the previous quarter and signs that things are picking up in China for the US giant.
Well, I’m not quite so sure. IDC senior research manager Melissa Chau told me that the biggest year-on-year movers were actually Lenovo (+57%), Coolpad (+36 per cent) and Huawei (+26 per cent). Samsung posted not unimpressive 20 per cent growth, but Apple’s year-on-year share actually dropped 2 per cent.
By comparison, its nearest rival, home-grown star Xiaomi, notched impressive 91 per cent growth to take sixth place with 6 per cent of the market.
So will Apple be worried? Well yes and no, according to Chau.
On the one hand the Cupertino giant has always been a high margin business, making way more money on handsets than Xiaomi and most of its Chinese rivals. To that extent it doesn’t need to shift smartphones in volumes quite so great.
However, the counter argument is that Apple needs to be seen as an attractive, popular platform, for the sake of its ecosystem.
“It is relevant to look at shipments because they affect Apple’s market power; it’s ability to attract developers,” Chau explained.
“Apple must walk a fine line making sure it doesn’t drop so far down that Android is the only ecosystem in China. It won’t be a risk it’s taking this or next year but it needs to watch [this trend]. That’s why it makes sense to launch a lower cost model there.”
You can’t argue with this logic. With Xiaomi’s low margin, high volume strategy potentially lifting it above Apple the last thing Cupertino wants is to be left floating outside of the leading pack, even if it is still hovering up revenue in one of its biggest markets.
Much has been written about the potential sales lift Apple’s recently announced deal with China Mobile – the world’s largest operator by subscriber numbers – will give it. However, as Chau told me, this might have been overplayed by some commentators – after all, we’re not talking about a new iPhone model here.
“Given the model has been out for some time I’m not sure the bump will be as significant as people are making out,” she argued. “The bump will come with the next iteration of the iPhone.”
All at Apple will be hoping that creates more buzz than its last major launch here. Or it could seriously be time to go back to the drawing board.
No news is bad news for Apple in China
Posted: September 11, 2013 Filed under: Uncategorized | Tags: apple, china, china mobile, cupertino, forrester, huawei, iphone 5C, iphone 5S, iphone launch, lenovo, meizu, smartphone, xiaomi Leave a comment
So there it is. Apple’s much publicised Beijing iPhone launch event ended. With no news.
It appears that the fruit-themed company, while claiming that China will be its biggest market soon, does not believe it’s THAT important. At least yet. All the poor hacks were offered was a video of last night’s US launch. Ouch.
More importantly for Cupertino, the prices it has stuck on its new 5C and 5S devices will mean only the most hardy fanboys and girls will want to buy them. The iPhone 5C is definitely not budget, so it will fail to appeal to the mass low-end market currently consuming smartphones in China and India like there’s no tomorrow.
A 5C will retail for between 4,488 and 5,288 yuan ($733-864, £466-549). Compare this with the price for the high-end 5S in the US ($649-849) and you can see why some commentators reckon it will fail in the PRC.
It’s certainly not enough to beat Xiaomi’s impressively spec’d Mi-3 at 1,999 yuan ($326).
Forrester analyst Bryan Wang told me that it needs to come down to 2,999-3,499 yuan in order to “eat up the market share” of the likes of Huawei, Lenovo and Meizu, but that at present prices, the local Android players will be “really relieved”.
However, Apple is likely to have left itself some breathing room. It’s plan? Test the market out with these inflated prices and then “lower the price after a couple of months”.
Apple’s other hope of gaining much needed market share in China come from a possible tie up with the world’s largest operator, China Mobile, which has over 700 million subscribers.
No announcement was made at the Beijing press “conference” today but Wang believes it will come, when the carrier has a 4G network to announce. The reason? The 5C and 5S both support TD-LTE, a standard China Mobile helped to build.
phil muncaster 