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Apple facing iPhone challenges in SE Asia from price pressure

Apple’s iPhone is competing with considerably cheaper rivals in the Southeast Asia smartphone market, Canalys analysts advise, with approximately 62% of the region’s smartphone shipments stemming from Chinese-based smartphone brands.

Apple's iPhone XR

In the third quarter’s financial earnings call, Apple CEO Tim Cook claimed the company “couldn’t be happier” with the improvements in revenue for China over the last two quarters, following a previous warning over low iPhone sales. While the company is seeing improvements, it is doing so in an environment where the market is flooded with cheaper and locally-produced rivals.

Analysis of the Southeast Asia smartphone market for the second quarter by Canalys reveals a small amount of growth year-on-year, with the 30.7 million shipments being a 2% improvement on the same period in 2018. The rise also reverses several quarters of decline for the market, with Southeast Asia also doing better than other parts of Asia and even Greater China.

The analysis concentrated on the top five smartphone brands, but Apple wasn’t among the list. Top of the pile was Samsung with 7.7 million units, seeing year-on-year growth of 5% after three quarters of decline, with Oppo gaining 49% year-on-year growth to reach second place with 7.3 million units.

Third was Vivo with 4.1 million units, and Xiaomi displaced Huawei to occupy the fourth spot with 3.7 million units. Xiaomi didn’t take fifth place, with that now held by newcomer Realme with 1.6 million units.

Apple’s main problem remains the vast amount of cheaper rival smartphones that are available on the market, offered at a fraction of the price of the premium iPhone lineup.

Chinese brands, including Oppo, Vivo, Xiaomi, Realme, and Huawei, shipped a total of 19 million units in the quarter, taking up 62% of shipments in the region. This is a considerable jump up from the same quarter last year, where the Chinese brands shipped 50% of devices.

“With 75% of shipments consisting of sub-$200 models, the market here is focused on mid-to-low-end smartphones, a segment where brand loyalty is low,” said Canalys analyst Matthew Xie.

The market focus on cheaper devices allowed Samsung to fight back against the Chinese producers, with festive promotions likely to allow Samsung to erode more market share. “Samsung is fighting back in Southeast Asia,” advised Xie. “Samsung chose Thailand to host the global launch event for its latest A series, to show the strategic importance of Southeast Asia.”

The rise of Samsung and Chinese brands is not limited to Southeast Asia, as one report from July claims Apple’s global smartphone market share fell year-on-year in the June quarter from 11.3% to 10.1%. The report also attributed better performance by Chinese vendors and Korea’s Samsung for the fall.

Even so, Apple does not necessarily have to rely on global iPhone shipments in the future, as the manufacturer moves more towards becoming a Services-based company. Meaningful growth in China of 20% year-over-year is believed to have helped increase App Store revenues in the last quarter, in part due to a relaxation of Chinese game license restrictions.

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‘iPhone 11,’ ‘iPhone 11 Pro,’ and ‘iPhone 11 Pro Max’ coming in fall, says sketchy report

 

Data from a budget iPhone enclosure manufacturer reportedly shows both the name and dimensions of the upcoming iPhones, set to release at Apple’s September event.

Image Credit: iPhonesoft.fr

Image Credit: iPhonesoft.fr

The spreadsheets show multiple products that are to fit the yet to be released iPhones, which the company is calling the “iPhone 11,” “iPhone 11 Pro,” and “iPhone 11 Pro Max.” Accessories shown include cases, camera lens protectors, and screen protectors.

Other leaks have recently referred to the upcoming iPhone line with similar language.

At the top of one of the spreadsheets, discovered by the French website iPhoneSoft, is a short dimension list, listing the size of each iPhone. The “iPhone 11” is said to be 6.1 inches, the “iPhone 11 Pro” comes in at 5.8 inches, and the “iPhone 11 Pro Max” at 6.5 inches.

The current line of iPhones boast the same dimensions, with the iPhone XR at 6.1 inches, the iPhone XS at 5.8 inches, and the iPhone XS Max at 6.5 inches.

The cases show backs that fall in line with other leaks, specifically the large cutout for the anticipated triple lens camera.

Image Credit: iPhonesoft.fr

Image Credit: iPhonesoft.fr

In nearly every similar situation, iPhone accessory manufacturers do not know what Apple is going to call a product prior to launch, nor are they given specifics about product features or dimensions. The document may simply be what ESR has chosen to call the anticipated lineup internally, or they may be using language reflected in recent leaks.

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Apple facing antitrust examination in Russia

Russia has joined the list of countries taking a look at alleged antitrust law violations by Apple, this time, over removal of parental monitoring applications from the App Store.

Apple's Screen Time in iOS 12 on assorted devices

The latest investigation surrounds Apple’s withdrawal of parental monitoring applications on iOS. Cybersecurity company Kapersky Lab filed the complaint with the Russian Federal Antimonopoly Service on March 19 following the removal of the firm’s Safe Kids application.

“From our point of view, Apple appears to be using its position as platform owner and supervisor of the sole channel for delivering apps to users of the platform to dictate terms and prevent other developers from operating on equal terms with it,” Kaspersky said. “As a result of the new rules, developers of parental control apps may lose some of their users and experience financial impact. Most important, however, it is the users who will suffer as they miss out on some critical security features. The market for parental control apps will head toward a monopoly and, consequently, stagnation.”

Apple has been removing many of the parental monitoring apps since the fall 2018 release of iOS 12, which not just contained Apple’s own Screen Time routines, but also revised the terms of using Mobile Device Management (MDM) routines. Apple says that the pulled monitoring applications were using MDM intended for enterprise improperly, and in violation of the developer’s rules.

Prior to app withdrawal, including in Kapersky’s case, developers found to be using the MDM in violation of Apple’s guidelines were given 30 days to fix the issue and submit an app update. Some did modify apps, losing some functionality in the process —but others did not and had their wares removed as a result.

“Parents shouldn’t have to trade their fears of their children’s device usage for risks to privacy and security, and the App Store should not be a platform to force this choice,” Apple said. “No one, except you, should have unrestricted access to manage your child’s device.”

In a Newsroom post in April Apple also denied claims that the removals are related to its own Screen Time feature.

“Apple has always supported third-party apps on the App Store that help parents manage their kids’ devices,” the company said. “Contrary to what The New York Times reported over the weekend, this isn’t a matter of competition. It’s a matter of security.”

Reuters reports that Kapersky believes that Apple’s App Store guidelines allowed for the company’s use of MDM. However, the company also claims that it wasn’t sure how to get Apple’s permission to use it the way it wanted.

Apple is fighting antitrust allegations all over the world. In the United States, the bipartisan investigation by the House Antitrust Subcommittee aims to examine “platform gatekeepers” and “dominant firms,” including how much control they have over their respective markets. At its launch, Chairman David N. Cicilline (RI-01) called the growth of monopoly power on the U.S. Economy “one of the most pressing economic and political challenges we face today,” with market power of digital markets presenting “a whole new set of dangers.”

In Europe, Apple also faces a complaint from Spotify via the European Commission over Apple’s share of Spotify’s subscriptions, as well as other obstacles that make it harder for streaming services to compete with Apple Music. For example, Spotify cannot replace Apple Music as the default service on Apple’s HomePod, giving Spotify a disadvantage.

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An iPhone with in-screen TouchID could ship as soon as 2021

 

Apple analyst Ming-Chi Kuo isn’t limiting himself to rumors about 2019 and 2020 phones, and has published one now predicting that the 2021 iPhone will have both Face ID and Touch ID.

Comparing Face ID and Touch ID

In a note published on early Monday morning, Kuo predicts that the 2021 iPhone may adopt fingerprint on display (FOD) technology in 2021. The expected supplier of the technology is Qualcomm, using its ultrasonic technology, rather than other that have been developed over the last year or so.

Kuo believes that “four critical technical issues” will improve in the next 12 to 18 months. Limiting factors cited are module thickness, sensing area, power consumption, and lamination yield rate.

Apple has filed patents on the technology, which Kuo believes proves Apple’s continued interest in implementing under-screen solutions. In April, Apple was granted a patent to turn the entire display into a fingerprint reader by taking advantage of acoustic imaging —exactly what Kuo has predicted here.

A slightly different implementation is apparently also in the works, using a series of pinholes in the display panel, which would allow for an optical sensor. It is less likely that this method will be used, according to Kuo, however.

Apple maintains that the chance of another face matching a stored user is about one in a million. Identical twins have on occasion fooled the system, and it is possible to train the system with a failed Face ID unlock and a PIN entry to identify two people that look substantively alike. Touch ID has a one in 50,000 unlock with somebody else’s fingerprint.

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Sprint & T-Mobile merger could win DOJ approval as soon as Wednesday

 

The contentious $26.5 billion merger of T-Mobile and Sprint is reportedly close to approval by the U.S. Department of Justice, to the point an announcement could be made as soon as Wednesday.

T-Mobile sign

The tentative deal would require the creation of a fourth wireless competitor, CNBC sources said. As rumored that firm should be Dish, the people went on, adding that it’s unlikely to face limitations requested by T-Mobile owner Deutsche Telekom since the DOJ wants a genuine fourth competitor in the U.S. carrier market. In particular, Dish may be free to sell an equity stake to whomever it wants.

That firm may also absorb Sprint prepaid brand Boost Mobile, but initially rely on T-Mobile’s network, switching to its own 5G as the sharing agreement ends — likely in 6 to 7 years. In return for network use T-Mobile is expected to “receive about half of the economics” from each person signing up to Dish wireless.

Dish currently specializes in live TV via satellite and Sling, but has wanted to become a mobile carrier for a decade, snapping up wireless spectrum accordingly. In fact the company has until March 2020 to prove to the Federal Communications Commission that a sizable portion is being used.

Two threats to the merger remain. Sprint and T-Mobile have set a self-imposed July 29 deadline, but more significantly, a lawsuit by state attorneys general — now up to 13, plus the District of Columbia — could block a deal on competitive grounds.

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Review: Grado’s GW100 headphones make open-back wireless affordable

There may be superior-sounding open-back headphones, but you’ll be hard-pressed to find anything better than the Grado GW100 that’s both wireless and affordable.

Recently I checked out Audio-Technica’s ATH-AD1000X headphones as a possible open-back option for Macs, iPads, and iPhones. They sound excellent — I’m wearing them as I write this — but a fundamental obstacle is that as with many open-back models, they’re wired-only. That doesn’t fly with too many people these days, especially iPhone owners.

Grado is a well-known brand in the audio world, primarily as a source of open-back headphones that won’t break the bank. The GW100 is its first Bluetooth option, which it claims it held off on until it could match the quality of wired products.

Once more, a quick primer. Most headphones are closed-back, which improves qualities like noise isolation at the expense of shaping output and creating a narrower soundstage. Open-back headphones tend to have a “purer” sound with a wide stage, at the cost of bass.

Construction-wise the GW100 isn’t terribly impressive out of the box. Most of it is built of lightweight plastic, and the earpieces are covered with a cheap, removable foam lining. It’s not what you’d anticipate from something costing $249.

It does retain Grado’s signature style though, and lightweight means exactly that — this might something to consider if you feel other on- or over-the-ear headphones weigh too much. Foam lining isn’t ideal for comfort, but it is tolerable.

Thankfully, the tradeoff in build quality is made up for in sound. Grado says it custom-configured its driver design for the GW100, which further employs Bluetooth 4.2 with aptX, a Qualcomm compression technology that enables “CD-like” quality.

As a rule the headphones sound great. They’re not audiophile quality — you’d need aptX-HD for that — but frequency response ranges from 20 hertz to 20 kilohertz, and most of that comes through loud and clear. I sometimes felt as if sound was a little muffled or lacking in bass, but not in any serious way, and that was more than offset by having a smooth and open soundstage.

Another pleasant feature: real physical buttons for playback. Many headphones use touch gestures these days, which I find maddeningly imprecise. Here, it’s quick and easy to change tracks or volume.

A couple of minor complaints are that they bleed audio, and while portable, are even less suited to rain and sweat than usual. Both issues are inherent to open-back technology, however, so there’s no faulting Grado.

Conclusions

If you’re considering a first step into open-back headphones or simply want a more portable version, the GW100 won’t disappoint so long as you know what you’re in for. That’s the catch, naturally — people who want privacy or or more rugged design will have to turn elsewhere. So too will audiophiles, but they’re probably browsing far more expensive options anyway. For the common man, this is excellent.

Score: 4 out of 5

Where to buy

The Grado GW100 Wireless Headphones sell for $249 at top retailers, such as Amazon and B&H Photo.

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DOJ asks appeals court to pause enforcement of Qualcomm antitrust ruling

 

The U.S. Justice Department on Tuesday asked a federal appeals court to temporarily halt enforcement of an antitrust ruling against Qualcomm, citing the necessity of the company in 5G networking, and support from both the Energy Department and Defense Department.

Qualcomm offices

“For DoD, Qualcomm is a key player both in terms of its trusted supply chain and as a leader in innovation, and it would be impossible to replace Qualcomm’s critical role in 5G technology in the short term,” wrote Ellen Lord, the Under Secretary for Defense for Acquisition and Sustainment, in a filing seen by Reuters. The company was one of the first to market with a 5G modem for smartphones and tablets.

The Trump administration and others in U.S. government have strongly opposed Chinese businesses gaining dominance in the 5G space. The worry is not just economic, but that the Communist Party could push for backdoors that would enable spying and cyberwarfare. State-sponsored hackers have repeatedly probed American networks.

The antitrust case in question was brought by the Federal Trade Commission, which won an initial verdict in late May. The agency successfully argued that Qualcomm engaged in anti-competitive patent licensing, and U.S. District Judge Lucy Koh ordered the firm to license to rival chipmakers.

Qualcomm quickly launched an appeal, but has had no luck staying enforcement pending the outcome.

Apple and Qualcomm settled their own patent licensing fight in April. After the fact it was revealed that Apple had plotted a years-long scheme to reduce its royalty payments, which is likely why the case settled on the first day of trial, netting Qualcomm between $4.5 billion and $4.7 billion.

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Japan Display inks $738M bailout deal, including reported $100M from Apple

 

Ailing LCD manufacturer Japan Display on Friday said a consortium led by China’s Harvest Group has successfully raised the requisite funds to execute an 80 billion yen (about $738 million) bailout plan, $100 million of which is thought to come from Apple.

iPhone XR

After months of negotiations, Harvest agreed to increase its investment in JDI to meet the 80 billion yet target, reports Reuters.

Harvest was reportedly willing to invest nearly $500 million to keep JDI afloat. In June, JDI confirmed the amount, adding that a single customer had agreed to a $100 million infusion as part of Harvest’s offering.

Previous reports identified Apple as the mystery JDI investor. Apple is JDI’s most important customer, with the tech giant’s iPhone LCD panel orders accounting for some 60% of JDI’s revenue for the 2018 fiscal year.

Apple was originally expected to make its investment through TPK Holding, a Taiwan-based display maker in talks to kick $230 million into the bailout pool. TPK stepped away from the deal in June.

Alongside Harvest, Hong Kong-based Oasis Management will invest between $150 million to $180 million. According to today’s report, Oasis has offered to furnish additional funds to offset potential currency fluctuations. JDI plans to formalize the bailout at a shareholders meeting in August, the report said.

JDI is a joint venture that combined the display arms of Hitachi, Sony and Toshiba in a bid to better compete with Korean powerhouses Samsung and LG Display. While the company enjoyed some early success, it erred by investing heavily in LCD production and largely ignoring a wider industry trend toward OLED panels.

Apple became intertwined with JDI after fronting a large sum to help the display maker build a $1.5 billion panel factory in 2015. JDI now finds itself in arrears and with a funding shortfall as the iPhone maker and others reduce LCD orders on a path toward OLED.

In addition to the supposed $100 million investment, Apple has agreed to slow JDI’s debt repayment timeline and potentially increase orders to stabilize the firm’s finances. Reports also suggest Apple this year awarded JDI a portion of future Apple Watch OLED panel orders as the company works to shift production away from LCD technology.

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Apple to launch three OLED iPhones with 5G alongside budget model in 2020, analyst predicts

As the 2019 iPhone rumor season heats up, JP Morgan is already looking ahead to 2020 and predicts Apple to launch three OLED handsets with speedy 5G connectivity alongside a less expensive model next fall.

iPhone XS

A research note published Monday by analyst Samik Chatterjee largely backs up previous analyst predictions and scuttlebutt out of Apple’s supply chain, but adds a new low-cost model into the mix for 2020.

As reported by CNBC, Chatterjee expects Apple to launch a trio of high-end iPhones with 5G baseband modems and 5.4-, 6.1- and 6.7-inch OLED screens. The strategy would be a departure from the current lineup, which boasts two top-tier OLED variants in iPhone XS and XS, and a cheaper LCD model in iPhone XR.

Beyond 5G and OLED, at least two of the top iPhones will adopt “world facing,” or rear-facing, time of flight (TOF) 3D sensor technology for augmented reality and virtual reality applications, the note said.

Apple has long been rumored to integrate TOF into its popular smartphone as a means to map the world around a user.

In 2017, prior to the unveiling of TrueDepth on iPhone X, a report claimed Apple was investigating a rear-facing, laser-based 3D sensor for AR applications and faster, more accurate camera autofocus operation. More recently, noted Apple analyst Ming-Chi Kuo last September said Apple was unlikely to turn to TOF in 2019, and would instead continue to rely on multi-lens cameras seen in iPhone XS and XR.

Reports of Apple’s interest in the technology resurfaced last December when Sony announced plans to start production of TOF chips this summer to meet anticipated demand from “several” smartphone makers.

Apple’s current TrueDepth camera assembly uses a single vertical-cavity surface-emitting laser (VCSEL) to project structured infrared light — a grid of dots — onto a user’s face. Deviations and distortions in the grid are measured to generate a 3D map that is applied to user authentication algorithms.

TOF systems also create depth maps, but instead of evaluating structured light, the arrays measure the time it takes pulses of light to travel to and from a target surface. The technology can operate at longer distances and produce better data than existing solutions like TrueDepth.

As for 5G, Kuo in June reported Apple plans to bake the wireless technology into two iPhone models next year — 5.4- and 6.7-inch OLED variants — while a 6.1-inch OLED model will retain LTE connectivity. Like Chatterjee, Kuo also believes the future handsets will support mmWave frequencies that promise ultra-fast transfer speeds.

JP Morgan’s report diverges from the predictions of Kuo by claiming all three OLED models will net 5G compatibility.

Finally, Chatterjee says Apple is looking to chase “a much more value’ category than it has been used to with its recent launches.” What, exactly, this means is up for debate, but the report speculates the company could launch a fourth iPhone model in the same vein as 2017’s iPhone 8, sans OLED display or 5G modem.

The upgrades should be enough to help Apple sell an estimated 195 million iPhones in 2020, Chatterjee said. As a result, JP Morgan raised its Apple stock price target $6 to $239.

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Samsung received estimated $683M payment from Apple in Q2, still projects 56% decline in profits

 

Samsung on Friday released a bleak earnings forecast for its second fiscal quarter of 2019, projecting operating profits more than halved from last year due to ongoing weakness in the company’s bread-and-butter memory chip business.

Operating profit likely dipped to 6.5 trillion won (about $5.5 billion) during the three-month period ending in June, Samsung said in a regulatory filing. The tentative result beats industry estimates but represents a year-over-year decline of 56%, reports CNBC.

The first quarter result would have been worse was it not for a one-time payment from Apple, which reimbursed Samsung for missing contractual purchasing obligations for OLED panels.

The earnings forecast recognizes Apple’s payment, Samsung said without offering further detail. According to analysts, Samsung received an estimated 800 billion won for unfilled orders of display panels bound for iPhone, Reuters reports.

Reports in June said Apple and Samsung met to discuss an alternative to the monetary penalty but failed to agree on a middle ground.

Samsung Display is in a tight spot after investing in a state-of-the-art OLED production facility to serve Apple’s needs. The company’s sixth-generation “A3” line is capable of pumping out large quantities of next-generation OLED mother glass and was tipped to supply display parts for what was thought to be a glut of current and future iPhone orders. With slow iPhone X sales and lower-than-expected iPhone XS demand, however, the plant is reportedly operating at less than half of its output capacity.

If accurate, the guidance foretells Samsung’s third consecutive quarter of year-over-year profit declines. Following a dismal holiday season, the Korean tech giant posted operating profits of 6.2 billion won for the first quarter of 2019, its weakest performance since 2016.

Increasing tensions with Japan and the U.S.-China trade war are in part blamed for continued memory chip pricing and demand softness. With no near term solution in sight for either trade issue, Samsung could see its profits continue to slip well into 2019.