Chip sales Will Strauss 2007 Chinese, 2 Korean, & Apple. Until I saw Will Strauss' table, I didn't realize the U.S. and Europe were this far behind. 2016 was a tragic year for smartphone makers, who were counting on continued high growth. 2017 almost certainly will be little better. 

"The top suppliers of smartphone shipments for 2016 were Samsung at 21%, Apple 15.1%, Huawei 9%, Oppo 6.4%, Vivo/Vsun 4.8%, LG 4.2%, Xiaomi 4%, Lenovo 3.8%, ZTE 3.7%, and Alcatel (TCL) at 2.6%" Will Strauss These are shipment totals; Apple stands out in sales dollars.

 Qualcomm (blue) and Mediatek (orange) dominate chips.

 There are several contradictory estimates circulating; several of the key companies are private and don't release data. Will Strauss has proven reliable over the years, so I'm picking up his figures here.

A few implications:

  • No matter how much Trump proclaims "Make in America," it will be almost impossible to win much market for U.S. companies in cellphones. We no longer have companies with the expertise. Apple and others may bring over some low-margin assembly work. The same is true in many other industries. It illustrates the limits of using fiscal tools to grow industries. China is smarter; they are expanding the chip business by directly investing $70B in building companies. That will almost certainly move much of the world chip industry. American fear of government "industrial policy" meant much of Obama's stimulus was wasted and the error continues.
  • A billion smartphones shipped implies 400-600M new mobile Internet connections. Many of those phones were replacements, but older phones often are resold. A good thing. 
  • 4G phones passed 3G phones in shipments. I believe that by the current quarter, 4G is far ahead. The ratio should be approaching 2:1 4G:3G. 3G networks are essentially obsolete. From Reliance in India to China Mobile to Verizon & AT&T, carriers are rapidly moving to 90%+ 4G because they save money. 4G has > three times the capacity in the same amount of spectrum. The newer equipment uses much much less power.  The difference in cost to make a 4G phone is $5-15. The telco saves that or more and can afford to subsidize the upgrade. Carriers upgrading 3G nets, including many in Africa, are making a mistake.

 

 Press release below chart

Chip sales Will Strauss 600

 

Forward Concepts Publishes Major Global Smartphone & Tablet Market Study

The report also covers the Modems that enable them and global shipments by air interface

Mesa, AZ, U.S.A. April 18, 2017: Forward Concepts, a leader in DSP and wireless market research is proud to announce the publication of its newest report, “SMARTPHONE, TABLET & MODEM MARKET '17”. The 237-page report provides a detailed market analysis of all significant smartphones, connected-tablets and the modem chips that enable them. Vendor market shares for all vendors are provided with quarterly shipments through Q4/2016. Product forecasts in units and revenue are provided for 2017 through 2021

This report provides a detailed market analysis of all significant smartphones, wireless-connected tablets (cellular & Wi-Fi) and the modems that enable them. Five-year forecasts are provided in considerable detail for each. In addition, smartphone and non-smart cellphones are forecast for all global regions and the report discusses the 2017 market positioning of the major vendors.

The report reveals that 2016 smartphone shipments grew by 7% overall from 1.3 billion to 1.4 billion units. The 4G LTE smartphone shipments grew by 13% from 645.7 million to 741 million. Fifty one percent of smartphone shipments are now 4G growing from 48% in 2015.

The top suppliers of smartphone shipments for 2016 were Samsung at 21%,  Apple 15.1%, Huawei 9%, Oppo 6.4%, Vivo/Vsun 4.8%, LG 4.2%, Xiaomi 4%,
 Lenovo 3.8%, ZTE 3.7%, and Alcatel (TCL) at 2.6%.

Exhibiting the largest volume growth rates were newcomers Oppo at 122%, LeEco 136%, Lava 103%, Vivo 93%, and Gionee at 39%. Growing at 36% Transsion, a leading Chinese supplier of non-OS voice centric phones into Africa, is ranked globally in the top 15 in smartphones for the first time.

 

Smartphone baseband processors, both integrated (like Qualcomm’s Snapdragons) and stand-alone “slim” modems (such as those employed by Apple) were led by Qualcomm, with 59% of 2016 shipments, followed by MediaTek at 23%. The more advanced 2017/2018 modems discussed in the report incorporate Category 15 Gigabit-class down-link data rates as well as advanced features like VoLTE and ViLTE.

Although Intel’s modem chips garnered only a small share for the 2016 $26 billion market, their 2017 market share will be boosted significantly as they are now incorporated in a large portion of Apple’s iPhone 7 shipments (and Qualcomm has the other part of iPhone modem shipments).

Uniquely, this report also covers global smartphone (and non-smart cellphone) shipments by region. Country and air interface. Major operators in each country are also discussed. This valuable report is aggressively priced at $3,500 for an enterprise-wide digital PDF copy.

For an overview of this expansive report and the detailed table of contents, please click here.

dave askOn Oct 1, Verizon will turn on the first $20B 5G mmWave network, soon offering a gigabit or close to 30M homes. The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while keeping capex at around 15%.

The Koreans, Chinese, and almost all Europeans are not doing mmWave in favor of mid-band "5G," with 4G-like performance. Massive MIMO in either 4G or "5G" can increase capacity 4X to 10X, including putting 2.3 GHz to 4.2 GHz to use. Cisco & others see traffic growth slowing to 30%/year or less. Verizon sees cost/bit dropping 40% per year. I infer overcapacity almost everywhere.  

The predicted massive small cell builds are a pipe dream for vendors for at least five years. Verizon expects to reach a quarter of the U.S. without adding additional small cells. 

In the works: Enrique Blanco and Telefonica's possible mmWave disruption of Germany; Believe it or don't: 5G is cheap because 65% of most cities can be covered by upgrading existing cells; Verizon is ripping out and replacing 200,000 pieces of gear expecting to save half. 

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 5G Why Verizon thinks differently and what to do about it is a new report I wrote for STL Partners and their clients.

STL Partners, a British consulting outfit I respect, commissioned me to ask why. That report is now out. If you're a client, download it here. If not, and corporate priced research is interesting to you, ask me to introduce you to one of the principals.

It was fascinating work because the answers aren't obvious. Lowell McAdam's company is spending $20B to cover 30M+ homes in the first stage. The progress in low & mid-band, both "4G" and "5G," has been remarkable. In most territories, millimeter wave will not be necessary to meet expected demand.

McAdam sees a little further. mmWave has 3-4X the capacity of low and mid-band. He sees an enormous marketing advantage: unlimited services, even less congestion, reputation as the best network. Verizon testing found mmWave rate/reach was twice what had been estimated. All prior cost estimates need revision.

My take: even if mmWave doesn't fit in your current budget, telcos should expand trials and training to be ready as things change. The new cost estimates may be low enough to change your mind.