Dixons Carphone’s bid to renegotiate mobile operator contracts falls on deaf ears

Dixons Carphone’s bid to negotiate more favourable contacts with mobile operators is failing, claims The Telegraph, threatening new CEO Alex Baldock’s recovery plan.

Carphone Warehouse is the UK’s biggest mobile phone retailer, but the market is saturating, and people are buying fewer phones. SIM-Only tariffs and SIM-free handsets are becoming increasingly popular and this is having an effect.  Margins are being squeezed and sales are flat.

Baldock assumed the top job earlier this year and made renegotiations as a pillar of his strategy, arguing that the terms of its deals with EE, O2 and Vodafone were “unsustainable” and signed in the wake of the collapse of Phones 4U.

Carphone Warehouse deals

All four major operators have invested significantly in their retail presences over the past few years and there is a suggestion that they might prefer to focus on their own channels because they are more profitable.

Meanwhile Three has no plans to return to Carphone Warehouse with CEO Dave Dyson telling TechRadar Pro that such a move wouldn’t make sense. And it appears as though its rivals have no intention of making life easy for Dixons Carphone.

According to the report, Vodafone is ready to sign a new two-year deal on roughly the same terms as before, while talks are ongoing with EE, whose deal expires at the end of 2018.

Meanwhile, TechRadar Pro understands O2’s contract still has years to run and that the operator is happy with the terms it had previously agreed.

In June annual profits fell from £500 million to £382 million, while the company expects profits to all again during the next 12 months. It will also shut 92 of its 700 Carphone Warehouse stores.

As well as renegotiated contracts, Baldock has also indicated his desire to overhaul the company with the increased use of data analytics, new technologies and better marketing.

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Samsung: Why innovation and device ecosystem can overcome ‘challenging’ smartphone market

Samsung is a company in transition. It’s a consumer electronics giant (with a not insignificant B2B interest) that has benefited hugely from its mobile division in recent years.

It supplanted Nokia as the world’s largest manufacturer of mobile phones in the early part of the decade and has stayed there ever since, buoyed by seemingly never-ending demand for smartphones.

But the industry has run out of new markets to expand into and demand in developed ones have saturated. A perceived lack of hardware innovation and rising costs mean many people are content with the handsets they already have, and the sector actually contracted for the first time in 2018.

Other ventures to offset this decline have so far failed to materialise. The tablet market exploded with the advent of cheap seven-inch slabs, but again, demand has slowed, and the smartwatch has also failed to be the holy grail.

It’s amid this backdrop that Samsung launches the Galaxy Note 9, alongside the Samsung Galaxy Tab S4 and the Samsung Galaxy Watch.

Market saturation

Samsung’s profits for the second quarter reached record highs but the performance of the mobile unit is still cause for concern, especially the performance of the Samsung Galaxy S9 flagship.

According to figures from IH Markit, Samsung suffered the biggest decline of the most recent quarter, with smartphone shipments falling by 10.8 per cent to 70.8 million – still enough for a fifth of the market.

“It’s a challenging market,” Kate Beaumont, director of commercial strategy at Samsung, admits to TechRadar Pro. “From a mobile perspective there is a lot of [market] saturation. People are holding onto their devices much longer and that’s creating an environment in which we have to keep on our toes.

“We’re seeing that the premium segment is growing year-on-year while the low-end segment is falling.”

One of the most interesting trends is that although the volume of handsets it sells has fallen, the average cost of each device is increasing. That comes as no surprise to anyone who has seen the price of the Samsung Galaxy Note 9 – it’s a very expensive phone.

Meanwhile competition in the mid-range segment is intense, with several manufacturers entering the market with aggressively-priced handsets stocked with features.

Innovation and competition

“One of the things Samsung does very well is that we have a broad portfolio where we can take down the premium features [from the Galaxy S and Note range] and bring them down,” she says. “It’s about finding a compromise between cost and innovation.”

Huawei’s critically acclaimed P20 flagship has seen it overtake Apple in the market (albeit with help from marketing), while the Galaxy Note series has earned a reputation for innovation over the past few years with features and design choices that break convention.

Huawei has the devices and the resources to mount the most serious challenge to Samsung date and It has also finally managed to gain an inroads into the UK market, so is Beaumont worried?

“I think competition is always good because it drives innovation,” she replies. “We don’t want to become complacent, so we look at our competitors, but they’re not driving our R&D. The UK is traditionally brand-conscious, and we have a really strong brand.”

But despite this, Beaumont doesn’t believe that innovation for innovation’s sake is the solution to driving growth in the premium sector.

“I think it’s about finding the right innovation,” she explains. “What we’ve done with S Pen is subtle but impactful. I think it’s about finding innovation that’s useful.”

Similarly, in the mid-range market, it’s about finding the right balance between cost and new features. For example, the R&D investment for the Galaxy S series can eventually be included in the A series at a later date.

The Samsung ecosystem

Samsung is committed to maintaining this choice, noting that customers who take a mid-range device might one day decide to upgrade to a premium handset. But it is also committed to growing its ecosystem.

“This is the first time we’ve launched three devices at the same time,” says Beaumont. “The relevance of this is how they work together. We want more interconnectivity and by 2020 we want our devices to be interoperable.

“We do know that we have high loyalty and we know that people buy multiple devices, but the reality is that it is an open ecosystem. It’s unlikely anyone will buy all three at the same time and the best thing about the watch is that it works with other Android devices and indeed iOS.

“Our SmartThings App works with 40 other brands. We recognise our customers might have different devices but the question is ‘how do you bring them all together?’”

Samsung’s decision to replace the ‘Gear’ branding for its smartwatch in favour of ‘Galaxy’ is notable. As the company’s flagship brand, Galaxy stands for its latest innovations, but Beaumont also explains it epitomises the internal changes at the company.

Previously the products were built by different teams, but the adoption of the Galaxy moniker helps contribute to the creation of the ecosystem that Samsung wants: “We’re moving away from sub branding.”

Who will buy the Note 9?

Speaking of branding, Beaumont emphasises the attachment that many of its customers have to the Galaxy Note brand: “The Note customer is a special group of customers for us,” she says. “They are our most loyal, they are early adopters and they’re looking for [innovative] tech.”

The productivity features are the Note 9’s biggest selling point and the updated ‘S Pen’ is something Beaumont is keen to emphasise, declaring it her favourite feature of the new device. The Note has a big following in the B2B sector, but Samsung doesn’t want to limit its appeal, noting that all of its devices are available to both consumers and businesses.

Samsung is also placing significant emphasis on customer service and has a dedicated team to help new owners of the Note 9 and S9 to switch from a rival operating system. But there is an acknowledgement that the main component of any strategy still has to be technology.

Earlier in the month Samsung announced it would invest 25 trillion won (£17 billion) in areas such as Artificial Intelligence (AI), 5G and components for connected cars as it seeks to protect itself against smartphone saturation. It plans to be a leader in the market for 5G chipsets and hopes to benefit from demand for the applications that next-generation networks will enable.

Beaumont says she is “really excited” about the investment and what it means for the future direction of Samsung smartphones.

“There’s a race to be first [with 5G] but we’re more interested in the consumer experience. You can do the technical piece, but if you can’t come up with experiences then you’ve wasted your time.

“I think the success for any manufacture can be measured in what they’re investing in.”

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Samsung: Why innovation and device ecosystem can overcome ‘challenging’ smartphone market

Samsung is a company in transition. It’s a consumer electronics giant (with a not insignificant B2B interest) that has benefited hugely from its mobile division in recent years.

It supplanted Nokia as the world’s largest manufacturer of mobile phones in the early part of the decade and has stayed there ever since, buoyed by seemingly never-ending demand for smartphones.

But the industry has run out of new markets to expand into and demand in developed ones have saturated. A perceived lack of hardware innovation and rising costs mean many people are content with the handsets they already have, and the sector actually contracted for the first time in 2018.

Other ventures to offset this decline have so far failed to materialise. The tablet market exploded with the advent of cheap seven-inch slabs, but again, demand has slowed, and the smartwatch has also failed to be the holy grail.

It’s amid this backdrop that Samsung launches the Galaxy Note 9, alongside the Samsung Galaxy Tab S4 and the Samsung Galaxy Watch.

Market saturation

Samsung’s profits for the second quarter reached record highs but the performance of the mobile unit is still cause for concern, especially the performance of the Samsung Galaxy S9 flagship.

According to figures from IH Markit, Samsung suffered the biggest decline of the most recent quarter, with smartphone shipments falling by 10.8 per cent to 70.8 million – still enough for a fifth of the market.

“It’s a challenging market,” Kate Beaumont, director of commercial strategy at Samsung, admits to TechRadar Pro. “From a mobile perspective there is a lot of [market] saturation. People are holding onto their devices much longer and that’s creating an environment in which we have to keep on our toes.

“We’re seeing that the premium segment is growing year-on-year while the low-end segment is falling.”

One of the most interesting trends is that although the volume of handsets it sells has fallen, the average cost of each device is increasing. That comes as no surprise to anyone who has seen the price of the Samsung Galaxy Note 9 – it’s a very expensive phone.

Meanwhile competition in the mid-range segment is intense, with several manufacturers entering the market with aggressively-priced handsets stocked with features.

Innovation and competition

“One of the things Samsung does very well is that we have a broad portfolio where we can take down the premium features [from the Galaxy S and Note range] and bring them down,” she says. “It’s about finding a compromise between cost and innovation.”

Huawei’s critically acclaimed P20 flagship has seen it overtake Apple in the market (albeit with help from marketing), while the Galaxy Note series has earned a reputation for innovation over the past few years with features and design choices that break convention.

Huawei has the devices and the resources to mount the most serious challenge to Samsung date and It has also finally managed to gain an inroads into the UK market, so is Beaumont worried?

“I think competition is always good because it drives innovation,” she replies. “We don’t want to become complacent, so we look at our competitors, but they’re not driving our R&D. The UK is traditionally brand-conscious, and we have a really strong brand.”

But despite this, Beaumont doesn’t believe that innovation for innovation’s sake is the solution to driving growth in the premium sector.

“I think it’s about finding the right innovation,” she explains. “What we’ve done with S Pen is subtle but impactful. I think it’s about finding innovation that’s useful.”

Similarly, in the mid-range market, it’s about finding the right balance between cost and new features. For example, the R&D investment for the Galaxy S series can eventually be included in the A series at a later date.

The Samsung ecosystem

Samsung is committed to maintaining this choice, noting that customers who take a mid-range device might one day decide to upgrade to a premium handset. But it is also committed to growing its ecosystem.

“This is the first time we’ve launched three devices at the same time,” says Beaumont. “The relevance of this is how they work together. We want more interconnectivity and by 2020 we want our devices to be interoperable.

“We do know that we have high loyalty and we know that people buy multiple devices, but the reality is that it is an open ecosystem. It’s unlikely anyone will buy all three at the same time and the best thing about the watch is that it works with other Android devices and indeed iOS.

“Our SmartThings App works with 40 other brands. We recognise our customers might have different devices but the question is ‘how do you bring them all together?’”

Samsung’s decision to replace the ‘Gear’ branding for its smartwatch in favour of ‘Galaxy’ is notable. As the company’s flagship brand, Galaxy stands for its latest innovations, but Beaumont also explains it epitomises the internal changes at the company.

Previously the products were built by different teams, but the adoption of the Galaxy moniker helps contribute to the creation of the ecosystem that Samsung wants: “We’re moving away from sub branding.”

Who will buy the Note 9?

Speaking of branding, Beaumont emphasises the attachment that many of its customers have to the Galaxy Note brand: “The Note customer is a special group of customers for us,” she says. “They are our most loyal, they are early adopters and they’re looking for [innovative] tech.”

The productivity features are the Note 9’s biggest selling point and the updated ‘S Pen’ is something Beaumont is keen to emphasise, declaring it her favourite feature of the new device. The Note has a big following in the B2B sector, but Samsung doesn’t want to limit its appeal, noting that all of its devices are available to both consumers and businesses.

Samsung is also placing significant emphasis on customer service and has a dedicated team to help new owners of the Note 9 and S9 to switch from a rival operating system. But there is an acknowledgement that the main component of any strategy still has to be technology.

Earlier in the month Samsung announced it would invest 25 trillion won (£17 billion) in areas such as Artificial Intelligence (AI), 5G and components for connected cars as it seeks to protect itself against smartphone saturation. It plans to be a leader in the market for 5G chipsets and hopes to benefit from demand for the applications that next-generation networks will enable.

Beaumont says she is “really excited” about the investment and what it means for the future direction of Samsung smartphones.

“There’s a race to be first [with 5G] but we’re more interested in the consumer experience. You can do the technical piece, but if you can’t come up with experiences then you’ve wasted your time.

“I think the success for any manufacture can be measured in what they’re investing in.”

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LG to launch ‘first 5G smartphone’ in 2019

LG and US mobile operator Sprint will release a 5G-compatible smartphone in the first half of 2019.

The two parties are tight-lipped about price, specs and even an exact launch date, but are confident that it will be the first 5G smartphone to be made available in the US.

Even though the race to 5G has been a global event, there is still competition between US carriers to be the first.

LG 5G smartphone

 

The first commercial 5G networks will go live in the US later in 2018, offering faster speeds, greater capacity and lower latency. All four major US carriers have advanced 5G roadmaps, but initial deployments will be restricted to Fixed Wireless Access (FWA) broadband in major cities until the first 5G smartphones arrive next year.

Sprint is the country’s fourth largest operator and plans to launch 5G in nine cities - Atlanta, Chicago, Dallas, Houston, Kansas City, Los Angeles, New York City, Phoenix and Washington DC – in 2019.

However, the company has agreed a $26 billion merger deal with T-Mobile in a move that it is claimed will accelerate the rollout of 5G.

Both say they don’t have the means to build a truly national 5G network on their own, but their combined spectrum and network assets mean they will be able to this more rapidly than rivals AT&T and Verizon – both of whom have more customers and spectrum than the merged company.

This is because T-Mobile has long range 600MHz airwaves, whereas its rivals have mmWave spectrum which offers vast capacity but only within a limited radius. The two companies also assert that Verizon and AT&T would have to “kick” customers off LTE to facilitate the rollout.

But despite the ongoing talks with regulators, Sprint has confirmed the LG device will optimised for its 5G network and that the only way you’ll be able to use it with T-Mobile is on 4G.

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Huawei and ZTE tech banned from US government use

Communications technology manufactured by either Huawei or ZTE will not be permitted for use within the US government nor by its contractors.

Both companies have been largely frozen out of the US market due to the government’s concerns that its telecommunications equipment represents a threat to US national security, with many departments already prevented from using them.

However this practice has been formalised by the passing of the Defense Authorization Act, which prohibited the use of “Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities).”

Insert heading here

The act also covers products made by a number of other Chinese companies, most related to surveillance, as well as equipment from any firm that the FBI or the Secretary of Defense “reasonably” believes has links to a foreign government.

Huawei has always denied accusations of links to the Chinese government and is a supplier for telcos in other countries, including the UK. It is now the world’s second biggest manufacturer of smartphones with its recent P20 flagship receiving considerable critical acclaim.

As for ZTE, the Trump administration had personally intervened to stop the company from going out of business. 

ZTE was slapped with a seven-year ban from dealing with US suppliers for breaching a previous agreement for illegally shipping products to North Korea and Iran. ZTE was obliged to discipline executives involved in the scandal but failed to do so.

UK telcos have been warned not to use ZTE network equipment, mainly because this would inhibit British security agencies’ ability to monitor kit from Huawei.

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EE named UK’s best mobile network again

EE has been named the UK’s best mobile network for the fifth consecutive year by independent testers at RootMetrics, but the operator’s lead is narrowing.

The BT-owned operator won the overall, network reliability, network speed, data performance, call performance and text performance categories, helping it “win” RootMetrics’ half-yearly report for the tenth time in a row.

Its overall score was 96 out of 100, but Three was close behind on 93, Vodafone scored 90.1 and O2 reached 86.6.

UK mobile networks

Vodafone made significant improvements in data, while Three performed consistently well in most categories. O2 was last once again, but testers noted better call performance and the fact it has done consistently well in the text category over the past few years.

There are also regional variations, with Vodafone doing better in Northern Ireland and Three competing with EE in Wales.

All four operators have made significant investments in their infrastructure in order to boost speed and coverage. EE, for example, is targeting 95 per cent 4G landmass coverage by the end of the decade.

However, RootMetrics believes that as the gap between the best and worst network becomes smaller, 5G will be an increasingly important differentiator. It is expected that all four will launch 5G between 2019 and 2020.

“The first movers in 5G are going to have an advantage as consumers will see a big step change in performance of their devices across critical functions like live streaming video,” said Kevin Hasley, head of product at RootMetrics and head of testing at parent IHS Markit.

“EE’s high performance in 4G testing can lead to a seamless service transition to 5G; however it will be a brand new playing field once the technology is live. 5G will give all networks an opportunity to be a leader in performance and service provision.

“However, 5G is most likely to impact urban area performance as it will be deployed in centres of high population density. Operators will still need to prove and maintain 4G and even 3G performance across wider geographies as that’s how we use our phones. We accept that when on the move and in more rural locations that performance will be lower, but we still have expectations about minimum performance.”

A separate study from RootMetrics earlier this year suggested just 53 per cent of Brits were happy with their mobile speed, but 79 per cent would be willing to pay marginally more for a better service.

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Ericsson hopes US 5G investments will speed up deployments

Ericsson is making several significant investments in the US in a bid to speed up deployments of 5G networks in North America and beyond.

The first 5G networks are expected to go live in the US later this year, delivering Fixed Wireless Access (FWA) broadband in urban areas. Japan and South Korea are also expected to be among the first, with deployments taking place in the UK in 2019 and 2020.

Ericsson’s investments cover both R&D, including in AI, as well as in US manufacturing and product operations.

Ericsson 5G

The company hopes to tap into local talent that will aid deployment of 5G around the world, while also shortening the timeline for new product introduction and delivery to customers in the US.

“The United States is our largest market, accounting for a quarter of Ericsson’s business over the last seven years,” explained Börje Ekholm, Ericsson CEO. To serve the demand of these fast-moving service providers, we are strengthening our investment in the US to be even closer to our customers and meet their accelerated 5G deployment plans.”

Ericsson’s Austin ASIC Design Centre in Austin, Texas focuses on the core microelectronics of 5G radio base stations and will employ 90 staff, while a new software development centre will house more than 200 engineers working on 5G software. By 2019, both will introduce 5G products and software features into the company’s wider portfolio.

Separately Ericsson hopes to have 100 AI specialists in North America by the end of 2018.

Manufacturing will begin later this year, while a dedicated team will identify products for the US market, conduct testing and work on early prototypes so they can be delivered to customers as soon as possible. The first 5G radios will be produced before the end of 2018.

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iSmash: There’s no reason why high street tech retailers can’t thrive

At a time when Carphone Warehouse is shutting stores and Maplin has gone out of business, it is noteworthy when a tech retailer decides to expand their physical footprint.

But that’s exactly what repair specialist iSmash is doing, having announced plans 70 more locations over the course of the next three years.

Intense competition from online rivals has left many high street stores unable to compete in terms of price and service and while others have adopted multi-channel strategies, the transition hasn’t been as smooth as hoped.

But iSmash believes trends in the mobile market, a lack of a major rival, and the availability of retail space make it an ideal time to expand.

iSmash origins

Julian Shovlin was inspired to found iSmash following an experience at university when he was unable to find someone to fix his damaged mobile phone.

“I fixed my phone myself and thus the idea for iSmash was born,” he tells TechRadar Pro, adding that the popularity of smartphones and their increasing importance to everyday life made it seem like a huge gap in the market.

The first store opened on the Kings Road in London in 2013 and there are now 26 locations on the high street, in train stations, and in shopping centres. The expansion will see iSmash cover a wider geographic area of the UK and an international push might not be far off.

The thinking is simple. Smartphone sales have plateaued - the market even shrank for the first time ever earlier this year – thanks to a lack of hardware innovation and rising costs. The longer someone holds onto a phone the more likely it is they will damage it, and with consumers less keen to replace it, repairs become a more attractive option.

But anecdotal evidence would suggest a lot of people don’t get their handsets repaired. After all, it’s not uncommon to see a smashed display on the tube for example. So why don’t people get their phones fixed?

Repair not replace

“There’s a perception that it will cost the earth to repair a phone, which is not the case and it is a much more affordable option than replacing the handset,” suggest Shovlin. “Secondly, people believe there’s no convenient solution that gets them their device back swiftly. Lastly, some people simply want an upgrade and feel that it’s not worth the money to repair when they are planning to get a new phone anyway.

“We are addressing the first two points in our proposition – the average cost of a repair through iSmash is under £100 and takes less than 30 minutes.”

It’s this desire for convenience which is why iSmash is expanding via the high street rather than online. People are too attached to their handsets to send it off for any extended period of time.

“Key for us in particular is the fact that in order for customers to fully enjoy the benefits of our service (a while-you-watch 30-minute repair) they must visit our stores on the high-street. Currently around 50 per cent of all of our appointments are booked online in advance, highlighting our ability to secure customers online but service them in store.

High Street future

Shovlin believes that despite the failure of Maplin and the difficulties facing Carphone Warehouse don’t mean that tech retailers on the High Street can’t thrive so long as they adapt to changing demand.

“As obvious as it might sound, for bricks and mortar stores in the tech industry, the way to thrive is to remain agile,” he says. “This means embracing new technology and listening to, and actioning insights from, your customers.

“Whilst a number of established brands on the high street are struggling financially, there is an opportunity for those with a strong proposition to thrive. At iSmash our offering is different, we offer an in-demand service that is best accessed on the high street.

“The closure of other high street chains also presents a unique opportunity for growing retail businesses as it means that prime retail space is now cheaper than it’s been in a long while.”

Shovlin suggests the aforementioned market trends have fostered a ‘repair not replace’ culture in the UK. But given the growing public interest in plastic and electronic waste, shouldn’t device manufacturers make it easier for people to carry out their own repairs?

He concedes that this would make consumers happy but doesn’t think it’s going to happen any time soon.

“I think that the idea would certainly be well received by consumers. However, generally speaking, the focus from handset manufacturers is currently on creating slimmer, sleeker and more powerful devices – unfortunately this often comes to the detriment of durability.”

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Virgin Mobile sees modest gains in Q2

Virgin Media added 16,000 new mobile customers during the second quarter of 2018 as total subscriber numbers remained static at three million.

Mobile revenues rose by 16.1 per cent thanks to higher revenue from handset sales, but this was partially offset by lower mobile subscription income.

Two thirds of all mobile customers are now using 4G, while a third have now been migrated to Virgin’s “full” Mobile Virtual Network Operator (MVNO) platform.

Virgin Mobile UK

Virgin Mobile was the first MVNO when it launched in 1999, using what was then One2One’s network to power its services. It renewed its wholesale deal with EE last year, allowing Virgin to build a ‘thick’ MVNO with greater control over billing, SIM provision and other network components.

This means it’s easier for Virgin Media to rollout new services, avoiding a repeat of the delayed launch of 4G, which only took place in late 2016.

It was a successful quarter for the UK’s largest cable provider, whose fixed network now reaches 14.2 million premises. Total customer ARPU rose 1.6 per cent to £51.11 thanks to new and existing customers taking out 112,000 new services during the three months – a record for the company.

A particular highlight was the addition of 31,000 broadband subscribers.

Total revenues increase by 4.1 per cent to $1.6 billion, which helped boost parent company Liberty Global’s income by 2.7 per cent to $3 billion.

“Enhanced broadband speeds and the continued roll out of our V6 set top box helped deliver a substantial increase in our triple-play acquisitions, improved growth on our existing footprint and increased ARPU,” said Liberty Global CEO Mike Fries.

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Samsung invests billions in 5G and AI

Samsung is to invest 25 trillion won (£17 billion) in areas such as Artificial Intelligence (AI), 5G and components for connected cars as it seeks to protect itself against smartphone saturation.

The Korean giant is the world’s leading manufacturer of smartphones and memory chips but slowing demand in more developed markets has seen it seek other sources of growth.

According to figures from IHS Markit, Samsung’s shipments fell 10.8 per cent to 70.8 million during the most recent quarter as the Samsung Galaxy S9 failed to fend off competition from the likes of Huawei.

Samsung 5G

This still gives it a market share of 20.6 per cent, but even Samsung acknowledged in its results that sales of its newer devices hadn’t been as good as excpected.

“Today’s announcement follows many months of deliberations and review by the management and board of directors of different Samsung companies that will make the investments, including Samsung Electronics,” said the company.

It plans to become a leader in the market for 5G chipsets while also ensuring it is in position to capture demand for new applications in autonomous cars, the Internet of Things (IoT) and robotics that will be enabled by next generation networks.

In addition to components for devices, Samsung also sees 5G as a chance to transform its network equipment division into a major player that can compete with Ericsson, Huawei and Nokia. It has been involved in trials of Fixed Wireless Access (FWA) broadband with Verizon in the US and with Orange in Romania among others.

There are plans to increase the number of advanced AI researchers at its AI centres to 1,000 while there will also be an expansion of its semiconductor manufacturing capabilities to cope with demand for AI, 5G, data centre and connected car components.

In total, Samsung expects to create 40,000 jobs over the next three years.

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EU ponders one single common phone charger

The European Union (EU) is to study whether there is a need for more action to force the mobile industry to adopt a common charger that can be used with any smartphone

European policymakers have been keen for a single standard for more than a decade, citing significant amounts of electronic waste caused by unused chargers and the inconvenience suffered by Android and iPhone users who need different cables for different devices.

EU charger

It has expressed its view to the industry for almost a decade and in 2009 it appeared as though there was a breakthrough when Nokia, Sony Ericsson, Motorola and Apple, agreed to use the MicroUSB standard for all new smartphones by 2011.

This deal expired in 2012 and although much of the industry has indeed settled on MicroUSB, Apple introduced its proprietary Lightning standard in September of that year. Lightning is now used in all models of iPhone and iPad, with Apple claiming the connector affords it more freedom of design in its products.

But the EU is frustrated at this lack of progress and has confirmed it will look into the matter to see if it needs to intervene.

“Given the unsatisfactory progress with this voluntary approach, the Commission will shortly launch an impact assessment study to evaluate costs and benefits of different other options,” EU Competition Commissioner Margrethe Verstager is quoted as saying by Reuters.

It would seem as though Apple would be most vulnerable to any such move and could be forced to adapt the designs of its new devices. The company has been approached for comment.

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How can mobile operators look beyond falling traditional revenues?

One of the biggest takeaways from Ofcom’s Communications Market Review (CMR) was that the number of voice calls being made on a mobile phone in the UK had fallen for the first time.

Whereas making calls on the move was once considered the raison d'être of the mobile phone when it first arrived in the 1980s, priorities of mobile users have shifted significantly since the first iPhone and first Android devices launched a decade ago.

Just 75 per cent of smartphone users consider using a mobile phone for phone calls as ‘important’, compared to 92 per cent who consider web browsing to be important.

Traditional revenue squeeze

One of the reasons for the drop can be attributed to the popularity of applications like Facebook Messenger and WhatsApp.

It’s been clear for a long time that mobile networks are now defined by their ability to carry data – only yesterday Three revealed that its average customer consumes 7.7GB a month – and also that mobile operators need to find new ways of monetising this demand as traditional revenues decline.

It’s six years since the number of messages sent via WhatsApp, iMessage and other applications exceeded those sent via SMS and now the distinction between native messaging and over-the-top (OTT) services. In 2016, 89 billion SMS messages were sent but this is set to fall to 64 billion in 2018. In 2020, the figure is expected to be 40 billion.

And in Europe, operators are counting the cost of the abolition of roaming charges within the EU. While most cost-savvy customers have used Wi-Fi and/or OTT services to avoid most charges, it means that additional levies on data consumption are now outlawed.

The opposing argument is that mobile operators stand to benefit from greater demand for data services and there is some truth to this as carriers seek to increase revenues with more generous bundles and bigger data allowances.

But these trends are having an effect on out of bundle revenues which have fallen from £2.1 billion in 2016 to £1.4 billion in 2018, according to ReportLinker, which suggests a further decline to £600 million by 2020.

To put it into perspective, the average monthly amount spent on mobile services has fallen from £43.55 in 2016 to £41.12 in 2018. By 2020, this could be as low as £38.89. Intense competition between four major providers is also playing a role.

Future of networks

With mobile operators having to invest billions to upgrade their existing 4G networks and to prepare for the advent of 5G, this is a worrying trend. No one wants a repeat of the 3G era when there was precious little capital to invest in infrastructure (although this was due to crippling spectrum licences).

But there is hope. One of the principal aims of the industry is to ensure that mobile networks aren’t simply ‘dumb pipes’ that other companies such as Facebook and Netflix profit from. That’s why there has been such a push into additional services like content and areas like the Internet of Things (IoT).

The ability for an operator to see everything that happens on their network, whereas OTT companies can only see what takes place within their application, is a huge advantage.

5G represents a significant opportunity to connect more things and deliver more services, while it also hoped that new, virtualised infrastructure and next-generation equipment will lower operational costs.

A golden opportunity

There have also been moves to regulate OTT services more closely. The mobile industry has long complained that it is subject to obligations that rivals like WhatsApp and Skype are not. Germany has said it wants to regulate OTT firms like telcos, while the GSMA has said the advent of the EU’s General Data Protection Regulations (GDPR) will also help level the playing field.

And there’s hope for traditional revenues too. Google is working with operators around the world on Rich Communications Services (RCS), which is seen as a successor to SMS and a rival to iMessage. RCS combines the rich content of instant messaging with the universality of SMS and is targeted at both consumers and businesses.

Analysts also believe that the short-term decline in roaming revenues within the EU could be offset in the medium to long term by the increased use of mobile phones abroad. It has been suggested that many people simply don’t use their phones on holiday because they are scared of the costs, but normalisation could see more calls and texts being made or bigger bundles being taken out.

The past decade has seen irreversible changes in how people use their mobile phones and access the Internet and it’s something that operators have had to get to grips with. But Ofcom’s report also shows that people are using mobile devices more than ever and that opportunity must be seized.

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UK smartphone use hits new high but Brits make less calls than ever

The dominance of data and decreasing importance of voice on mobile has been underlined by the findings of a new Ofcom report which says the amount of time spent on calls has fallen for the first time.

The regulator's annual Communications Market Report (CMR) found that the popularity of over-the-top messaging applications like WhatsApp and Facebook Messenger as communications tools meant that just three quarters of Brits considered a mobile phone useful for making calls.

This compared to 92 per cent who viewed their phone as important for web browsing.

Rise of the smartphone

UK smartphone ownership has risen from 17 per cent to 78 per cent since 2008, with Ofcom’s report showing the differences in behaviour over the past decade. Back then, smartphones accounted for 20 per cent of web browsing, but the figure now is 72 per cent.

The average Brit spends 2 hours 28 minutes a day on their handset and checks their smartphone every 12 minutes. Two fifths look at their smartphone within five minutes of waking up.

These trends are having an impact on overall time spent online, with a fifth of Brits spend more than 40 hours a week online. Flexible working and communication with friends and family are the main use cases, but more people feel like they’re cut off from the outside world if they don’t have their phone on them, while some people struggle to separate work and personal lives.

“Over the last decade, people’s lives have been transformed by the rise of the smartphone, together with better access to the internet and new services,” said Ian Macrae. 

“Whether it’s working flexibly, keeping up with current affairs or shopping online, we can do more on the move than ever before. But while people appreciate their smartphone as their constant companion, some are finding themselves feeling overloaded when online, or frustrated when they’re not.”

Mobile operators might be happy with the increasing amounts of data as it allows them to sell tariffs with bigger data bundles, but the use of OTT services to bypass call and text charges is having an impact on traditional revenues.

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Huawei overtakes Apple to become world’s 2nd biggest smartphone maker

Huawei has leapfrogged Apple to become the world’s second biggest smartphone maker during the second quarter of 2018.  

It’s a significant milestone for the Chinese firm which has enjoyed considerable success in its homeland over the past few years but has since sales increase dramatically over the past 12 months.

This can be attributed both to increased awareness of the brand through marketing and longevity, but also due to the critically-acclaimed Huawei P20 flagship.

IHS Markit claims that shipments rose 41 per cent year-on-year to 54.2 million units and managed a growth rates of 107 per cent in Asia-Pacific and more than 60 per cent in EMEA. What’s notable about Huawei’s second-placing is that it is effectively frozen out of the North American market.

Its overall share stands at 15.7 per cent.

Huawei smartphone growth

"Huawei is shifting to more value-added models, by launching new flagship smartphones with the latest features,” said Gerrit Schneemann, an analyst with HIS. “Huawei’s P20 Pro is the first flagship smartphone model to be equipped with triple cameras, beating competitors to market.”

"The continued growth of Huawei is impressive, to say the least, as is its ability to move into markets where, until recently, the brand was largely unknown," added Ryan Reith, an analyst from IDC, whose separate report has Huawei as number two as well.

Samsung suffered the biggest decline of the quarter, with shipments falling 10.8 per cent to 70.8 million, or 20.6 per cent of the market. However, this was still enough to retain first position, although it may be looking over its shoulder going forward.

“The company’s shipments were also down 9.2 percent quarter over quarter,” continued Schneemann.

“Samsung is struggling to fight off the competition with its Galaxy S9 and S9 Plus devices, and the company needs the next Galaxy Note to deliver in the latter part of the year. Samsung has been facing severe competition from Chinese manufacturers, especially Huawei and Xiaomi. These two brands have been disturbing Samsung’s smartphone sales in Europe and Asia.

“Combined shipment volume of four Chinese manufacturers — Huawei, Oppo, Vivo and Xiaomi — reached 145.4 million units, which is bigger than the 114-million-unit combined shipment volume of market leaders Apple and Samsung. The second quarter was also the first time these top four Chinese manufacturers shipped more smartphones than the two leading companies.”

Apple shipments were static at 41.3 million despite the fact the firm is selling nine models rather than the six it did this time last year. However, revenue is up 20 per cent thanks to the popularity of its more expensive iPhones, most notably the £999 iPhone X. It is in third place with 15 per cent of the market, the first time since Q2 2010 that it hasn’t occupied one of the top two positions.

Xiaomi is in fourth, Oppo fifth, Vivo sixth and LG’s decline continued as it slipped to 7th. Motorola’s popularity in Latin America ensured it finished eighth. In total, 344.6 million units were shipped – a fall of 1.8 per cent.

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Ofcom wants mobile operators to notify customers at end of contract

Mobile operators would be required to inform customers when their minimum contract term is close to concluding under proposed rules from Ofcom.

Under existing regulations, providers of mobile, broadband, landline and television services are under no such obligation. This means that consumers whose introductory offer has expired or who  can get a cheaper deal elsewhere after paying off a handset might be unaware of their options.

Ofcom estimates there are more than 20 million communications customers outside of their minimum term and 10 million whose deals will become automatically more expensive thereafter.

Out of contract

The proposals would mean customers get a notification via their medium of choice – SMS, letter or email – between 40 and 70 days before their contract expires.

“We’re concerned many people are paying more than they need to – particularly those who are out of contract,” said Lindsey Fussell, Ofcom Consumer Group Director.

“Customers have told us they want to be alerted when their phone, TV or broadband contract is coming to an end, and get advice on their options. Under our plans, providers would have to do exactly that.”

To appeal to consumers concerned about paying too much for their mobile contract, a number of operators offer ‘flexi’ tariffs that separate the cost of the handset from the airtime. Once the handset portion has been paid off, customers only pay for the airtime component.

However research published by uSwitch earlier this month suggested that these tariffs were still more expensive than a comparable SIM-Only deal. uSwitch said that Ofcom’s proposals on minimum term notifications “couldn’t come soon enough”.

The regulator will consult on the proposals until 9 October.

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