Content
- Thought about the “Foundation” Asimov
- Bipolar world
- Apple results
- About Samsung, BBK and when will the company give up its leadership
- Instead of a conclusion: Apple, Google, Amazon, Facebook, Nvidia, AMD, Netflix …
Thought about the “Foundation” Asimov
As you know, next year on Apple TV there will be a series based on Isaac Asimov’s Foundation series of novels. I hardly remember books, I read when I was 12 years old, and began to reread them. And the very first scene caught the attention. The hero of the novel arrives in the capital of the galactic Empire, goes to the taxi stand, guided by the instructions of the customs officer, stands in line at the taxi operator’s desk and asks to be taken to some good hotel, worried about how much it will cost, because the money he has almost none. Ask the customs officer for directions! Stand in line! Order a taxi at the counter! Don’t know which hotel to choose! Worry about whether there is enough money! This is really fantastic for 2020.
This is not sarcasm towards Mr. Azimov, whose contribution to the development of the entire society is invaluable. It is rather to the fact how many things are obvious today, even such an advanced thinker, immersed in the sphere of the world of the future, like Isaac Asimov, simply could not imagine.
I wonder what the novel would look like if it were written today.
Bipolar world
The nature of the current confrontation between the United States and China is that the latter has begun to show global business ambitions. As long as China was a global factory and local companies remained in the home market, everything was fine. However, just as Western companies were tempted by the huge Chinese market, Chinese companies looked at the world around with interest. And if 10 years ago, the ability of the Chinese to independently create high-tech solutions raised questions, today China can be called one of the world technological leaders.
It may seem that the main obstacle to Chinese technology has become censorship and ideology, as a result of which Chinese decisions are perceived by the Western world as lepers. But rather, this is the reason, because, as they say, “hitting” must be justified.
Smart cities flooded with cameras to help combat traffic and crime are, in theory, a blessing. The average person has nothing to hide and no one to hide from. And cameras for monitoring situations have been used all over the world for a long time. Along the way, admiring the decisions of Singapore, it was the Chinese “smart” cities that immediately began to be perceived as synonymous with the police state.
Paying via WeChat or Alipay from any smartphone (it doesn’t matter if there is NFC or not) – it’s much easier and more profitable for everyone. But even then they immediately explained that Chinese companies are giving data to the state, which now knows what kind of coffee you drink. Another thing is Sberbank or Bank of America cards, which reliably protect against the watchful eye of the government.
Another example is telecom equipment from Huawei. The company offers the best products in terms of quality, capabilities and prices. And immediately falls under the sanctions.
The next example is much more interesting – TikTok. Perhaps this is the first social product from China that has become fashionable and in demand around the world. And as soon as that happened, signals immediately went from the US government about a future application ban.
You don’t need to do an analysis to see that each time the whistle-blower is the US government, which subsequently puts pressure on all partners to call for the abandonment of Chinese technology. The UK recently ditched Huawei as its 5G service provider. Now everyone is looking at Germany, which has not yet abandoned Huawei. As, indeed, France, which in early July announced that it would not prohibit the use of Huawei products by those companies that are already in partnership with a Chinese manufacturer (but operators who have not previously worked with Huawei will have to justify why with Huawei they must cooperate). Then, apparently, they will prohibit German schoolgirls from dancing on TikTok, along the way, additional sanctions will be imposed on Russia.
Thus, a split occurs when countries have to choose which side to side with – China or the United States.
Instead of a conclusion, I will say that at the moment China is still losing in terms of the number of technologies, and the strength is on the side of the United States. A striking example of this is the problem with the creation of processors. Since the 90s, attempts have been made at the state level to build their own industry. By the way, the IPO of the largest home chipset manufacturer Semiconductor Manufacturing International Corp, which is several generations behind TSMC, took place on the Shanghai exchange recently. Well, then countries will have to make a choice which twix wand is better.
Apple results
About Apple and India
Before discussing the report. In the last issue, speaking about India, he casually mentioned that Apple is unable to establish the production of the iPhone there, because the local hard workers cannot cope. And then the news flew in – a rumor that the Taiwanese manufacturer Foxconn at the plant in Chennai (India), it seems, has mastered the production of the iPhone 11, and that even such smartphones will be exported. It turns out that the altitude was taken from the third time and 7 months after the previous attempt. Well, in order not to be reproached for distorting information, I will immediately note that budget outdated refurbished iPhone models have been made in India since 2017. But the complexity of such work is much lower than a full-fledged assembly of a flagship device.
Currently, the production of the iPhone is tied to China. In light of the difficult geopolitical environment, Apple has long and hard tried to reduce its dependence on China and diversify its production capacity in other countries. In the same way, the company works with different factories, reducing the risks of dependence on one manufacturer. Foxconn is the main contractor, but Apple also has Pegatron and Wistron.
About Apple Report
In the previous issue of Echo, I wrote that Apple’s quarter will be unsuccessful (closer to the indicators of 2017), and a 2-3% drop to the previous year can be called a success. Everything hinted at a similar result, from the lack of traditional guidance from Apple, downtime at retail stores, and ending with the drop in the share of iOS and macOS operating systems.
However, I was not alone in my judgments. Analysts from Loop Ventures, Munster, Cowen investment bank, JP Morgan unanimously spoke about the results in the range from 49 to 50 billion, that is, 5-10% worse than a year ago. And only an analyst from Morgan Stanley suggested that Apple, as always, will surprise, presenting results better than expected, in the region of 55 billion, that is, a couple of percent better.
Against this background, the $ 59.7 billion figure named by Tim Cook hit everyone like a bolt from the blue. In an interview with Bloomberg, one of the analysts called the results of the quarter jaw-dropping. I absolutely agree, when Cook mentioned the number, the jaw was asked to hang. And at the Q&A session, during a call with investors, analysts, instead of the usual greeting and congratulatory words on the next successful quarter, immediately asked questions, trying to understand how it happened. One analyst even asked a tactless question about the level of overstocking, implying whether Apple just shipped a lot of products, thus “drawing” good numbers. It is even more surprising that Tim Cook did not dismiss him, but, apparently, feeling obliged to at least somehow comment on the super result, said that, on the contrary, the overstocking of channels is even lower than it was in a similar situation a year ago.
By the way, there is an interesting point here. Whether you paid attention or not, at the hearings in Congress, Tim Cook, with a rather guilty look, said that Apple makes great money during a pandemic. As if he was slightly embarrassed by this fact. If this is true, then this is something, yes, speaks of the Apple CEO as a person.
It is even more interesting that although Cook did not make official forecasts, he mentioned that the next quarter is expected to be good too. And all products, including services, will continue the positive trend.
Apple user base as of January 1 of each year in billions of devices
And perhaps the most interesting fact from the conference call is that the company’s user base has grown and reached a new all-time high. Unfortunately, no figure was given. But we can assume that this is about 1.55 billion users. The fact is interesting because statistics from Statscounter show that the share of iOS users declined after the surge in April. Here, of course, one could say that this market has increased, but other smartphone manufacturers have shown a drop in sales year-on-year.
Probably, a significant role in the success was played by the launch of a new version of the iPhone SE, which prompted an update. For example, Counterpoint in its report notes that about 30% of those who bought the iPhone SE in the United States switched to it from iPhone 6 or older models, and 26% of users switched to SE from Android. The latter figure is significantly higher than usual.
The situation with Apple’s sales is also curious because it turns out that the pandemic, in fact, not only did not affect iPhone sales, but even contributed to them. Speaking about the United States, experts note that people used incentive payments from the state to buy new smartphones. And, apparently, the choice was in favor of the iPhone. By the way, this is also seen on the graph with the shares of operating systems. IOS peaked in April. The situation is similar in China, where Apple’s sales grew 32% quarter-on-quarter due to the replacement of old iPhones with the new SE.
Apple cannot be suspected of falsifying the facts. An overly significant company and an insignificant reason. The third financial quarter is always the weakest for the company. And no one expected miracles, and if the results were at the level of last year or worse, then everyone would have treated with understanding. And here is such a frantic growth. Also in all categories. Macs still have one of the most record highs in history. Well … That’s why we love Apple. The company knows how to do miracles out of the blue.
By the way, Tim Cook mentioned that this year the presentation of new smartphones will take place later than usual.
About Samsung, BBK and when will the company give up its leadership
Somehow it so happened that Samsung is considered the main competitor to Apple. Although this is absolutely not the case. These companies have different attitudes, strategies, and profit sources. But for some reason, Apple fans are happy when the company bypasses Samsung. I’m still waiting for the BBK Electronics Corp brands (Oppo, Vivo, realme, iQOO) to finally bypass Samsung. Initially, he said that this would happen at the end of this year, but the coronavirus confused all the cards. In the fourth quarter of 2019, Oppo / Vivo / realme sold 70.5 million units, while Samsung sold 69.5 million units. In 2020, BBK was supposed to strengthen its leadership, but due to the coronavirus panic, it lost the 1st quarter, and in the second quarter BBK sold 53.4 million, and Samsung – 53.7 million phones. He breathes in the back of his head.
The outcome depends, firstly, on the depth of the economic crisis in which we find ourselves after the pandemic, since the BBK relies heavily on developing countries. And as you know, the crisis primarily affects the least financially protected countries. Secondly, locked in the Chinese market, Huawei continues to terrorize local players. Pay attention to the slide below, the shares of Oppo and Vivo decreased by 20-30%. Along the way, Xiaomi received a 35% slap in the face. At this rate, other manufacturers will soon be petitioning change.org to launch Huawei into other markets. Thirdly, anti-Chinese sentiments have emerged in the Indian market, which can be called the most important after the home market for BBK.
Returning to Samsung. The company completed the second quarter with dignity. Sales of semiconductors and memory increased significantly, consumer electronics decreased slightly due to lower sales of TVs. The company linked the last point to the closure of stores, the lack of sports broadcasts and the cancellation of the Olympic Games in Tokyo.
In smartphones, everything is generally not bad either. In units, sales dropped by almost 30%, in revenue – by 19%. But the net profit from the sale of smartphones increased by 40%. If the figure confuses you, then everything is simple. The company began to sell fewer but more efficient models that made more money. Along the way, Samsung has significantly reduced marketing costs for advertising and offline promotion.
Instead of a conclusion: Apple, Google, Amazon, Facebook, Nvidia, AMD, Netflix …
A series of reports for the second calendar quarter of 2020 has passed. And, perhaps, the main result of the quarter is the undeniable power of IT companies. Most hi-tech companies have shown results that seem to be oblivious to the difficult situation in the world. Bad bank reports, rising unemployment, falling sales of grocery and FMCG goods, planes do not fly, and cruise ships rust in ports. If you look this way, it may seem that the world is falling apart. And, perhaps, it is, if we talk about the concept of the old “analog” world. But the new digital is flourishing.
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