Global tablet sales to hit 145 million in 2013: Research

Global tablet computer sales are expected to hit 145 million this year, a research firm said Wednesday in the latest upgrade of the sizzling segment.
ABI Research said it raised its forecast due to "a combination of new market entrants, more affordable choices for consumers, and increased adoption by business audiences."
"The rate of innovation is slowing as tablet vendors augment their product portfolios to meet the needs of market audiences," says ABI's Jeff Orr.
"The late 2012 launches of Apple's iPad mini and a variety of slates based on Intel architecture and new Windows operating systems will only begin to show their progress this year."
ABI said North America will account for just over 50 percent of worldwide sales.
Business sales are expected to account for 19 percent of the total, as corporate customers look to newer models aimed at their users.
Sales data from 2012 are still being compiled, but some forecasts indicated the total number of tablets sold would be around 126 million.

Apple misses revenue forecast, stirs concern over growth

Apple Inc missed Wall Street's revenue forecast for the third straight quarter after iPhone sales came in below expectations, fanning fears that its dominance of the mobile industry was slipping.
Shares of the world's largest tech company fell 10 percent to $463 in after-hours trade, wiping out some $50 billion of its market value - nearly equivalent to that of Hewlett-Packard and Dell, combined.
On Wednesday, Apple said it shipped a record 47.8 million iPhones in the December quarter, up 29 percent from the year-ago period. But that lagged the 50 million that analysts on average had projected.
Expectations heading into the results had been subdued by news of possible production cutbacks by some component suppliers in Asia, triggering fears that demand for the iPhone, which accounts for half of Apple's revenue, and the iPad could be slowing.
But many investors clung to hopes for a repeat of years of historical outperformance, analysts said.
"It's going to call into question Apple's dominance in the space. It's still one of the strong players, the others being Samsung and Google. It's still a two-horse race, but Android continues to grow rapidly," said Sterne Agee analyst Shaw Wu.
"If you step back a bit, it's clear they shipped a lot of phones. But the problem is the high expectations that investors have. Apple's conservative guidance highlights the concerns over production cuts coming out of Asia recently."
Apple projected revenue of $41 billion to $43 billion in the current, second fiscal quarter, lagging the average Wall Street forecast of more than $45 billion.
Fiscal first quarter revenue rose 18 percent to $54.5 billion, below the average analyst estimate of $54.73 billion, though earnings per share of $13.81 beat the Street forecast of $13.47, according to Thomson Reuters I/B/E/S.
Apple also undershot revenue targets in the previous two quarters, and these results will prompt more questions on what Apple has in its product pipeline, and what it can do to attract new sales and maintain its growth trajectory, analysts said.
Net income of $13.07 billion was virtually flat with $13.06 billion a year earlier on higher manufacturing costs. The year-ago quarter also had an extra week compared to this year.
Gross margins consequently slid to 38.6 percent, from 44.7 percent previously.
"You can't just keep rolling out iPhones and iPads and think that everybody needs a new one," said Jeffrey Gundlach, who runs DoubleLine Capital LP, the $53 billion bond firm. "The mini? What is that all about? It is a slightly smaller iPad - so what? So that is our new definition of innovation?"
"There are plenty of competitors like Samsung and other legitimate competitors like them," added Gundlach, one of the highest-profile Apple bears. He maintains a $425 price target.
Shares of several of Apple's suppliers crumbled. Chip suppliers Skyworks and Cirrus Logic both fell more than 6 percent. Qualcomm Inc slipped 1.8 percent.
China is next big growth driver
Apple shares are down nearly 30 percent from a record high in September, in part on worries that its days of hyper growth are over and its mobile devices are no longer as popular.
Intense competition from Samsung's cheaper phones - powered by Google's Android software - and signs that the premium smartphone market may be close to saturation in developed markets have also caused a lot of investor anxiety.
Meanwhile, sales of the iPad came in at 22.9 million in the fiscal first quarter, roughly in line with forecasts.
On the brighter side, Chief Financial Officer Peter Oppenheimer told Reuters that iPhone sales more than doubled in greater China - a region that Apple Chief Executive Tim Cook has vowed to focus on as its next big growth driver.
The company will begin detailing results from that country going forward. Revenue from the region totaled $7.3 billion, up 60 percent from the year-ago December quarter.
"These results were OK, but they definitely raised a few questions," said Shannon Cross, analyst with Cross Research. "Gross margin trajectory looks fine so that's a positive and cash continues to grow. But I think investors are going to want to know what Apple plans to do with growing cash balance."
"And other questions are going to be around innovation and where the next products are coming from and what does Tim Cook see in the next 12 to 18 months."
Addressing production rumors
In an unusual move for Apple, which typically does not respond to speculation, Cook addressed the production cutback rumors at length on the conference call and questioned the accuracy of rumors about its plans.
Media reports earlier this month said the company is slashing orders for iPhone 5 and iPad screens and other components from its Asian suppliers.
"Even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business, because the supply chain is very complex," he said, adding that Apple has multiple sources for components.
"Yields might vary. Supplier performance can vary. The beginning inventory positions can vary. There's just an inordinately long list of things that would make any single data point not a great proxy for what's going on," he said.
Apple's initial iPhone and iPad mini sales were hurt by supply constraints, but Cook expects supply to balance demand for the iPad mini this quarter. He also acknowledged that iPad was cannibalizing its high-margin Macintosh computers, but said it was a huge opportunity for the company.
"On iPad in particular, we have the mother of all opportunities here, because the Windows market is much, much larger than the Mac market is," he said. And I think it is clear that it's already cannibalizing some."
In another departure from tradition, Apple intends to tweak the way it both reports results and publishes forecasts.
Apart from breaking out results from China, the company also will no longer provide a single revenue or gross margin outlook. From Wednesday, it began providing the range it expects to hit, rather than the often-ludicrously conservative estimates that Apple was once notorious for.
The new policy took many by surprise.
"Before people could always ignore the guidance," said Dan Niles, Chief Investment Officer of AlphaOne Capital Partners, LLC. "Apple is telling investors that they need to pay attention to the guidance and you can't ignore it, which is basically what we all did in the past."
© Thomson Reuters 2012

LG Display posts robust Q4 profit amid Apple worries

LG Display Co Ltd reported a second consecutive quarterly profit, beating forecasts by far on a rebound in television sales during the year-end holiday season and solid sales of screens used in Apple Inc's iPad and iPhone.
But concerns about slower growth for Apple products have risen, particularly in the wake of disappointing earnings from the U.S. company on Wednesday, and analysts have forecast earnings for the South Korean screen maker to slide in the first quarter.
LG Display said it expected its LCD panel shipments to decline by around 15 percent in the first quarter from the previous quarter.
The company, which provides about 70 percent of Apple iPad screens and vies with Samsung Electronics Co Ltd's panel unit for the top position in liquid crystal display flat screens globally, reported 587 billion won in operating profit for the October-December quarter.
That beat an average prediction for a 441 billion won profit in a poll of eight analysts by Thomson Reuters and was up from an operating loss of 155 billion won for the same period a year earlier.
It also marks its highest quarterly profit since the second quarter of 2010 and a continuation of a turnaround that began in July-September after seven straight quarters of losses, mainly due to an industry oversupply of TV panels. Sales rose to 8.7 trillion won in the quarter, a quarterly record.
Apple sold 18 million more iPhones in the December quarter from the previous quarter, as it expanded iPhone 5 sales. The introducion of the iPad mini also boosted LG's panel shipments.
But hit by growing worries about demand for Apple products, LG Display's shares have lost about 17 percent since December after gaining 40 percent in the first 11 months of 2012. Prior to the results, they closed down 1.2 percent, underperforming a 0.8 percent decline in the broader market.
Apple's iPhone sales were, however, weaker than expected, fanning fears that its dominance of the mobile industry was slipping.
In forecasts made prior to Apple and LG Display's reuslts, analysts expect LG Display's first-quarter operating profit to tumble to around 123 billion won.
CLSA analyst Matt Evans estimated this week that LG's iPad panel shipments could tumble to as few as 2 million units in the first quarter, from the fourth-quarter's 12 million, partly due to increased inventory following weak sales in December.
Two industry sources told Reuters last week that rival Sharp Corp of Japan has nearly halted production of 9.7-inch screens for iPad, possibly as demand shifts to the iPad mini.
Sharp supplies around 17 percent of Apple's iPad screens while Samsung provides 12 percent, according to research firm DisplaySearch.
Apple's Chief Financial Officer Peter Oppenheimer said iPad sales are expected to fall in the first-quarter, as they normally do after the year-end holiday season.
© Thomson Reuters 2012

Apple ships record 47.8 million iPhones and 22.9 million iPads in Q1 2013

Apple's blockbuster revenue growth is slowing drastically, as iPhone sales plateau and the company finds itself lacking revolutionary new products.
The company's warning, issued Wednesday as part of its financial results for the holiday quarter, sent Apple Inc.'s stock plunging by more than 10 percent, wiping out a year's worth of gains.
Analysts said the warning suggested Apple can no longer sustain its growth without some completely new products. Its last revolutionary creation, the iPad, was launched in 2010. Co-founder Steve Jobs, who was the engine behind the creation of the iPod, iPhone and iPad, died in 2011.
"It has been an overriding concern with Apple that they would not be able to generate revenue growth just rolling out new versions of old products," said Jeff Sica, president and chief investment officer of SICA Wealth Management. "Now they've proven it in their numbers."
On a conference call with analysts, Apple CEO Tim Cook rebutted that idea, but as usual, gave no details.
"We're working on some incredible stuff. The pipeline is chock full," he said.
Before he died in 2011, Apple co-founder Steve Jobs told biographer Walter Isaacson that he had figured out how to create a groundbreaking, easy-to-use TV set. Since then, company watchers have been waiting for the company to bring out something in that vein to re-energize sales. Cook said the company was still working on it.
"I tend to believe that there's a lot we can contribute in the space, and so we continue to pull the string and see where it leads us," he said.
Apple said it expects sales of between $41 billion and $43 billion in the current quarter, which ends in March. That would usually be little cause for concern, even though analysts were expecting $45.6 billion, because Apple usually lowballs its forecasts. But Chief Financial Officer Peter Oppenheimer said the company is changing its practices and providing a reasonable range rather than a single, easily achievable number.
That means Apple is looking at sales growth of about 7 percent from last year's January to March quarter, a striking number for a company that's posted double-digit increases in every quarter except one since 2008.
Apple's stock fell $55.58 to $458.43 in extended trading, after the release of the results. The shares are down 35 percent from their all-time high, hit Sept. 21, when the iPhone 5 launched.
Fueled by earlier versions of the iPhone, Apple's market capitalization decisively overtook that of Exxon Mobil in early 2012, making it the world's most valuable company. With Wednesday's drop, Apple is worth just 5 percent more than Exxon.
Apple's enviable profit growth also hit a wall in the October to December quarter. It said net income in the fiscal first quarter was $13.1 billion, or $13.81 per share, flat with a year ago. That still beat expectations, as analysts polled by FactSet had forecast earnings of $13.48 per share.
Revenue was $54.5 billion, up 18 percent from a year ago. Analysts were expecting $55 billion. Sales were held back by the fact that the latest quarter had 13 weeks, one less than the corresponding 2011 quarter.
Apple shipped 47.8 million iPhones in the quarter, about 1 million less than analysts were expecting, and 22.9 million iPads, also about 1 million short.
Most surprisingly, Mac sales were also 1 million short, at 4.1 million. That's a 22 percent drop from shipments a year ago. Oppenheimer said this was because Apple couldn't get the new iMac desktops out before December.
Cook said iPhone supplies were short too, and the company could have sold more of both the iPhone 5 and older iPhone 4 if it had been able to make more.
Most technology companies would be ecstatic if they posted 18 percent sales growth and $13 billion in profit for a single quarter, but Apple is held to a high standard, set by the shocking, iPhone-propelled success of the last few years.
"Apple has been growing tremendously and that level of growth can't be sustained by any company," said Sarah Rotman Epps, senior analyst at Forrester Research.
Investors have already been concerned that Apple's strategy of keeping the price of the iPhone high means it's losing out on sales, particularly overseas. Consumers are instead opting to buy cheaper smartphones running Google Inc.'s Android software, which has propelled South Korea's Samsung Electronics to the world's largest maker of smartphones. The average wholesale price of the iPhone is $640, hundreds of dollars more than smartphones with comparable hardware.
There's speculation among company watchers that the company will produce a cheaper iPhone, but that would cut into its profit margin and could tarnish the company's image as a purveyor of premium products.
Apple had warned that the holiday quarter's profits would be lower than Wall Street was initially expecting, because it had so many new products coming out, including the iPhone 5 and iPad Mini. New production lines are more expensive to run and yield more defective products that need to be redone or thrown out rather than sold.

iPhone most popular in US, while Android popular worldwide in Q4 2012: Report

Apple's iPhone remained the most popular smartphone among US buyers in the closing months of 2012 while Android handsets were on top worldwide, Kantar Worldpanel ComTech reported on Tuesday.
"At the end of 2012, the global (operating system) picture shows Android on top, but clearly the rate of growth it experienced over the past year is beginning to slow as easy wins from first-time smartphone buyers begin to reduce," said Kantar global consumer insight director Dominic Sunnebo.
Apple iPhones accounted for 51.2 percent of smartphone sales in the United States during the 12-week period ending December 23rd of last year, according to Kantar.
Smartphones powered by Google-backed Android software made up slightly more than 44 percent of sales while handsets based on Microsoft's Windows operating system were a distant third-place with 2.6 percent, the report indicated.
Android smartphones continued to be best sellers in major markets including Britain, China, Spain, Australia, and Germany while iPhones were favored in Japan as well as the United States, according to Kantor.
Windows smartphones appeared to be catching on in Europe, with its shares of sales in Britain and Italy climbing to 5.9 and 13.9 percent respectively, the reported indicated.
"Windows Phone is now starting to gain respectable shares in a number of key European countries," Sunnebo said.
"However, its performance in the Chinese and US markets remains underwhelming; these remain key challenges for Microsoft to overcome during 2013."

Samsung looks to broaden chip base as Apple cuts orders

Samsung Electronics Co is looking to supply chips to more Chinese and other emerging smartphone makers, the head of its system chip business said, to counter any fall-off in demand from Apple Inc, which is weaning itself off Samsung chips used in its iPhones and iPads.
Samsung and its main U.S. rival, and biggest customer, together account for more than half the global smartphone market, and the South Korean group is the main supplier of mobile processors, or application processors (AP), powering both Apple devices and its own range of Galaxy phones and tablets.
But, as Apple looks to be less reliant on its rival for parts for its gadgets it is already buying fewer Samsung memory chips and display screens as the two have gone to war over patents - concerns have grown that Samsung may see its processor revenues tumble.
"As there are just two smartphone makers that are doing really well, chipmakers supplying them have grown in tandem. So we plan to bolster our relationship with those key customers," Stephen Woo, president of Samsung's System LSI business, which makes processors for Apple products, said in an interview.
Supplying processors for Apple products has been the mainstay of Samsung's system chips business.
Goldman Sachs estimates Samsung's AP chip sales to Apple will rise to 9.3 trillion won this year, or nearly 80 percent of Apple's spending on Samsung processing chips, memory chips and flat screens. But that could tumble to just 2.5 trillion won next year, as Apple will shift 30 percent of its AP business from Samsung and eventually 80 percent by 2017, according to Goldman.
"(We) should diversify our customer base and are making such efforts already, adding some Chinese customers," Woo told Reuters ahead of his first keynote speech at the annual Consumer Electronics Show in Las Vegas on Wednesday.
China's Meizu, one of the local smartphone newcomers, uses Samsung's Exynos quad-core chip for its MX smartphone, and Lenovo's K860 LePhone is also powered by Exynos.
Still, Samsung's mobile processor business is almost entirely tied to the fortunes of Apple and its own mobile business - the Galaxy range. By comparison, chip rivals such as Qualcomm Inc, Texas Instruments and Nvidia have a broader client base - from LG Electronics Inc and Nokia to HTC Corp, Huawei Technologies Co and Google's Motorola.
"We see emerging players who have potential to grow in smartphones and we will continue to make efforts to supply them with our chips," Woo said.
Eyeing baseband
The mobile processor market, driven by roaring sales of smartphones and tablets, is a bright spot for a semiconductor industry that is struggling with falling computer sales. Research firm Gartner estimates the mobile processor market will grow 30 percent this year to $13.5 billion and hit $16.5 billion next year.
To strengthen its chip capability, Samsung bought UK chipmaker CSR Plc's mobile phone connectivity and location technology for $310 million last year, and it is now looking at how it can improve modem chip technology, especially the baseband chip solution that enables wireless devices' radio communications.
"Baseband is a very important segment, but we don't have it. Given its importance, we're reviewing various options," Woo said, suggesting Samsung could be scouting for potential targets.
Qualcomm is the biggest baseband chip company with nearly 50 percent of the market, followed by the likes of Mediatek, Texas Instruments and Broadcom.
Single chipsetChipmakers are increasingly seeking to produce a single chip solution that combines AP, modem chip and connectivity chips that support Wi-Fi, Bluetooth and near-field communication functions, in one chipset. This combo-package is popular among low-end smartphones as it allows phone makers to cram various chips into compact devices.
Woo said Samsung, however, was not considering expanding into a single chip solution and will instead continue to focus on pure AP chips favoured for high-end phones, as it allows manufacturers to differentiate their hardware offerings with various chip combinations.
The explosion of mobile devices has opened a big opportunity to Samsung as Intel Corp, the world's top chipmaker, struggles to crack the mobile processor market dominated by the makers of ARM Holdings licensed chips. Samsung is the biggest maker of ARM-based chips, such as Apple chips and Samsung's Exynos brand.
Intel's market share in mobile devices is just 1 percent, as UK chip designer ARM holds a near monopoly.
Woo said Samsung was not looking to break into the desktop computer or server processor market - which Intel dominates, but is under threat from ARM-based chips that boast low-power consumption and compact design.
"For the time being, our focus will pretty much be on enhancing our AP offering, especially for high-end mobile devices," he said.
New powerful chip, flexible display
At his keynote speech, Woo unveiled Samsung's latest "Exynos 5 Octa" processor, tailored for high-end smartphones and tablets.
The new processor boasts eight cores: four to handle processing-intensive tasks and four to take on lighter workloads, to conserve battery life.
Glenn Roland, vice president and head of new platforms at Electronic Arts, demonstrated its processing power by running the high-octane, fast-paced "Need for Speed Most Wanted", on a Samsung reference tablet.
Other guests at Woo's speech included ARM Chief Executive Warren East, Microsoft chief technical strategy officer Eric Rudder, and former U.S. president Bill Clinton.
Samsung also unveiled a prototype phone with a flexible display that can be folded back and forth - almost like paper - by replacing a glass panel with super-thin plastic to make it bendable and unbreakable, as well as a smartphone equipped with a curved display.
"It won't break even if it's dropped. This new form-factor will really begin to change how people interact with their devices, opening up new lifestyle possibilities allow our partners to create a whole new ecosystem of devices," said Brian Berkeley, senior vice president of Samsung Display, a flat-screen unit of Samsung Electronics.
© Thomson Reuters 2012

Apple working on thinner, lighter 5th generation iPad: Report

If inside sources of a Japanese blog Macotakara are to be believed, then Apple is reportedly planning to introduce the next generation iPad in the upcoming months.

The blog, which has been known for its accurate predictions in the past with Apple products, states that this version of the company's 9.7-inch tablet will be thinner and lighter drawing on elements from the recently introduced 7-inch iPad mini (Review I Pictures). The expected dimensions for the device are 4mm x 17mm x 2mm. According to the blog, the 5th generation iPad is likely scheduled for a March 2013 release.

Furthermore, the blog's sources indicate that Apple is also amidst a production trial of the 2nd generation iPad mini. The 7.9-inch tablet is expected to feature a 2048x1536 pixel Retina display translating into a 326ppi pixel density and will likely carry on board the A6X chip as seen in the fourth generation iPad.

It's evident that Apple has picked up pace on the tablet front, proof of which we first witnessed this year with the launch of the 4th generation iPad in October, a move which came just six months after launching a new model, doubling the speed of the processor.

The new fourth generation iPad features a 9.7-inch Retina display, new Apple-designed A6X chip, FaceTime HD camera and ultrafast wireless performance with same 10 hours of battery life.

Coming to the iPad mini, it was introduced at a special event in San Jose, California on October 23rd (Pictures). The iPad mini features a 7.9-inch 1024x768  display, FaceTime HD and iSight cameras, ultrafast wireless performance and 10 hours of battery life.

The company sold three million iPads in just three days since the launch of its new iPad mini and fourth generation iPad. The number is double the previous first weekend milestone of 1.5 million Wi-Fi only models sold for the third generation iPad in March. So whether or not the next generation iPad and iPad mini create a similar effect is something that we'll keep an eye for.

Google Play growing faster than Apple's App Store: Report

Google Play growing faster than Apple's App Store: Report

Google's online Play shop of applications for Android-powered smartphones or tablets is growing fast, a report released Thursday by market tracker Distimo said.
The aggregate daily revenue at Google Play shops across the 20 largest countries where they are available climbed 43 percent during the past four months, while sales at Apple's online App Store increased 21 percent.
"Google Play is just starting to rival the Apple App Store in a few countries on a worldwide scale, even though it is still losing in terms of daily revenues," Distimo said in the report.
Apple's App Store catering to its iPhones, iPads, and iPod touch devices took in more than $15 million dollars a day in November, while daily revenue at Google Play was just shy of $3.5 million, according to Distimo.
"There were many success stories in 2012 about applications that became very successful in a matter of a few days and gathered millions of downloads and revenues," the analytics firm said in the report.
"Looking at the worldwide daily download and revenue volumes, the opportunity is really huge."
Smartphone game application "Draw Something" reached a million users in just nine days, while Asian publisher Naver launched five games in November that quickly became hits.
Naver game application Line Pop was downloaded 1.75 million times within three days of its release, according to Distimo.
A report released this month by research firm IDC projected that Android operating system will power more than two-thirds of smartphones sold worldwide in 2012, and will remain the dominant platform for at least the next four years.
IDC also boosted its forecast for global tablet sales for 2012 to 122.3 million, from 117.1 million, in large part due to demand for Android tablets and the new iPad mini.

Sam4sammy :: iPhone 5 hits China as Apple shares slide further

The highly anticipated release of the iPhone 5 in China, Apple Inc's second-biggest market, failed to stop the recent share slide of the world's most valuable technology company on Friday, and analysts said Apple's longer-term China hopes may hinge on a partnership with the country's top telecoms carrier.
Apple's latest iPhone, sporting a larger 4-inch screen and 4G capability, was launched in the United States and 30 other countries in September, when the company sold more than 5 million of the devices in the first three days.
Apple's shares, however once among the most desirable of portfolio holdings have headed steadily lower since September on growing uncertainty about the company's ability to fend off unprecedented competition. This year saw a surge in sales of Amazon.com Inc's cheaper Kindle Fire and Microsoft Corp's first foray into the tablet market with its Surface.
Unlike the crowds that the iPhone 5 debut drew in many cities around the world since September, just one person was waiting at the Apple store in Shanghai's financial district when its doors opened at 9 a.m. on Friday.
"Some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S," UBS analyst Steven Milunovich wrote in a note to clients.
China is Apple's fastest-growing market, bringing in about 15 percent of total revenue.
"In absolute terms, this (iPhone 5) launch will certainly result in strong sales for Apple in China. However, in relative terms, I don't believe it will move the needle enough in market share," said Shiv Putcha, a Mumbai-based analyst at Ovum, a global technology consultant.
Apple shares were down 3.6 percent at $510.55 on the Nasdaq on Friday afternoon. The stock has lost a quarter of its value since hitting a high of $705.07 on September 21, as it faces increasing competition from phones using Google Inc's Android operating system.
Cutting forecasts
In addition, analysts cut their forecasts for shipments of the iPhone.
Jefferies analyst Peter Misek trimmed his iPhone shipment estimates for the January-March quarter, saying that the technology company had started cutting orders to suppliers to balance excess inventory.
Misek cut his first-quarter iPhone sales estimate to 48 million from 52 million and gross margin expectations for the company by 2 percentage points to 40 percent.
UBS Investment Research cut its price target on Apple stock to $700 from $780 on lower expected iPhone and iPad shipments for the March quarter.
The brokerage said it was modeling more conservative growth for Apple after making supply chain checks that revealed that fewer iPhones were being built.
The iPhone is currently sold through Apple's seven stores, resellers and through China Unicom and China Telecom which together have fewer than half the mobile subscribers of bigger rival China Mobile.
"Apple's market share declined because of the transition between the iPhone 4S and 5. Their market share will recover (with the iPhone 5), but if you don't have China Mobile, the significant market share gains will be very difficult," said Huang Leping, an analyst at Nomura in Hong Kong.
Apple has been in talks about a tie-up with China Mobile for four years.
A deal with China's biggest carrier is seen as crucial to improve Apple's distribution in a market of 290 million users - which is forecast to double this year. But the company's failure to strike a deal with China Mobile means it is missing out on a large number of phone users.
As the China pie grows, Apple's sales increase, but without China Mobile, it is losing ground at a faster rate compared with other brands.
China Mobile and Apple initially said they were separated only by a technical issue - as the Chinese carrier runs a different 3G network from most of the world - but that has evolved into a broader and more complex issue of revenue-sharing.
"China Mobile and Apple still have to solve many issues, such as the business model, articles of cooperation and revenue division, but I believe we will reach an agreement eventually," China Mobile CEO Li Yue was reported by Chinese media as saying in Guangzhou last week.
Apple China declined to comment. China Mobile said it had no update to the Apple discussions.
In addition to Apple's share fall, shares of some of the company's suppliers were also down on Friday afternoon. Shares of Jabil Circuit Inc were down 5.6 percent at $17.50, Qualcomm Inc shares were down 3.2 percent at $60.76, Skyworks Solutions Inc stock was down 6.7 percent at $19.65, TriQuint Semiconductor Inc was down 3.9 percent at $4.65, Avago Technologies Ltd was down 3.9 percent at $32.38 and Cirrus Logic Inc was down 6.5 percent at $25.62.
China deal seen eventually
Cutting a deal with a Chinese state-owned carrier may be less optimal than the deals Apple is used to in other markets, and analysts note that China Mobile would not necessarily open the flood gates for Apple.
Ovum's Putcha believes Apple and China Mobile will eventually strike a deal - though this would be for an iPhone running on China Mobile's next-generation network rather than its current 3G network.
Of China Mobile's 704 million subscribers, only 79 million are on its 3G network, and Apple has been reluctant to sign up to China Mobile's underutilized, homegrown TD-SCDMA technology. "Apple likely doesn't see the return-on-investment in extending themselves for TD-SCDMA," Putcha said.
China Mobile is currently conducting a trial of its next-generation network, TD-LTE, which could be of more interest to Apple, but full-scale commercial use - and an iPhone tie-up - could still be years away.
Android threat
Meanwhile, rivals are circling, eating away at Apple's smartphone market share. Samsung Electronics, Lenovo Group and little-known Chinese brand Coolpad held the top three slots in the third quarter, according to research firm DC.
All three have relationships with China Mobile and offer smartphone models at different price points. Apple competes exclusively at the high end, and even there, rivals are rolling out models with China Mobile. Last week, Nokia said it planned to release its latest Lumia smartphone with China's top carrier, which is also expected to launch Research in Motion's new Blackberry 10, analysts predict.
"The threat will still come more from the Android camp where they have many vendors already working with China Mobile and offering high-end phones," said TZ Wong, a Singapore-based IDC analyst.
While these smartphones do not generate the buzz of a new iPhone, Chinese buyers are not known for their brand loyalty, and this could siphon away users considering an Apple upgrade.
"I've used a Blackberry, Android and iOS and, personally, I want to try the Windows 8," said Andy Huang, a 37-year-old fund manager, who owns most iPad models, an iPhone 4 and a 4S. "I think the Windows 8 is very innovative."
With a China Mobile deal appearing to be still a ways off, Apple could always boost market share by offering cheaper models - the basic iPhone 5 will cost 5,288 yuan without a contract - though this appears an unlikely route for a high-end brand.
"If they want to expand market share, probably the only way to do it here dramatically would be to put out a lower-cost phone," said Michael Clendenin, managing director at RedTech Advisors. "It's really uncertain if they'd decide to go that route ... Apple's a mystery in that regard."
© Thomson Reuters 2012

Judge may trim Apple's $1 billion patent verdict

A federal judge on Thursday appeared ready to trim millions from a $1.05 billion jury verdict Apple Inc. won over Samsung Electronics this summer as she urged the top two smartphone companies to settle their myriad legal actions around the world.
U.S. District Judge Lucy Koh said she would issue a series of ruling over the next several weeks resolving the many legal issues raised at the hearing Thursday. Samsung is seeking a new trial or a reduction of the verdict that resulted from a lawsuit Apple filed in 2011. Apple, on the other hand, urged the judge to add millions more to the award and permanently ban the U.S. sales of eight Samsung smartphone models a jury in August said illegally used Apple technology.

Koh gave no indication on how she would rule on the sales ban request nor by what amount she would cut from the $1 billion award. Samsung was demanding that she cut the award by more than half, but Koh gave no hint that she sided with that argument or Apple's separate argument for an increase in the award.

Apple filed a second lawsuit earlier this year, alleging that Samsung's newer products are unfairly using Apple's technology. That's set for trial in 2014. In addition, the two companies are locked in legal battles in several other countries.

"I think it's time for global peace," Koh said at an end of a nearly four-hour hearing in San Jose.

Lawyers for each company responded by casting aspersions on the other side.

Apple lawyer Harold McElhinny claimed that Samsung "willfully" made a business decision to copy Apple's iPad and iPhone, and he called the jury's $1.05 billion award a "slap in the wrist." McElhinny said Apple intended to keep on fighting Samsung in court until it changed its business ways.

In turn, Samsung lawyer Charles Verhoeven responded that Apple was attempting to "compete through the courthouse instead of the marketplace." He said Apple wants to tie up Samsung in courts around the world rather than competing with it head-on.

In the third quarter of 2012, Samsung sold 55 million smartphones to Apple's 23.6 million sales worldwide, representing 32.5 percent of the market for Samsung compared with Apple's 14 percent.

Earlier in the hearing, Koh appeared ready to rework some of the jury's damage calculations. The jurors filled out a verdict form listing the amount of damages Samsung owed Apple for 26 separate products. For instance, the jurors said Samsung owed Apple nearly $58 million for sales of its Prevail smartphone found to have used Apple's "tap-and-zoom" technology. But the type of patent violation the jury found doesn't lend itself to that big of an award for the product, Koh said, musing that it appeared that Apple could recover perhaps $8 million over the Prevail dispute.

That was just one of 26 line items Koh is reviewing when it comes to considering the jury's $1.05 billion verdict.

She is also considering Samsung's demand for the verdict to be completely wiped out and for a new trial to be held. Samsung raises a host of legal issues in arguing it was deprived of a fair trial in a courthouse a dozen miles from Apple's Cupertino, Calif., headquarters. One of it arguments is that jury foreman Velvin Hogan committed misconduct when he didn't divulge he had been sued by his former employer, Seagate Technology, in 1993. Samsung is a large investor in Seagate.

Koh showed no indication of what she thought of the argument, and most legal experts said Samsung had no chance of prevailing on that issue because it happened more than 20 years ago and Hogan wasn't specifically asked about it.

"The connection here is tenuous," said Christopher V. Carani, a Chicago patent attorney who has closely followed the case. "I would be surprised if Judge Koh accepted this argument and scrapped the jury's entire finding."

Koh's decision will help shape the ultimate result of the case, but this bitter legal battle is expected to land before the U.S. Court of Appeals for the Federal Circuit, the Washington, D.C.-based court that decides patent disputes, if not the U.S. Supreme Court.

Apple to return some Mac manufacturing to US in 2013

Apple CEO Tim Cook says the company will move production of one of its existing lines of Mac computers from China to the United States next year.
Industry watchers said the announcement is both a cunning public-relations move and a harbinger of more manufacturing jobs moving back to the U.S. as wages rise in China.

Cook made the comments in part of an interview taped for NBC's "Rock Center," but aired Thursday morning on "Today" and posted on the network's website.

In a separate interview with Bloomberg Businessweek, he said that the company will spend $100 million in 2013 to move production of the line to the U.S. from China.

"This doesn't mean that Apple will do it ourselves, but we'll be working with people and we'll be investing our money," Cook told Bloomberg.

That suggests the company could be helping one of its Taiwanese manufacturing partners, which run factories in China, to set up production lines in the U.S. devoted to Apple products. Research firm IHS iSuppli noted that both Foxconn Technology Group, which assembles iPhones, and Quanta Computer Inc., which does the same for MacBooks, already have small operations in the U.S.

Apple representatives had no comment Thursday beyond Cook's remarks.

Like most consumer electronics companies, Apple forges agreements with contract manufacturers to assemble its products overseas. However, the assembly accounts for a fraction of the cost of making a PC or smartphone. Most of the cost lies in buying chips, and many of those are made in the U.S., Cook noted in his interview with NBC.

The company and Foxconn have faced significant criticism this year over working conditions at the Chinese facilities where Apple products are assembled. The attention prompted Foxconn to raise salaries.

Cook didn't say which line of computers would be produced in the U.S. or where in the country they would be made. But he told Bloomberg that the production would include more than just final assembly. That suggests that machining of cases and printing of circuit boards could take place in the U.S.

The simplest Macs to assemble are the Mac Pro and Mac Mini desktop computers. Since they lack the built-in screens of the MacBooks and iMacs, they would likely be easier to separate from the Asian display supply chain.

Analyst Jeffrey Wu at IHS iSuppli said it's not uncommon for PC makers to build their bulkier products close to their customers to cut down on delivery times and shipping costs.

Regardless, the U.S. manufacturing line is expected to represent just a tiny piece of Apple's overall production, with sales of iPhones and iPads now dwarfing those of its computers.

Apple is latching on to a trend that could see many jobs move back to the U.S., said Hal Sirkin, a partner with The Boston Consulting Group. He noted that Lenovo Group, the Chinese company that's neck-and-neck with Hewlett-Packard Co. for the title of world's largest PC maker, announced in October that it will start making PCs and tablets in the U.S.

Chinese wages are raising 15 to 20 percent per year, Sirkin said. U.S. wages are rising much more slowly, and the country is a cheap place to hire compared to other developed countries like Germany, France and Japan, he said.

"Across a lot of industries, companies are rethinking their strategy of where the manufacturing takes place," Sirkin said.

Carl Howe, an analyst with Yankee Group, likened Apple's move to Henry Ford's famous 1914 decision to double his workers' pay, helping to build a middle class that could afford to buy cars. But Cook's goal is probably more limited: to buy goodwill from U.S. consumers, Howe said.

"Say it's State of the Union 2014. President Obama wants to talk about manufacturing. Who is he going to point to in the audience? Tim Cook, the guy who brought manufacturing back from China. And that scene is going replay over and over," Howe said. "And yeah, it may be only (public relations), but it's a lot of high-value PR."

Cook said in his interview with NBC that companies like Apple chose to produce their products in places like China, not because of the lower costs associated with it, but because the manufacturing skills required just aren't present in the U.S. anymore.

He added that the consumer electronics world has never really had a big production presence in the U.S. As a result, it's really more about starting production in the U.S. than bringing it back, he said.

But for nearly three decades Apple made its computers in the U.S. It started outsourcing production in the mid-90s, first by selling some plants to contract manufacturers, then by hiring manufacturers overseas. It assembled iMacs in Elk Grove, Calif., until 2004.

Some Macs already say they're "Assembled in USA." That's because Apple has for years performed final assembly of some units in the U.S. Those machines are usually the product of special orders placed at its online store. The last step of production may consist of mounting hard drives, memory chips and graphics cards into computer cases that are manufactured elsewhere. With Cook's announcement Thursday, the company is set to go much further in the amount of work done in the U.S.

The news comes a day after Apple posted its worst stock drop in four years, erasing $35 billion in market capitalization. Apple's stock rose $8.45, or 1.6 percent, to close at $547.24 Thursday.

Apple, Samsung set to resume billion dollar legal battle

The epic $1 billion patent fight between the world's top two smartphone makers resumes Thursday in a federal courtroom when Apple Inc. and Samsung Electronics Corp. again square off over rights to vital technology.
Samsung seeks to overturn an Aug. 24 jury verdict that found the Korean tech titan ripped off Apple Inc.'s designs for its iPhone and iPad. The jury ordered Samsung to pay Apple $1 billion after finding close to two dozen of its products used technology controlled by Apple.

Apple in turn is looking to add $500 million more to the award while barring many of the older Samsung products at issue from sale in the United States.

The companies' lawyers will file into a San Jose federal court armed with a host of legal arguments including allegations that the jury foreman committed misconduct. The case is ultimately expected to land before the U.S. Federal Circuit Court of Appeals, the Washington, D.C.-based court that decides patent disputes, if not the U.S. Supreme Court.

Nonetheless, what U.S. District Judge Lucy Koh decides after Thursday's hearing will greatly shape the end result.

Samsung has mounted an aggressive post-trial attack on the verdict, raising a number of legal issues that allege the South Korean company was treated unfairly in a federal courtroom a dozen miles from Apple's Cupertino headquarters. Samsung alleges that some of Apple's patents shouldn't have been awarded in the first place and that the jury made mistakes in calculating the damage award.

Samsung also accuses jury foreman Velvin Hogan of concealing that his former employer, Seagate Technologies, had a filed a lawsuit against him. Samsung is a large investor in Seagate.

"Mr. Hogan's failure to disclose the Seagate suit raises issues of bias that Samsung should have been allowed to explore," Samsung said in its October request for a new trial.

Hogan didn't return a call placed to his San Jose home Wednesday. In opposing Samsung's argument, Apple argued that Samsung should have discovered the 1993 lawsuit before Hogan was seated as a juror and made its objection then. Apple said Samsung knew that Hogan declared bankruptcy in 1993 and had it reviewed that case it would have discovered the Seagate lawsuit.

Apple argues it is unfair to raise the Seagate lawsuit now that the jury ruled against Samsung.

Experts monitoring the trial largely side with Apple on the juror misconduct issue specifically and speculate that the judge will keep most of the unanimous verdict intact.

"Samsung is hoping to set aside the verdict entirely, accusing the jury foreman of lying to get on the jury," said Edward Naughton, a patent attorney who is following the case closely. "This argument isn't likely to succeed, but Samsung may convince the court to whittle down the jury verdict a bit."

Android-based tablets gaining on Apple's iPad: IDC

The global market for tablet computers is growing faster than earlier estimates suggested, with Android-powered devices gaining on the market-leading iPads, a survey said Wednesday.
IDC said it boosted its forecast for global tablet sales for 2012 to 122.3 million, from 117.1 million, in large part due to demand for Android tablets and the new iPad mini.

IDC also raised its 2013 forecast number to 172.4 million, up from 165.9 million and said shipments by 2016 worldwide shipments should reach 282.7 million.

"Tablets continue to captivate consumers, and as the market shifts toward smaller, more mobile screen sizes and lower price points, we expect demand to accelerate in the fourth quarter and beyond," said Tom Mainelli, research director for tablets at IDC.

"Android tablets are gaining traction in the market thanks to solid products from Google, Amazon, Samsung, and others. And Apple's November iPad mini launch, along with its surprise refresh of the full-sized iPad, positions the company well for a strong holiday season."

IDC now expects Android's worldwide tablet share to increase to 42.7 percent for 2012 from 39.8 percent in 2011. Apple's share is expected to slip to 53.8 percent from 56.3 percent in 2011.

"The breadth and depth of Android has taken full effect on the tablet market as it has for the smartphone space," said Ryan Reith, an IDC analyst.

"Android tablet shipments will certainly act as the catalyst for growth in the low-cost segment in emerging markets given the platform's low barrier to entry on manufacturing. At the same time, top-tier companies like Samsung, Lenovo, and ASUS are all launching Android tablets with comparable to premium products, but offered at much lower price points."

IDC predicts Windows-based tablets, including new devices from Microsoft and others, will gain share from both iOS and Android, growing from one percent of the market in 2011 to 2.9 percent in 2012 and 10.2 percent in 2016.

Apple launching iPhone 5 in over 50 additional countries this December

Apple Monday announced iPhone 5 will be available in South Korea on Friday, December 7, with more than 50 additional countries being added in December, including Brazil and Russia.

Apple unveiled the iPhone 5 at a special event held in San Francisco on September 12. It went on sale in seven countries - United States, Canada, Britain, France, Germany, Australia and Japan - on Friday, September 21. iPhone 5 is currently available in 47 countries, including India, where it was launched on November 2 starting Rs. 45,500. The iPhone 5 made an encouraging start in India, with initial reports indicating brisk sales.

iPhone 5 (Review | Pictures) will be available in South Korea on Friday, December 7 and on Friday, December 14 in Albania, Antigua and Barbuda, Armenia, Bahamas, Bahrain, Bolivia, Brazil, Chile, China, Costa Rica, Cyprus, Ecuador, Grenada, Indonesia, Israel, Jamaica, Jordan, Kuwait, Macedonia, Malaysia, Moldova, Montenegro, Panama, Paraguay, Philippines, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Turkey, United Arab Emirates and Venezuela.

iPhone 5 will also be available on Friday, December 21 in Barbados, Botswana, Cameroon, Central African Republic, Egypt, Guinea, Ivory Coast, Kenya, Madagascar, Mali, Mauritius, Morocco, Niger, Senegal, St. Kitts, St. Lucia, St.Vincent & the Grenadines, Tunisia, Uganda and Vietnam.

Apple iPhone 5 the most-searched gadget on Yahoo! in 2012

The U.S. presidential election became the most-searched item and Kim Kardashian was the most-searched person on Yahoo! in a year when online searches were dominated by big news stories and pop culture obsessions, the search engine company said on Monday.
The search term "election" topped the list of searches, led not only by extensive media coverage but also widening conversation on online social media platforms.

The term "political polls" was No. 8 of the top 10 Yahoo! searches of the year.

"The 2012 elections dominated the online searches, which is amazing because if something is in the news, it's already accessible people were really saturated by it, but even so, that was a key word that people typed throughout the year," Vera Chan, Yahoo!'s web trend analyst, said in a conference call.

Chan said only two other news stories have topped the list in the past decade, those being the death of Michael Jackson in 2009 and the BP oil spill in 2010.

"iPhone 5" came in at No. 2, which Chan said was interesting "in a post-Steve Jobs era" because while Apple Inc's iPhone has featured regularly in the top searches since the first generation emerged in 2007, this was the first time a specific model had appeared high on the list.

Reality star Kim Kardashian was the most-searched person on the website, coming in at No. 3 and leading six famous women in the top 10.

Chan said Kardashian's "notoriety has kept her at the top," citing her ongoing divorce saga with ex-husband Kris Humphries, her high-profile relationship with rapper Kanye West and her E! channel reality shows.

Sports Illustrated cover model Kate Upton, British royal Kate Middleton, late singer Whitney Houston, troubled former child star Lindsay Lohan and pop star and former "American Idol" judge Jennifer Lopez all featured in the top 10 after being in the news prominently throughout the year.

Middleton, who was followed eagerly by fans and critics in her first year as a royal married to Britain's Prince William and being a staple at the London Olympics and the Queen's Diamond Jubilee, also garnered the most-searched scandal of the year when a French magazine published photos of her topless.

"olympics" came in at No. 7 on the list, as many turned to online media to watch and keep tabs on the global sporting event held in London during the summer.

On Yahoo!'s separate list of top-searched obsessions, pop culture dominated this year, with "The Hunger Games," reality star Honey Boo Boo, erotic novel "Fifty Shades of Grey," British boy band One Direction, Carly Rae Jepsen's hit song "Call Me Maybe" and Korean rapper Psy's "Gangnam Style" featuring in the top 10.

Yahoo! Inc compiles its annual search lists based on aggregated visitor activity on the network and billions of consumer searches.

© Thomson Reuters 2012

Apps like Wavii, Summly redefine consuming news on the go

Silicon Valley may believe that mobile devices represent the future of information technology, but they've yet to come up with a slick and comprehensive way to read and process news.
A growing group of technology entrepreneurs hopes to change that.

This week, Wavii, a start-up founded by a former Microsoft Corp employee, Adrian Aoun, unveiled a free iPhone app that filters news stories from around the world, crunches them through a natural language processing algorithm and presents them in five- or six-word summaries.

Over the past two years in Seattle, Aoun's team of two dozen machine-learning experts secretly developed code that boils down a news story into a basic subject-verb-object format, and draws connections between disparate news stories.

"Our edge has always been the technology," Aoun said.

Wavii has been online for several months, and Aoun has noticed that readers spend nine times longer browsing news headlines in his rudimentary prototype smartphone app than on his desktop website.

Wavii's app lets a user slice and dice a search into something as specific as "employment change in the technology sector," Aoun said.

Aoun's app pits his company against the likes of Summly, a mobile news reader headed by Nick D'Aloisio, a 17-year-old who is being backed by Li Ka-Shing, the Hong Kong billionaire; Yoko Ono, the widow of Beatle John Lennon; and a host of more traditional Silicon Valley investors.

"I use a lot of news aggregators, I use Facebook, I use Twitter" to find news articles, D'Aloisio told Reuters last month, when he launched Summly. Still, the actual article "is hard to consume. It took effort to read."

Summly, also free, features a gauzy, design-rich interface in the iPhone version of the app that summarizes stories with several-paragraph-long blurbs that fit on one iPhone screen.

Hailed in the UK as a "boy genius," D'Aloisio has been featured in Forbes Magazine and on the BBC and moves almost as quickly as he speaks, trotting around the world with a pair of orange headphones around his neck. He came up with the idea for the app when he felt he didn't have time to consume long-form news articles while on the move.

"The way it's shown on the phone, it's daunting," he said. "It's 10 pages I have to flip through. Who's actually sitting there on their iPhone really wanting to read an in-depth 1,500-word article?"

Other app-makers have left alone news copy but have tinkered with how stories are laid out. One example is Flipboard, a tablet app that spreads stories like a magazine across a tablet screen.

Aoun said the market for mobile news reader apps has grown more competitive in recent years, but few of them have truly caught on with consumers.

"We're getting close to figuring out the formula," he said.

© Thomson Reuters 2012