Huawei, controversial in the West, is going strong in the Gulf

DUBAI - Chinese telecoms giant Huawei is enjoying an extended honeymoon with oil-rich Gulf nations, despite being criticized in the United States and Europe as a potential security threat. 

Arab Gulf countries -- strategic partners of Washington that are seeking to diversify their economies -- are investing heavily in the sector as their appetite for technology grows.

Huawei has struggled in recent years in the face of US sanctions, as Washington claims it has close ties to China's military and that Beijing could use its equipment for espionage -- accusations the company denies.

Britain and Sweden have banned the use of Huawei equipment in their 5G networks, while France has also imposed restrictions. 

Yet Gulf countries including Saudi Arabia and the United Arab Emirates have not only chosen Huawei for their 5G rollouts, but have also partnered with the company to develop "smart cities."

These feature enhanced digital services and security surveillance -- a Huawei speciality Gulf states value highly for monitoring their populations.

Gulf countries' "use of technologies for population surveillance is closer to the practices of China than those of Western countries," said Camille Lons, of the International Institute for Strategic Studies.

Concerns about Huawei voiced in the US and Europe "weren't convincing" in the region, she told AFP.

Mitigating 'political pressures' 

While the telecoms giant has had a strong presence in the Gulf since the 1990s, its deals and big announcements there have multiplied in recent years.

In January, Saudi Arabia announced it would open the largest Huawei store outside China in Riyadh, a few months after a deal with the company on developing artificial intelligence to support public and private sector growth.

Last summer, Saudi investment firm Batic cemented a deal with Huawei to work on "smart city" projects in the kingdom, where it is already a main partner in the Yanbu Smart Industrial City project on the Red Sea.

Huawei has also developed apps and digital infrastructure to support Muslim pilgrims visiting Mecca and Medina, Islam's two holiest sites.

"By gaining the trust of our partners in the Middle East, we have been able to mitigate external political pressures like those pursued by the US," Charles Yang, Huawei's Middle East chief, told AFP from the company's headquarters in Dubai.

In the high-tech emirate, one of 7 that make up the UAE, Huawei has launched projects ranging from data storage to online payment services for public transport networks. 

Dubai-based Emirates, the Middle East's largest airline, last year chose Huawei to build a center to boost the company's surveillance and security capabilities.

An Emirates spokesperson declined to elaborate on the precise nature of the technology, but said "such solutions are utilized... around the world primarily for public safety and security reasons."

'Risk' for the US

China remains one of the Gulf's leading trade partners.

UN figures show its 2019 trade with Saudi Arabia -- the world's largest exporter of crude oil -- reached about $36.4 billion, while with the UAE it exceeded $50 billion.

"Digital infrastructure has become a key pillar of (Gulf states') national transformation strategies," Yang said.

Huawei said this month it hoped for a reset with Washington, after former US president Donald Trump targeted the firm as part of an intensifying China-US trade and technology standoff.

But Lons from the International Institute for Strategic Studies warned the apparent Huawei-Gulf honeymoon could cause security worries for the US.

She noted the presence of American military bases in the region, and that Gulf countries are "major buyers of US military equipment."

There could be concerns about the "risk that sensitive US military information or technology is being spied on and transferred to China," she said.

Agence France-Presse

What caused Samsung's 27 percent drop in Q4 profit?

SEOUL - Samsung Electronics, the world's largest smartphone maker, posted a 27 percent decline in net profit for the fourth quarter Thursday, days after arch rival Apple reported the biggest corporate profit in history.

The South Korean tech giant reported a net profit of 5.3 trillion won ($4.8 billion) for the October-December period, compared to 7.3 trillion won a year ago.

It also announced a dividend of 19,500 won a share, up from 13,800 won a year earlier.

The profit fall was cushioned by a boom in high-margin chip sales that helped offset the downturn in the key mobile sector, which has struggled in the face of intense competition from cut-price Chinese rivals.

Operating profit in the semi-conductor division rose 35.7 percent to 2.7 trillion won.

The slowdown contrasted sharply with the triumphant surge in the fortunes of California tech titan Apple, whose net profit for the same quarter stood at $18 billion -- the largest ever made by a public company.

Apple's performance was driven by the sale of 74.5 million iPhones, which included a doubling of sales volume in the crucial Greater China region.

The South Korean behemoth, which is also facing a once-in-a-generation leadership change, had reported a 20 and 50 percent net-profit decline in the second and third quarters of 2014 respectively.

It has been a dramatic reversal after several years of stellar growth, driven by the once all-conquering mobile division.

The company's flagship Galaxy phones have suffered in the high-end market from the popularity of Apple's iPhone 6, while dominance of the middle- and low-end handset segment has been challenged by Chinese firms such as Huawei, Xiaomi and Lenovo.

Samsung plans to slash the number of smartphone models it issues in 2015, while boosting production of remaining models that can be sold more cheaply to compete with cut-price Chinese rivals.

A more fundamental restructuring is assumed to be in the pipeline, with control of the family-run conglomerate's main business expected to pass from ailing patriarch Lee Kun-Hee to only son Lee Jae-Yong.

Needing cash to pay for what will be a massive inheritance tax bill, Lee and his siblings are expected to pare down and simplify the byzantine system of cross-holdings that link the many branches of the Samsung empire.

The anticipated reforms have helped keep Samsung on the "buy" list of many analysts, despite the recent profit downturn.

Thursday's dividend increase came with Samsung under growing pressure to boost shareholder returns as its stock price has been battered by the recent series of quarterly profit falls.

The company is currently in the middle of a $2.0 billion share buyback process announced in November to appease disgruntled shareholders.

With a market capitalisation of about $185 billion, Samsung accounts for nearly 17 percent of the weighting on South Korea's benchmark Kospi composite index.

source: www.abs-cbnnews.com

Did China ask Huawei to spy? CEO speaks up

DAVOS - China's controversial telecommunications equipment maker Huawei supports the ruling Communist Party and loves the country, its CEO said Thursday, but stressed Beijing has never asked it to spy on the United States or others.

Ren Zhengfei, a former People's Liberation Army (PLA) engineer, founded the company in 1987 and it has risen to rank among the world's top manufacturers of network equipment.

But his PLA service has led to concerns of close links with the Chinese military and government, which Huawei has consistently denied.

Asked about the issue in a rare public appearance at the World Economic Forum, Ren said through an interpreter: "We are a Chinese company, we definitely advocate (the) Communist Party of China.

"We love our country," he added. "But having said that, we definitely will not compromise the interest of any other country or government. We comply with laws and regulations in every country we do business in."

Asked whether Beijing has ever asked him to use the company's network to tap into US facilities, he responded: "We have never received such a request from the Chinese government."

He also suggested Huawei's technology would not be up to such a task: "There's no way we can possibly penetrate into other people's systems."

The US has long seen Huawei as a security threat, while Washington and Australia have barred it from involvement in broadband projects over espionage fears. The company denies such allegations vigorously.

Last year The New York Times and Germany's Der Spiegel magazine reported the US National Security Agency (NSA) had accessed Huawei's email archive, communications between top company officials and the source code of some of its products.

The allegations were based on documents provided by fugitive NSA contractor Edward Snowden.

But Ren had nothing but positive comments about the US on Thursday, emphasising that its openness was a key reason it has become the world's top power and stressing he has never thought it has treated Huawei unfairly.

Huawei operates in 170 countries and the company says one third of the world's population communicate using its products in some way.

It is the world's second largest network equipment supplier behind Sweden's Ericsson, and has made a large push into consumer products such smartphones in recent years.

Research firm Strategy Analytics ranked Huawei as the world's number five smartphone maker by shipments in the third quarter last year, with a 5.1 percent market share.

source: www.abs-cbnnews.com

Samsung mobile executives to leave as profits slide

SEOUL - Three deputies to the head of Samsung Electronics Co Ltd's  mobile division are leaving, a person with knowledge of the matter said on Thursday, as the world's largest smartphone maker faces a rapid decline in profit.

The person, who declined to be named due to the sensitivity of the matter, said the executives directly report to division chief J.K. Shin, who this week retained his post despite sagging smartphone sales and expectations the company will see its worst annual profit in three years in 2014.

The departures included global marketing chief D.J. Lee, the source said, confirming earlier media reports.

Samsung Electronics declined to say if any executives were leaving the company as it announced its annual reshuffle for executive-level staff.

But the announcement showed Samsung had made 165 executive-level promotions, the lowest number in at least four years, underscoring the strains the South Korean company is under.

"Shin was given another chance, given his past contributions, but he will definitely continue to feel the pressure going forward," said IBK Securities analyst Lee Seung-woo ahead of Samsung Electronics' staff announcement.

Samsung's share of the smartphone market has fallen year-on-year for the last three quarters, squeezed by Chinese rivals like Xiaomi Technology Co Ltd at the low-end and Apple Inc's iPhones in the premium segment.

Samsung Electronics is expected to announce its annual business reorganisation plan by next week.

The company has kept mum about the details but the Joongang Ilbo newspaper reported earlier that Samsung will reduce executive-level positions for its mobile communications business by 25 percent. Other media reported the company could hive off its medical equipment business.

Samsung earlier this week said it will sell its fibre optics business to U.S. speciality glass maker Corning Inc, its second exit from a non-core business this quarter.

source: www.abs-cbnnews.com

Samsung unveils smartwatch that can make calls

SEOUL - Samsung Electronics Co Ltd on Thursday unveiled what it said was the first smartwatch capable of making and receiving calls without a mobile phone nearby, in the South Korean firm's latest effort to find a new growth driver.

The world's biggest smartphone maker has been pushing hard to develop the wearable devices market as it looks to counter slowing earnings in its mobile division, which led to weaker-than-expected second-quarter earnings.

Samsung is hardly alone in pushing wearables, which have yet to catch on with consumers. Rival Apple Inc is expected to launch its own device this year and LG Electronics Inc on Thursday announced its new G Watch R smartwatch featuring a circular plastic OLED screen, a stainless steel frame and leather strap.

Samsung's new smartwatch, called the Gear S, differs from its predecessors with a bigger 2-inch (5 cm) curved display and offers features like WiFi connectivity, pedestrian navigation and a built-in GPS. This device will run on Samsung's nascent Tizen operating system.

Samsung said the Gear S will start selling from October. It did not give details on pricing or where it will be available.

LG said its G Watch R will launch in key markets in the fourth quarter, without indicating a price.

source: www.abs-cbnnews.com

China's Xiaomi leads Asia's low-cost smartphone drive

SINGAPORE -- Xiaomi may be little known outside China, but the fast-growing smartphone maker is at the forefront of a new wave of Asian brands challenging the dominance of Apple and Samsung with high-spec, low-price phones.

In the three months to March, Xiaomi surpassed Apple and other established Asian players such as Huawei and Sony to become the third largest smartphone brand in China by market share, research firm Counterpoint Technology said.

Samsung holds the top spot at 18 percent, followed by homegrown Lenovo with 12 percent.

The Beijing-based tech upstart sold 18.7 million phones in 2013, and is targeting sales of 60 million this year and 100 million in 2015.

Using a high-tech but low-cost sales model, Xiaomi aims to tap into a vast market of budget-conscious young Asians who want the newest in smartphone technology.

Technology research firm IDC said in a February report that cheap smartphones would be a key driver of sales in the low-cost segment of emerging markets outside China.

Handsets selling for less than US$100 accounted for nearly half of mobile sales worldwide, with two-thirds of those priced under US$50, its research shows.

Cost-conscious youth

"Asian markets have burgeoning young populations who want the latest smartphone technology, but (they have) restrictive budgetary constraints," Mykola Golovko, senior consumer electronics analyst at research firm Euromonitor International, told AFP.

Euromonitor data in 2013 showed that this key market of 15-34-year-olds made up between 25 percent and 40 percent of the population in countries such as Malaysia, Vietnam, Indonesia and China.

Unlike its giant rivals, Xiaomi has minimal advertising and no retail outlets which help keep costs down.

Instead, it has gathered a cult-like following on social media, including China's Weibo.

Most consumers -- dubbed "Mi fans" by Xiaomi -- buy their phones directly via its website during regular "flash" sales.
Xiaomi, whose name means millet in Mandarin, is looking further afield and poached former Google high-flyer Hugo Barra to lead its international expansion.

The firm caused a mini-frenzy in Singapore in February when it began its global roll-out under the watchful eye of Barra.

Xiaomi phones, boasting processors and sleek designs that rival top Samsung models and using the latest iteration of Google's Android software, are sold at a fraction of the price of a Samsung Galaxy S5 or iPhone 5s.

Its low-end Redmi retails at S$169 (US$135) compared with Sg$388 for the Samsung Galaxy S3, which has comparable specifications.

The higher-end Mi3 retails at S$339, compared with S$1,068 for the Galaxy S5 and S$1,148 for an iPhone 5s with 32 gigabytes of storage.

Emerging players
Xiaomi is not alone and industry experts say Asia is ripe for more such makers.

The Philippines' Cherry Mobile, India's Micromax and Q-Smart in Vietnam are already making the leading players nervous, with feature-packed and large-screen smartphones retailing from as low as $30 without any carrier subsidies.

Others include Smartfren and Cyrus in Indonesia, Ninetology in Malaysia, QMobile in Pakistan and I-Mobile in Thailand.

A report by IDC said such "homegrown vendors" hold 39 percent of the total market share in the Asia-Pacific region excluding Japan.

Nearly 530 million smartphones were shipped to consumers in Asia-Pacific countries in 2013, IDC said, making up 52 percent of the global total.

Xiaomi may be doing well but internationally Samsung's dominance is undoubted.

IDC said Samsung sold 313.9 million smartphones in 2013, compared with Apple's 153.4 million.

But Xiaomi's global vice president Barra sees big things ahead for the Beijing-based fledgling.

"The company is bound to change the world in many significant ways," Barra said at the Startup Asia conference in Singapore on May 8, referring to chief executive Lei Jun and seven other co-founders as "insanely smart."

Singapore-based Golovko said upstart Asian makers will have to continuously reinvent themselves.

"As smartphones become more commonplace... consumers in emerging markets will become more demanding and willing and able to spend on them," he said.

"Without a significant shift in branding and product portfolio low-cost manufacturers will see deteriorating prospects over the mid-to-long term."

Nicole Peng, a mobile industry analyst with market research firm Canalys, said many Asian consumers of brands like Xiaomi are curious "early adopters" who want to have a first-hand experience of whether low-cost phones can actually match top models.

"This segment of the market are the geeks, if I can say that. They just want to experience the latest gadgets and are not so cost or brand-conscious," she said.

Hurdles remain

Other analysts warn that significant hurdles remain, especially expanding overseas.

Xiaomi plans to move into nine other countries apart from Singapore this year. India's Micromax too retails outside its home country, with sales in Russia and Romania. It has priced its latest top-range Bolt A69 phone at 5,999 rupees ($100).

"With Xiaomi for example, it could find its online sales model difficult to implement in countries like Indonesia and Philippines where you don't have the Internet penetration rates like in Singapore," said Ryan Lai, a Kuala Lumpur-based mobile devices research analyst with IDC.

But while leading players such as Apple and Samsung have branched out to "wearable electronics" like wrist devices, they are unlikely to cede smartphone territory to the upstarts, says Euromonitor's Golovko.

"We expect smartphones to remain the centers of attention for the current market leaders and low-cost manufacturers alike," he said.

source: www.abs-cbnnews.com

Samsung looks to life beyond smartphones

SEOUL -- After years of record profit growth, tech giant Samsung Electronics looks to be at a commercial crossroads as it searches for a new growth driver to counter slowing sales of its phenomenally successful smartphones.

Alarm bells have been sounding for a while over Samsung's reliance on smartphone sales in increasingly mature markets such as Europe and the United States, and increasingly competitive emerging markets like China.

The world's largest smartphone maker has a diverse product line ranging from memory chips to home appliances, but more than half its profits are generated by mobile devices.

Last week, Samsung said it was on track for a second consecutive quarter of year-on-year profit decline, and its stock price fell nearly 10 percent in 2013 -- the first annual drop in five years.

Last Friday saw the global roll-out of the latest version of the flagship Galaxy series smartphone, the S5, whose performance will be closely watched.

While reviews have rated the S5 a top-class product, they note that it offers little in the way of real innovation that would set it apart from previous versions and models offered by competitors such as Apple.

"I think the market really needs a new growth driver at this point," said Lee Min-Hee, an analyst at IM Investment and Securities, noting that the high-end smartphone market "is already saturated".

"So it's inevitable to shift to mid-and low-end markets where margins are tighter and competition is even more fierce," she said.

"Samsung did well this year on cutting costs -- including marketing spending, but these are only defensive measures to make up for slowing sales and to maintain profits, not a proactive move to innovate."

There appears to be a general consensus that smartphone evolution has hit a barrier that will only allow incremental improvements on existing design and technology, rather than market-changing re-invention.

Next big thing?

Many see wearable devices -- such as Google Glass -- as the "next big thing." IT research and advisory specialists Gartner Inc. predicts wearable technology will emerge as a $10-billion industry by as early as 2016.

Samsung's first Internet-enabled smartwatch, introduced last September, was given a lukewarm reception by consumers who disliked its chunky design. A second edition, the Gear 2, was launched in February.

"I believe the next big thing will be Internet of Things (IOT) in which all household appliances, electronic devices and even cars are connected through the network," said Lee.

"And the first step towards the era of the IOT is wearable devices," she added.

Samsung Electronics certainly has the financial clout to invest heavily in new technologies with a net cash balance of more than $50 billion.

At a rare analysts' briefing in November last year, president and chief financial officer Lee Sang-Hoon said the reserves would be used to fund significant investment in research and development.

"It's way too much of an exaggeration to say it's all downhill from here," said Suh Won-Seok, an analyst at Korea Investment and Securities.

"Given its economies of scale and relations with mobile carriers around the world, I believe it can maintain the 10% margin it needs to prevent any dramatic profit decline," he said.

Samsung is already making margin concessions with the S5, launching it at a slightly lower price than its predecessor the S4 and throwing in a premium software bundle estimated at more than $500.

Nevertheless, Greg Roh at HMC Investment and Securities said they had had cut their forecast for Galaxy S5 shipments for the year to 44 million, from the previous estimate of 46 million.

"We also slashed our forecast for Samsung's second-quarter sales and operating profits by 1.5% and 2.7%, respectively," Roh said.

"It's true that Samsung is good at producing profits despite slowing smartphone growth, but for now it looks inevitable that the operating profit falls this year," he added.

Adding to Samsung's headaches is a continuing series of patent-focused legal battles with arch-rival Apple.

A fresh trial opened in the United States earlier this month, with Apple vowing to prove that Samsung flagrantly copied iPhone features and should pay more than $2 billion in damages.

source: www.abs-cbnnews.com

China's Huawei unveils smart watch to rival Samsung

BARCELONA - Rising Chinese smartphone maker Huawei launched Sunday a connected watch to rival Samsung's Gear 2, both unveiled on the eve of the world's biggest mobile fair in Barcelona, Spain.

Huawei, already a major force in building mobile networks and the world number three smartphone maker in 2013, showed off its TalkBand, to be sold for 99 euros ($136).

Connected by Bluetooth to a smartphone, the watch lets you receive calls and messages without removing your mobile from your pocket, as well as measuring the steps you take with a podometer and even following your sleep pattern.

"When you look around us, everything is getting connected", Huawei consumer business unit vice president Colin Giles said.

"We will launch it first in China, then in the rest of the world," he told AFP ahead of the February 24-27 World Mobile Conference.

To take a call, the user lifts the face off the watch and puts it to his or her ear, like a hands-free kit, he said.

It works only with Huawei smartphones for the moment but is to be made compatible with other brands later.

Just a few hours earlier, Samsung launched the Gear 2, after a first version won over few critics, adding new features and ditching Google's Android in favour of its own operating system.

The South Korean electronics giant revealed the new watch in a statement before unveiling on Monday its new flagship smartphone, almost certainly the Galaxy S5.

Besides an array of features including sports tracking software and a heart rate monitor, the Gear 2 marks an important and widely anticipated step towards independence from Android.

The watch, available in two models -- the Gear 2 and the Gear 2 Neo, which has no camera -- will be powered by the Tizen operating system developed by Samsung with various partners to break free of the Android dominance.

The first Gear, launched last September, was criticised by many for being unfashionable and unwieldy.

- Mature markets slowing -

Samsung, like other device makers, is banking on smart devices to boost revenue as sales of smartphones slow in the mature markets, which are also the most profitable.

Though smartphone sales surged 42 percent to 968 million units last year, according to Gartner, the growth came from developing markets such as Latin America, India and China while mature markets such as western Europe and the United States hit the brakes.

"We will see all of the handset companies responding to slowing growth in the smartphone market and the difficulty of making money," said Ian Fogg, senior principal analyst of electronics and media at research house IHS.

"They are going to launch a number of smart accessory devices including wearable devices that will give them opportunities in new markets to generate revenues and growth."

Research house Canalys predicts world sales of 17 million smart bracelets and watches this year, rising to nearly 45 million in 2017.

Besides the new watch, Huawei launched a new wifi hotspot device, a smartphone designed for ultra-fast 4G networks and a mini tablet that can also be used as a smartphone.

China's smartphone makers are on a global expansion drive that could eventually challenge market leaders Samsung and Apple, analysts say.

Chinese manufacturer Lenovo struck a dramatic blow in its campaign in January, agreeing the $2.9 billion purchase of the loss-making Motorola Mobility from Google to grab a strong platform in the Americas and a foothold in Europe.

Smaller Chinese manufacturers are showing off bigger ambitions, too, with upstart Xiaomi, for example, hiring a Google executive, Hugo Barra, in August 2013. It launched a new, low-priced smartphone brand, Redmi, this month.

source: www.abs-cbnnews.com

Samsung's $1.1-B worker bonus raises eyebrows

SEOUL - Samsung Electronics Co Ltd, the world's largest smartphone maker, has reignited shareholder calls for more returns after splashing out on a special employee bonus estimated at nearly $1 billion.

The arch rival of Apple Inc drew on its $50 billion cash pile to mark 20 years of transformation into Asia's most valuable company - just two months after investors criticized it for not spending enough to increase its dividend yield.

The bonus, to commemorate Chairman Lee Kun-hee's "New Management" strategy, hit October-December operating profit which Samsung said likely fell 6 percent on year and 18 percent from a record third quarter to 8.3 trillion won ($7.8 billion).

Initial street estimates put the bonus at 300 billion to 700 billion won, but the extent of the profit decline indicated a payout closer to 1 trillion won, or an average $4,000 for each of the company's 240,000 employees, analysts say.

That is likely to have sent fourth-quarter profit below even the most bearish forecast among 23 polled analysts of 8.8 trillion won, to the lowest level since the 8.1 trillion won of July-September 2012.

"This (bonus) could increase pressure from some shareholders to raise shareholder returns, and I also do have some hopes for more payout either in the form of a share buyback or dividends," said Kim Kyung-yoon, head of equities management at Kyobo Axa Investment Managers, which owns Samsung shares.

Like most South Korean companies, Samsung has kept its dividend yield low at around 1 percent or less, which is a primary reason its shares are not as valuable as global peers.

"We are not against paying bonuses to workers but at least the shareholders should get as much," said Mark Mobius, executive chairman of Templeton Emerging Markets Group. "They should really celebrate the event with a big bonus, a bigger dividend, which may happen."

Samsung shares saw their first annual decline in 2013 in five years partly due to the company's conservative shareholder return policy, despite operating profit likely growing 28 percent to a record 36.8 trillion won. They closed down 0.2 percent on Tuesday, versus a 0.3 percent rise in the broader market.

Returns equal around 5.1 percent of profit, the lowest since 2007 when Samsung last bought back shares, at which time its rate of return was 15.8 percent.

"NO TRANSPARENCY"

Lee, who took over Samsung Group in 1987 from his founder-father, in 1993 ordered lieutenants to "change everything except your wife and children" to transform Samsung Electronics from a mid-tier television set manufacturer into a global technology leader.

It has since overtaken Sony Corp in TVs, Nokia Oyj in mobile phones and Apple in smartphones.

Lee, who turns 72 this week, set the agenda for the future in his New Year speech by stressing the need to drop a hardware-centric culture and adopt new ways of thinking to stimulate innovation.

"In theory this (bonus) has nothing to do with Samsung's enormous profit... and will not be repeated, although there is no transparency on this issue and so no guarantees," CLSA analyst Matt Evans said in a note.

"Whether shareholders will receive any similar 'bonus' in the form of a meaningful dividend or share buyback remains to be seen. However, this analyst is not holding his breath as M&As are a more likely way" of using its cash reserves.

Korean companies often top up low salaries with bonuses. Samsung Electronics gives up to 50 percent of annual salary by returning 20 percent of profit that exceeds targets. It also offers up to 100 percent of basic monthly salary to employees in units which achieve targets.

SMARTPHONE SALES

Fourth-quarter earnings were also likely affected by Samsung's flagship Galaxy S and Note smartphones losing out somewhat to Apple's iPhone in primary markets such as the United States and Japan during the year-end holiday season.

The company, ahead of releasing final figures on Jan. 24, estimated fourth-quarter sales of 59 trillion won. This compared with the 61 trillion won Thomson Reuters' Starmine SmartEstimate of 23 analysts, which gives greater weighting to the more accurate analysts.

"Even taking into account one-off costs, the (fourth-quarter) profit is lower than expected. Samsung has not provided details, but smartphone profit may have fared worse than expected, given increased marketing expenses," said IBK Investment & Securities analyst Lee Seung-woo.

Samsung is bracing itself for its toughest year at its mobile devices division since it started making smartphones in 2007, as Apple raises its China presence and fights back with larger-screen offerings. (Full Story)

Analysts estimate 2014 profit growth at its mobile arm to range from low single digit to mild contraction after growing eight times over the past five years.

source: www.abs-cbnnews.com

'Reports of BlackBerry's death are greatly exaggerated'

TORONTO - BlackBerry Ltd is "very much alive, thank you," Interim Chief Executive John Chen affirmed in an open letter on Monday in which the smartphone maker committed itself to rebuilding as a niche player concentrating on the enterprise market.

Chen took over as CEO a month ago after BlackBerry abandoned a plan to sell itself.

"Our 'for sale' sign has been taken down and we are here to stay," he wrote in the letter that was addressed to "valued enterprise customers and partners". The company provided the letter to Reuters.

"In short, reports of our death are greatly exaggerated."

BlackBerry, once the market leader in on-the-go email, has suffered a drastic loss of market share to Apple Inc's iPhone and devices powered by Google Inc's Android software. Its new smartphones have so far failed to win back customers, as Chen acknowledged in the letter.

"We know that BlackBerry devices are not for everyone. That's OK," he said.

BlackBerry has laid off thousands of workers over the last two years and in September it said it would shed more than a third of its global workforce and refocus itself on the enterprise market - large business and government clients - that vaulted it to prominence in the 1990s.

"We're going back to our heritage and roots, delivering enterprise-grade, end-to-end mobile solutions," said Chen, a turnaround artist with software maker Sybase in the late 1990s.

"The investments you've made in BlackBerry infrastructure and solutions are secure. I will keep the lines of communication open as we navigate through this transition."

BlackBerry shares were up 5 Canadian cents at C$6.76 on the Toronto Stock Exchange on Monday, just above the record low of C$6.25 hit two weeks ago, and at just a fraction of the stock's record high of C$150.30, hit in 2008, when the company dominated the smartphone market.

Rather than sell itself, BlackBerry said early last month it would raise $1 billion in a convertible notes offering led by Fairfax Financial Holdings Ltd, its largest shareholder.

source: www.abs-cbnnews.com

The problem with Taiwan's branding

TAIPEI - Taiwan's success at designing and mass producing must-have gadgets for branded rivals such as Apple Inc makes it tougher for its companies trying to launch aspirational consumer brands of their own.

Ben Ho, marketing chief at smartphone maker HTC Corp , says his firm's shift from original design manufacturer (ODM) to branded company has been a challenge for marketing and messaging.

"For an ODM player, things are much simpler - you ship to the operators and your job's done," he said in an interview. "As a company, we decided to become a brand ... it opened up a whole new area of engagement."

With ruthless efficiency and technical prowess, most large Taiwanese manufacturers were founded a generation ago by engineers or business people for whom cost control was king. Products were faster, lighter, more compact and feature-packed, but lacked a coherent brand image to attract consumer loyalty - even after these ODMs decided to become brands.

Now that the electronics and technology goods that Taiwan manufactures have become increasingly commoditized, the country's lack of an innovative breakthrough is more apparent.

Not so long ago, the likes of Acer Inc and Asustek Computer Inc (Asus) looked set to lead Taiwan's economy down a path similar to Japan and South Korea, moving from assemblers of gear exported westwards to globally admired brand champions.

In 2010, Acer was the world's second-largest notebook manufacturer. In 2011, HTC controlled a fifth of the United States market for smartphones - second only to Apple. Today, both are fending off talk of buyouts as sales have slumped and their stock prices have followed.

Acer is expected to announce later on Tuesday a third-quarter net loss of around T$113 million ($3.84 million) - according to Thomson Reuters SmartEstimates, which places greater emphasis on top-rated analysts' forecasts - versus a year-earlier T$68 million profit. Acer shares closed on Monday at their lowest in 12 years.

Last month, HTC posted its first ever quarterly net loss and could lose more than T$1.62 billion this year, according to SmartEstimates. Shares in HTC, which is due to give earnings guidance on a call on Tuesday, have climbed by more than a quarter from their 2013 low 9 weeks ago, but the stock has still lost half its market value this year.

LACKING EMOTION

Many view these companies' past triumphs as incremental at best, and coincidental at worst.

The popularity of smaller, web-friendly notebooks in the late-2000s, pioneered by Asus, was a stepping stone to the tablet wave later unleashed by Apple. Similarly, HTC's early dominance in the market for Android, Google's mobile operating system, is viewed as mere good timing: it was first to offer a genuine iPhone alternative.

Now, Taiwan's progression up the innovation ladder has stalled, with potential economic fallout as contract design and manufacturing shifts to mainland China and elsewhere, where costs are lower and talent plentiful.

The irony is that Taiwan has played its back-end role to great success for decades.

According to Mark Stocker, a Taipei-based branding consultant who has worked alongside local firms for two decades, Taiwan's economic miracle was built on a simple formula of "finding a product, making it cheaper, getting those orders - then finding the next product and doing it all over again."

Stocker and others believe this process has become dogma to Taiwanese technology firms - so much so that they fail to understand that customers now want more than just low prices and a long list of features.

"Taiwanese bosses don't really have an idea how to make a more appealing product based on emotional value," said Albert Chen, a former industrial designer for Acer and a design consultant for HTC. He compared Taiwan's product creation process to Samsung's, where consumer lifestyle is a key consideration.

"When I go to different exhibitions, whether it's electronics or design shows or consumer shows, I rarely see Taiwanese designers or developers or product planners. I just see people in execution level, top management," Chen said.

"They're good at business strategy, but this is not the way to create a good product."

DESIGNERS VS ENGINEERS

In putting technological muscle ahead of consumer taste, Taiwanese designers are forced to work around what engineers want - the opposite of how Apple operates. Conflict is common in an environment where designers strive to think 'outside the box' and managers are still fixated on cost-performance ratios.

"What's odd is that when we have discussions with project managers at Asus or Acer, they say 'don't worry about our product image'," said a senior designer at a large ODM, who didn't want to be named.

"The project managers, most of whom have engineering or R&D backgrounds, don't trust their own in-house designers."

Benjamin Chia, Taiwan-born chief creative officer at elemental8, a Silicon Valley-based design consultancy whose client list includes Samsung Electronics, Microsoft and Motorola, says Taiwanese designers struggle to gain respect in the corporate hierarchy.

"Upper management knows nothing about design, so they have designers over-explain and over-simplify," he said. "The product loses its design purity."

A manager at Asus said the company invests little in product design or consumer interaction, placing most emphasis on price and gadget spec. "Our strategy basically boils down to copying our competitors' products and adding one more feature or making it cheaper," said the manager, who was not authorized to speak for the company, so didn't want to be named.

INVESTMENT, CONTROL

For many, the only way for Taiwan to break from being a brand-free zone is to make the sort of deep, years-long investment in product innovation that Apple, under its design-obsessed founder Steve Jobs, did for decades.

Especially crucial, say industry experts, is gaining control over the entire user experience of a product, from hardware to software to advertising to sales outlets.

Apple, for example, designs its own chips and operating system, and has a commanding retail presence. And Samsung boasts a strong grip over its supply chain, and has a tradition of end-user products that has built a reputation among consumers.

For Taiwanese companies to succeed at talking to the average customer, price, spec and tech need to take a backseat to image, design and message, the experts say.

"What they haven't realized is that they're still using a cost-performance mentality to build brand," Stocker said. "That's just not working anymore."

source: www.abs-cbnnews.com

Why did Samsung apologize to China consumers?

BEIJING - South Korea's Samsung Electronics Co Ltd, the world's biggest smartphone maker, has apologized to Chinese customers for problems with some mobile phones after a broadcast on China Central Television criticized Samsung repair policies.

"As far as management problems caused inconvenience to our customers, we offer our sincere apologies," Samsung Electronics said in a notice on its Chinese website.

Samsung Electronics is the latest multinational company to be singled out by Chinese state media for what it says are unfair consumer practices. In a 25-minute programme broadcast late on Monday, CCTV said internal multimedia cards cause the software on Samsung Electronics Note and S series smartphones to seize up.

Samsung Electronics said it will fix the Galaxy S3 and Note2 telephones free of charge, and refund customers who already paid for repairs to the devices at authorized service centers. The company also will offer replacements or refunds for phones that could not be repaired.

The broadcast on Samsung Electronics came the day after CCTV aired a program criticizing Starbucks Corp SBUX.O for charging higher prices in China than other markets.

In March, CCTV criticised Apple Inc, the world's second-biggest smartphone maker, for using different warranty and customer service polices in China than in other countries. Apple Chief Executive Tim Cook later apologized.

source: www.abs-cbnnews.com