Start up: explaining BlackBerry’s demise, Samsung S6 sales concerns, Apple Watch shipments, and more

Remember? Photo by BitchBuzz on Flickr.

A selection of 9 links for you. Use them wisely. I’m charlesarthur on Twitter. Observations and links welcome.

Samsung silent on disastrous Galaxy S6 sales » Forbes

Gordon Kelly:

70 million.

Earlier this year that was the number of Galaxy S6 and Galaxy S6 Edge smartphones Samsung claimed it would sell in 2015. Samsung also claimed to have taken 20m pre-orders prior to both phones’ release. Sadly one month on the reality looks disastrously different…

Korean news agency Yonhap reports that it has taken a month for sales of the Galaxy S6 and Galaxy S6 Edge to reach 10m. Speaking to Yonhap a ‘high-ranking Samsung official’ confirmed this figure for the first time.

Trying to put a positive spin on it the official said: “The sales of the Galaxy S6 series have already surpassed 10 million.”…

…Consequently for combined sales of the Galaxy S6 and Galaxy S6 Edge to only pass 10m in a similar timeframe to the S5 and S4 represents a disastrous return. This is particularly true for the cheaper Galaxy S6 given Samsung has already confirmed demand for the Edge variant has been unexpectedly high.

All of which poses the obvious question: if Galaxy S6 Edge sales are performing above expectations, just how bad are Galaxy S6 sales?

Determined to get to the bottom of this I delayed this post in order to get official comment from Samsung. The company asked for 24 hours to respond, but eventually chose not to dispel any of the negative connotations or correct Yonhap’s figures. Instead its formal statement to me today was simply: “No Comment”.

Disastrous? Disappointing? Samsung supporters say the S5 was launched in 125 countries, the S6 in just 20 – so this 10m figure is “better” than last year’s. However that doesn’t explain how it could make such huge claims for preorders which then don’t seem to have been backed up by newer data.

There’s a growing suspicion in the tech world that the S6 isn’t succeeding as Samsung needs it to – because the business challenge is different from three years ago when the S3 was such a hit.

Apple Watch orders fell sharply after the first day and haven’t grown since, a shopping data firm says » Quartz

Dan Frommer:

Apple has taken orders for almost 2.5m watches in the US through Monday, May 18, according to Slice’s projections, which are based on more than 14,000 online shoppers. More than half of those orders were placed on April 10, the first day Apple accepted watch pre-orders in the US and eight other countries, according to Slice.

Since the first day—which we’ve excluded from this next chart to focus on detail—US orders have generally remained under 30,000 per day, according to Slice’s projections. Note the spike on April 24, the day US pre-orders started arriving—and when people started posting their initial Apple Watch experiences and real-life photos.

…One Wall Street analyst, Morgan Stanley’s Katy Huberty, recently increased her projection of first-year global Apple Watch shipments to 36m, based on survey results showing increased purchase intentions among US consumers. A second firm, however, just reportedly decreased its estimates to less than 15m watches, based on weak demand. To reach 36m shipments, Apple would need to average almost 100,000 per day worldwide.

30,000 in the US alone (if we assume the data is correct). Could the rest of the world triple that? Even if not, it means Apple has taken over the smartwatch market at a stroke.

Tracking protection for Firefox at Web 2.0 Security and Privacy 2015 » Monica Chew

My paper with Georgios Kontaxis got best paper award at the Web 2.0 Security and Privacy workshop today! Georgios re-ran the performance evaluations on top news sites and the decrease in page load time with tracking protection enabled is even higher (44%!) than in our Air Mozilla talk last August, due to prevalence of embedded third party content on news sites. You can read the paper here.

That 44% figure shows how the desire to know more about the audience in order to monetise the audience better is hurting the audience’s experience. That’s the sort of thing that drives adblocking.

The peak of ‘free’ on the Internet » Mashable

Jason Abbruzzese:

maybe we’ll look back at this point in time wistfully, telling tales of freely streaming music and viral videos. Perhaps the best days of the internet are behind us and its now just a platform on which mega-conglomerates can make money.

Or maybe this will come to be seen as a point where the internet’s initial promise of democratized distribution began to be fully realized. There’s a certain shabby charm in the weird old web with its terrible banner ads and dark humour. You can still find it, mostly on reddit.

The bottom line is that just about everything is online these days in every medium and almost all of it is free. As subscription services grow in number and popularity, that’s going to inevitably form a smaller part of the overall internet. The bottom line is that just about everything is online these days in every medium and almost all of it is free. As subscription services grow in number and popularity, that’s going to inevitably form a smaller part of the overall internet.

I think smartphones’ essentially closed nature – that they tend to be endpoints for app content – makes subscription models easier, for those which can charge for them. (A point Abbruzzese makes.) But there are still 750m or so PCs in the hands of consumers. That’s a lot of computing power able to crack DRM.

Analyzing the iPhone user base » Above Avalon Premium Recap

Neil Cybart, in a post that would normally be via premium access only:

Running basic arithmetic with that 48m number [of iPhone 6/6 Plus sold in January-March] and Tim Cook’s comments about the installed base, I get an iPhone installed base of approximately 475 million users. Is this an exact number? No. Is this a good estimate of roughly the number of people with an iPhone (all models)? Yes.  

With this estimate in hand, we can start to break out the iPhone base by model. iPhone 6 has been outselling 6 Plus by approximately 2.5x, while both have been outselling the iPhone 5s and 5c by nearly 4-to-1. Taking into account these ratios, I suspect the current iPhone user base breakout looks something like:

iPhone 6: 85 million users
iPhone 6 Plus: 35 million users
Older (5s, 5c, 5, 4s): 355 million users
Total: 475 million users

He then breaks it down further; turns out the bulge in ownership is of the 5S, at 125m users. (You can sign up for Cybart’s premium analysis on his website. Also: is there any equivalent premium analysis for Android?)

NSA planned to hijack Google App Store to hack smartphones » The Intercept

Ryan Gallagher:

The document outlines a series of tactics that the NSA and its counterparts in the Five Eyes were working on during workshops held in Australia and Canada between November 2011 and February 2012.

The main purpose of the workshops was to find new ways to exploit smartphone technology for surveillance. The agencies used the Internet spying system XKEYSCORE to identify smartphone traffic flowing across Internet cables and then to track down smartphone connections to app marketplace servers operated by Samsung and Google. (Google declined to comment for this story. Samsung said it would not be commenting “at this time.”)

As part of a pilot project codenamed IRRITANT HORN, the agencies were developing a method to hack and hijack phone users’ connections to app stores so that they would be able to send malicious “implants” to targeted devices. The implants could then be used to collect data from the phones without their users noticing.

Irritant horn. Such fabulous names the random two-word generator throws up. Wonder what the scheme that must have existed to do the same to iOS apps was called?

The inside story of how the iPhone crippled BlackBerry » WSJ

Extract from “Losing the Signal”, a book by Jacquie McNish and Sean Silcoff:

If the iPhone gained traction, RIM’s senior executives believed, it would be with consumers who cared more about YouTube and other Internet escapes than efficiency and security. RIM’s core business customers valued BlackBerry’s secure and efficient communication systems. Offering mobile access to broader Internet content, says Mr. Conlee, “was not a space where we parked our business.”

The iPhone’s popularity with consumers was illogical to rivals such as RIM, Nokia Corp. and Motorola Inc. The phone’s battery lasted less than eight hours, it operated on an older, slower second-generation network, and, as Mr. Lazaridis predicted, music, video and other downloads strained AT&T’s network. RIM now faced an adversary it didn’t understand.

“By all rights the product should have failed, but it did not,” said David Yach, RIM’s chief technology officer. To Mr. Yach and other senior RIM executives, Apple changed the competitive landscape by shifting the raison d’être of smartphones from something that was functional to a product that was beautiful.

As Horace Dediu pointed out on Twitter, Yach simply misunderstood the new basis of competition. It wasn’t “functional v beautiful”; it was a new axis of functionality, such as the web browser that BlackBerry didn’t offer.

One nitpick: the writers call mid-2007 RIM (as it was) “the world’s largest smartphone maker”. Nokia was shipping more smartphones, and its smartphone revenue was larger too.

BlackBerry, it’s revealed, didn’t have the flexibility of thinking to adjust to the changed world; the awful Storm (1m sold, 1m needing replacement) was perhaps its nadir.

The lesson of “don’t forget all the parts move” » Learning by Shipping

Steve Sinofsky on the BlackBerry excerpt:

While hindsight is always 20/20, when you are faced with a potentially disruptive situation you have to take a step back and revisit nearly all of your assumptions, foundational or peripheral, because whether you see it or not, they are all going to face intense reinvention.

In disruptive theory we always talk about the core concept that disruptive products are better in some things but worse in many of the things (tasks, use cases, features) that are currently in use by the incumbent product. This is the basis of the disruption itself. In reading the excerpt it is clear that out of the gate this reality was how the RIM executives chose to view the iPhone as introduced as targeting a different market segment or different use cases…

…There’s a natural business reaction to want to see a new entrant through the lens of a subset of your existing market. Once you can do that you get more comfortable doing battle in a small way rather than head-on.  You feel your market size will trump a “niche” player.

Sinofsky also wrote usefully on this topic in 2013. Read both posts along with the WSJ’s BlackBerry one.

Google seeking Taiwan partners to promote Chromebook, say makers » Digitimes

Google recently launched an education-use Chromebook for sale at US$99, the sources noted. In a bid to market inexpensive Chromebooks in emerging markets, Google has adopted chip solutions developed by China-based Fuzhou Rockchip Electronics and won support to launch models from China-based vendors Haier and Hisense as well as India-based Xolo and Indonesia-based Nexian, the sources indicated.

Google shipped 6.5m Chromebooks in 2014, mostly for educational use in the North America market, and expects to ship 8m units in 2015, the sources said.

Also talking to Acer and Asus. Trouble for PC makers is that Chromebooks are an even greater example of the “value trap” than Windows. If you’re selling stuff for $99 and the margin is low, you need huge scale to make any profit at all. And the scale so far is tiny.

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