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  • Apple to Rise to No. 2 in Semiconductor Spending by 2011

    The phenomenal success of the iPad and iPhone is expected to make Apple the world’s second-largest semiconductor buyer in 2011, potentially positioning the company to become the world’s top chip purchaser in 2012, according to iSuppli.

    The research group predicts that with projected semiconductor spending in 2011 of $16.2 billion, Apple will leap over Samsung, which will drop to the third spot after finishing with $13.9 billion. Apple’s one-step rise in the rankings will move the company to a close second place behind Hewlett-Packard, which will retain its No. 1 ranking next year thanks to $17.1 billion in spending.

    "Leadership in semiconductor spending represents a position of prestige, and an advancement in the rankings means that a company has been successful in introducing new products and that it is allocating more dollars in research and development—two factors that, as it turns out, feed innovation as well," said Min-Sun Moon, Senior Analyst at iSuppli. 

    According to him, in Apple’s case, the move to second place reflects the company’s triumph in the iPhone 4 and iPad, two flagship products that have captured the public’s imagination—and have garnered tremendous sales—on a scale unequaled by rival devices.

    Apple’s expected rise to No. 2—eclipsing Samsung and putting it within a hair’s breadth of Hewlett-Packard— indicates that the company’s investment in its new smart phone and tablet has paid off—and will do so for some time to come, he believes.

    Apple’s anticipated growth in 2011 continues the extraordinary arc of expansion enjoyed by the company in recent times. In 2009, Apple recorded a surprising 13 percent increase in semiconductor spending—a year when most manufacturers posted negative growth. This year, spending by Apple will rise by a staggering 54.0 percent to reach $12.4 billion—the highest growth rate predicted for any company. Next year, spending levels will be augmented by another 30.4 percent for the company to catapult to its vaunted second-place finish.

    According to the analysts, barring any unforeseen mergers and acquisitions by current champion Hewlett-Packard, Apple could well snag the top spot as soon as 2012, ousting a company that has held the lead since early this millennium.

    iSuppli data show that for 2010, a number of OEM companies are set to join Apple and post rapid growth in semiconductor spending levels.

    The next five companies following Apple, in descending order, are Lenovo at 47.1 percent; SanDisk at 44.3 percent; Research in Motion at 42.9 percent; Cisco at 37.3 percent; and Acer at 29.4 percent.

    "Overall, semiconductor consumption will continue to increase in the Asia-Pacific region, given the rise of manufacturing levels in the region and because of outsourcing activity flowing out from other areas. Major markets contributing to this trend include compute platforms, wireless communications and wired communications," concluded Min-Sun.

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  • Wireless Infrastructure Spending to Rise in 2011 as 4G Deployment Starts

    Following two years of declining expenditures, global capital spending on wireless infrastructure equipment is set to return to growth in 2011 as carriers in the developed world start deploying next-generation 4G networks, according to iSuppli.

    The research group says that capital spending on wireless infrastructure throughout the world is projected to reach $40.3 billion in 2011, up 6.7 percent from $37.8 billion in 2010.

    This will reverse the downward trend that first occurred in 2009 and is expected to continue this year. Expenditures dipped 5.7 percent in 2009, and in 2010 will tumble by an additional 2.3 percent to $37.8 billion.

    “The upturn in 2011 signals renewed commitment within the wireless industry to move on expansion plans that had been delayed or put on hold because of the global recession,” said Dr. Jagdish Rebello, senior director and principal analyst for wireless research at iSuppli. “Starting in 2011, wireless carriers in industrialized countries will start to deploy 4G in order to attain faster speeds and to unclog the heavy data traffic generated by the exploding use of smart phones. This 4G-driven growth in capital spending will continue at least through 2014.”

    According to iSuppli, carriers the developed world in 2011 will start to deploy 4G, with most expected to choose Long Term Evolution (LTE). Over the next decade, LTE will become the dominant technology, while WiMAX will be relegated to the status of a niche 4G technology, iSuppli believes.

    Already, a number of wireless carriers have announced support for LTE, including NTT DoCoMo and KDDI in Japan, as well as Vodafone and Orange in Europe. In the United States, Verizon Wireless has announced it will roll out LTE by the end of this year, with AT&T and T-Mobile expected to follow suit in 2011.

    Overall, carriers will work to establish viable business models to achieve greater revenue growth in light of the capital expenditures needed for network upgrades, iSuppli believes. This means that in all likelihood, carriers launching 4G will implement tiered pricing plans based on data access rates. As a result, data traffic in access networks will be prioritized, and customers will be required to pay higher access fees when using high-bandwidth services like mobile video or peer-to-peer mobile video gaming.

    Rebello notes that while wireless carriers in Japan, the United States and Western Europe contemplate launching 4G services in 2011, their counterparts in the developing world will continue to invest in 3G network enhancements.

    "For Latin America, China, India and the rest of the developing world—where wireless penetration has yet to extend to many rural areas—4G is not considered a feasible proposition at this point. Instead, carriers will focus on expanding the geographical coverage of their networks, or seek network-sharing agreements with infrastructure providers to help reduce total capital outlay," Rebello siad.

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  • Four out of Five Cell Phones to Integrate GPS by End of 2011

    With cell phones increasingly becoming the nexus of the burgeoning markets for navigation and Location Based Services (LBS), the use of GPS technology in such platforms is set to explode during the coming years, according to iSuppli.

    In the fourth quarter of 2011, 79.9 percent of cell phones shipped—amounting to 318.3 million units—will incorporate GPS functionality, up from 56.1 percent in the first quarter of 2009—or 187.8 million units—iSuppli predicts.

    The research group says the adoption of GPS in mobile handsets is being driven by smart phones.

    “The smart phone is the key product driving the technology industry today—and social networking services and applications spurred by GPS-related features are critical elements in the smart phone market today,” said Dr. Jagdish Rebello, director and principal analyst for iSuppli.

    “This is illustrated by Google’s decision to make turn-by-turn navigation, LBS and mobile ads the central features in its bid to take on Apple in the smart phone market, and make up the central pillars of its strategy to increasingly monetize mobile search.”

    Rebello said that smartphones are taking over from Portable Navigation Devices (PNDs) as the major platform for navigation. By 2014, usage of navigation-enabled smart phones will exceed that of PNDs.

    Furthermore – he continued – the smart phone is likely to generate many innovative LBS apps in the next five years. Apple’s iPhone already has more than 6,000 LBS apps available.

    Meanwhile, both Apple and Google are focusing on mobile advertising as a key source of revenue used in association with LBS.

    Apple’s new iAd platform, part of the company’s updated iPhone OS 4 operating system, enables the embedding of advertisements into applications, allowing iPhone users to interact with the ad without leaving the app. Similarly, Google in May acquired leading mobile ad provider AdMob.

    “Nonetheless, Apple recently upped the ante in the smart phone GPS segment with the addition of a gyroscope to its latest iPhone model. Used in combination with GPS, an accelerometer, a compass and the gyroscope can be used for in indoor navigation with floor accuracy,” as the analysts claim.

    iSuppli also sees an increased penetration of embedded GPS in a range of consumer and compute electronic devices by 2014. For example, iSuppli estimates that 18 percent of laptops and 42 percent of portable handheld video game players will have embedded GPS in 2014.

    According to the research group, altogether, the boom in mobile handset navigation will benefit suppliers of GPS semiconductors such as Texas Instruments, Broadcom Corp., Infineon Technologies and CSR.

    “GPS is not the only embedded connectivity technology that will be increasingly embedded in consumer and compute electronics devices. With the ratification of the Bluetooth 4.0 standard supporting the Bluetooth Low Energy profile, iSuppli expects increased penetration of Bluetooth in wireless mice, keypads and other interface devices for the mobile and desktop market—an area that has been dominated by proprietary technologies,” said Rebello.

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  • Nortel Patent Auction Benefits LTE Market

    The decision by Nortel to sell its Long Term Evolution (LTE) patent portfolio could serve as a launch pad for companies planning to cash in on a market expected to undergo explosive growth in the coming years, according to iSuppli.

    iSuppli forecasts that LTE subscribers will reach 274.4 million by 2014, managing a whopping CAGR of 276.9 percent, up from just 1.4 million subscribers in 2010 and virtually no subscribers in 2009.

    “With Nortel’s decision to open its LTE patent portfolio to bidders, the market for LTE just became a lot more interesting. The acquisition of Nortel’s Intellectual Property (IP) could represent a coup for any company, as it could significantly reduce time to market, development costs and royalty exposure. It also potentially could yield a new serious competitor in the market, depending on who acquires the IP,” said Francis Sideco, iSuppli analyst.

    Currently, among the major suppliers in the chipset landscape for LTE, only Qualcomm and ST-Ericsson are known to have sampled LTE chipsets. Meanwhile, Samsung Electronics and LG are known to be working on solutions for their captive handset businesses.

    Who could benefit?

    “Proven experience with licensing and royalties in 3G shows that having a strong IP position is essential to any company wishing to compete effectively and profitably in the wireless wide area networking market. This is true regardless of whether a company is an equipment manufacturer, a chipset supplier or even a mobile network operator,” said Sideco.

    According to him, with Nortel holding more than 4,000 patents in its portfolio, including those that are essential to the LTE standard, acquiring this IP might be a launch pad for companies that could be planning to get into the LTE market, expanding their portfolio or reducing royalty exposure on future products.

    iSuppli believes a number of companies could benefit from acquiring Nortel’s IP—whether or not they are actually bidding on the holdings. Broadcom, Intel, Infineon Technologies, Huawei, LG and Samsung are just a few companies that might be interested in the technology.

    The research group also believes that Nortel at present is testing the waters to gauge if there is enough interest going around in the market for a buyer to snap up the company’s patents, or whether Nortel could achieve greater revenues by turning its portfolio into a licensing business.

    “The real question here is whether interest in the auction exists—and if Nortel will be able to get as much as, or even more than, it obtained in 2009 for its CDMA patents, which yielded $1.1 billion,” concluded Sideco.

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  • iSuppli: Facebook Plans New Mobile Strategy

    Facebook is set to move beyond its mobile application strategy as it plans to become a stand-alone mobile platform, which developers can distribute mobile apps with, says iSuppli.

    Already a leader in non-mobile web applications, Facebook offers more than 550,000 applications and supports 1m developers. According to the research group, the social network’s aim is to offer something similar on mobile (most third-party Facebook apps are not currently available on mobile).

    Facebook’s mobile growth remains strong. It now counts more than 150m active mobile users (out of more than 400m total users), compared with 100m in February 2010.

    “Mobile will continue to play a key role in growing Facebook’s overall user base. In May 2010, it launched Facebook 0, a text only version of the social network aimed at mobile users in developing countries with lower-end phones and limited access to mobile data. Facebook has deals with more than 60 network operators in 50 developing countries to provide the service for free,” said iSuppli analyst Jack Kent.

    According to him, while Facebook will likely remain the leading social network on mobile, a number of new players will force it to innovate. Foursquare, the location-based mobile social network that offers a gaming element and check-in functionality, is most prevalent of these new entrants. While Foursquare‘s 2m user base is tiny compared to Facebook, its implementation of location specific data is likely to be similar to Facebook’s forthcoming local features.

    “Facebook’s drive towards creating its own mobile platform may cause a headache for developers who will be forced to develop for another set of APIs (application program interfaces) in the already fragmented mobile sector. The prospect of tapping into a 500m-strong social graph could however prove enticing for many, as is already the case for many websites that integrate Facebook’s APIs,” said Kent.

    He thinks that having previously focused on developing native applications for mobile operating systems (including Apple’s iOS and Google’s Android), Facebook’s new strategy will likely focus on mobile web based applications that give it greater control over its ecosystem and the user experience it provides.

    “For Facebook, offering its own platform for mobile web applications will help drive its core advertising and microtransaction business models. It will be able to serve ads and gain revenues from its Facebook Credits virtual currency, outside the realm of other mobile ad-networks and mobile application stores,” concluded the iSuppli analyst.

  • Samsung Takes Lead in U.S. LCD-TV Market in Q1

    Samsung in the first quarter of 2010 regained the leading position in the U.S. LCD-TV market, as the company capitalized on rising consumer demand for television sets with advanced features, including LED-backlighting, built-in internet connectivity and 3-D images, according to iSuppli.

    Samsung in Q1shipped 1.1 million LCD-TV sets in the United States. While this was down 33 percent from the fourth quarter, Samsung actually outperformed the overall U.S. LCD-TV market, which contracted by 35.8 percent sequentially due to seasonal factors. "This allowed Samsung to increase its market share to 18 percent in the first quarter, up from 17.3 percent in the fourth quarter, giving it the top position in the U.S. market," said Riddhi Patel, principal analyst, television systems, for iSuppli. 

    According to her, the year 2010 "marks a major transition period for the U.S. LCD-TV market, when consumers increasingly are gravitating toward sets with more advanced features.”

    “With Samsung at the forefront of trends including LED backlighting and 3-D, the company has been able to outperform the market and its closest competitors,” she said.

    The report finds that Samsung of South Korea retook the lead from U.S.-based brand Vizio, whose unit shipments declined by 42.2 percent sequentially in the first quarter. Vizio and Samsung have been engaged in a tight race for leadership in the U.S. LCD-TV market, with the two companies frequently swapping the No. 1 position from quarter to quarter. Samsung held a 1.3 percent point lead over Vizio in the first quarter of 2010, the same margin in which Vizio led Samsung in the fourth quarter of 2009.

    According to iSuppli, the U.S. LCD-TV market in 2010 is set to undergo a rapid transition away from traditional Cold Cathode Fluorescent Lamps (CCFLs) and toward LED backlighting technology. Shipments of LED-backlit LCD-TVs in the United States are projected to rise to 7.7 million units in 2010, up about 600 percent from 1.1 million in 2009. LED-backlit models will account for nearly one-quarter of all U.S. LCD-TV shipments in 2010, at 23.4 percent, up from only 3.4 percent in 2009.

    Meanwhile, Internet-Enabled Televisions (IETVs) are attracting consumer interest, with U.S. shipments expected to rise to 11.8 million units in 2010, up from 6.9 million in 2009.

    Among U.S. consumers that purchased new televisions in the first quarter, 26.8 percent indicated their new sets were connected to the Internet, either though the internal capabilities of their TVs or via external devices, such as digital video boxes or game consoles. This is up from 24.3 percent in the fourth quarter of 2009. Over time, IETVs will account for a rising portion of Internet connectivity in televisions.The most popular types of Internet content accessed by consumers are movies and social networking services.

    The research group says that U.S. shipments of 3-D TVs—introduced to the market for the first time in March—are expected to reach 1.45 to1.5 million units in 2010, thanks to increasing acceptance from enthusiastic early adopters.

  • iSuppli: HP’s Palm Acquisition Opens up a Tablet of Possibilities

    Hewlett-Packard planned acquisition of Palm immediately puts the PC-centric company knee-deep in the smart phone race, but perhaps more importantly positions the company to compete in the burgeoning tablet market, says iSuppli.

    According to the research firm, the acquisition gives HP the means to use Palm’s WebOS platform to release a tablet device that will compete against Apple’s iPad as well as whatever arises from the relationship between Nokia and Intel.

    iSuppli forecasts worldwide tablet shipments will expand to 11.0 million units in 2010, up from just 2.0 million units in 2009 and 1.8 million units in 2008. Most of the shipments in 2010 will be made up by sales of the iPad, and sales will continue to expand in the coming years as a range of competitors enters the tablet market.

    iSuppli believes that a key component in HP’s strategy will be to utilize its common WebOS operating system as a basis for developing a tablet that can use the same applications and services being employed by the company’s existing smart phone product line.

    According to the analysts, the challenge for HP is to develop an ecosystem around a platform that will be able to compete with the centralized apps store Apple has created. That also means garnering support from leading developers in order to get the right apps and features available for multi-platform mobilized devices.

    What this means is that there are now three major competitors positioning for a fully interoperable, multi-device platform: Nokia/Intel, Apple and now HP with its Palm purchase.

    “Even so, this doesn’t even address the number of Taiwanese and other vendors that are developing their own tablet PCs in what will surely be a highly competitive market in years to come,” as iSuppli claims.

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  • iPhone 4 Sounds Starting Gun for Smartphone Gyroscope Market

    Monday’s introduction of the iPhone 4 is set to trigger explosive growth in the market for gyroscopes used in cell phones, as a flood of competitors vie to emulate the feature, says iSuppli.

    According to the research group, global unit shipments of gyroscopes in mobile handsets are expected to rise to 285 million in 2014, up from 26 million in 2010 and from zero in 2009.

    The integration of the gyroscope in the iPhone 4, which is set to begin shipping on June 24, confirms iSuppli’s forecast that these parts would make their first appearance in smart phones this summer.

    “Because of Apple’s role as a technology trendsetter, a multitude of mobile handset OEMs are expected to offer smart phones that integrate gyroscopes,” said Jérémie Bouchaud, director and principal analyst, Microelectromechanical Systems, for iSuppli. “This will cause shipments to rise by 157 percent in 2011 and by 60 percent in 2012 and 2013.”

    Mobile handset makers until recently have shown little interest in gyroscopes, Bouchaud noted. However, the success of the Nintendo Wii Motion Plus video game console demonstrated the consumer appeal of gyroscopes for game playing. Meanwhile, InvenSense and STMicroelectronics have offered a cascade of new gyroscopes with 2 and 3 axes, making the technology more accessible.

    “STMicroelectronics is the sole supplier of accelerometers for previous models of the iPhone, as well as for the iPad and the iPod line,” Bouchaud said.

    “Because of this, we believe that STMicroelectronics is also the supplier of the gyroscope in the iPhone 4. However, we will have to wait for confirmation from iSuppli’s Teardown Analysis Service when it dissects the iPhone 4 in late June.”

    According to the analysts, the main applications for gyroscopes in cell phones in 2010 and 2011 will comprise a user interface utilizing a gyroscope in combination with an accelerometer, followed by image stabilization and dead-reckoning for in-vehicle navigation.

    From 2012, gyroscopes will start to be used for indoor navigation in combination with an accelerometer, compass and pressure sensor for floor accuracy. By 2014, the market for gyroscopes in cell phones is expected to amount to $220 million.

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  • New iPhone Ad Platform Extends Services—and Raises Questions

    The recent unveiling by Apple of its new iAd advertising platform extends the company’s array of inventive services for the iPhone, but also continues a distinctive collaboration-versus-competition dynamic between the giant technology trendsetter and its partner companies, according to iSuppli.

    “Thanks to the phenomenal success of the iPhone apps store and iTunes, Apple is in a unique position to partner with best-in-class companies and offer innovative services, products and apps to the market,” said Francis Sideco, principal analyst for wireless research at iSuppli.

    “The launch of one of these services, iAd, is a result of Apple’s recent purchase of Quattro Wireless and points to what appears to be an emerging modus operandi being employed by Apple – namely, a pattern of initial amicable association between Apple and its partner companies that then turns into a competitive relationship,” he said.

    In the smart phone market, Apple was the only player in the Top 5 to achieve a substantial increase and consistent gain throughout 2009, growing its share from 10 percent in the first quarter of 2009 to 16 percent in the final quarter.

    In contrast, top-ranked Nokia saw only a 3 percent increase during the period and suffered a dip in the third quarter, while the share of No. 2 RIM fell from 21 percent to 19 percent during the year. Rounding out the Top 5 were HTC with 6 percent share and Motorola with a 4 percent share.

    The iAd platform joins a host of major changes in Apple’s updated iPhone OS 4. In the case of iAd, developers will be able to embed ads into their applications, allowing iPhone users to interact with the ad without leaving the app. Apple CEO Steve Jobs says iAd not only presents additional revenue opportunities for iPhone developers but also provides users with improved advertising quality and access to ads.

    According to iSuppli, while iAd is the progeny of Apple’s acquisition of Quattro Wireless, Apple’s moves in the past have been less overt but nonetheless ended up pitting the giant against its former partners.

    “For instance, Apple partnered with Amazon.com to allow the Kindle app to run on the iPhone. Within a year or two, Apple now has launched its own iBook store for eBooks and other electronic publications. Prior to that, Apple originally partnered with Google Inc. for search and mapping capabilities on the iPhone, but Apple within two years achieved in-house capabilities for those functions and now, with iAd, is going after Google’s highly lucrative advertising business,” as the research group claims.

    As these developments illustrate, Apple is acquiring valuable domain knowledge that is allowing the company to enter into competition with some of its partners, iSuppli believes. And while Apple’s actions could be viewed as a reaction by the company to the moves of its partners, they also can set in motion possibly antagonistic relationships.

    “Should Apple continue to operate in this manner, the company might find it difficult in the future to form an association with best-in-class partners—connections in which friendly partnerships at the beginning alter and then deteriorate into aggressive rivalry,” said Sideco.

  • China TV Market to Enjoy Solid Growth in 2014

    The China television market, already a dominant force on the world stage, is expected to perform strongly once again in 2010, led by an overall rise in the production of television sets as well as surging demand for LCD-TVs, according to iSuppli.

    As the world’s top TV manufacturer, China will produce an estimated 95.5 million TV sets in 2010, up 11.3 percent from 85.8 million in 2009 when the country accounted for 42 percent of total global TV shipments. This year’s anticipated rise is also a bigger increase than the 5.3 percent gain made during the 2008-2009 period, iSuppli figures show.

    LCD-TV shipments alone this year will increase 40 percent to 80 million—or nearly 84 percent of overall China TV shipments—far outpacing the 13.6 million CRT-TVs and 1.9 million plasma sets to be produced in 2010.

    By 2014, iSuppli forecasts that TV production in China will rise to 128.1 million units, translating into a Compound Annual Growth Rate of 7.6 percent for the forecast period.

    LCD-TVs Take Center Stage
    The strength in China’s TV manufacturing can be attributed to the brisk expansion of LCD-TV production capacity as well as to the growing demand from both the domestic and export markets. In particular, Chinese LCD firms are investing billions of dollars in set-production lines, panel fabs and component factories, becoming more competitive with the global brands in the overall LCD-TV arena.

    Of the total China LCD market in 2009, local Chinese OEMs accounted for three-quarters market share, beating out their foreign-based counterparts that had pulled back on marketing in the country because of the global economic crisis. Chinese OEMs were also helped by their deep penetration in the rural market, along with support from the government’s subsidy program offering rebates to consumers who buy TVs and other consumer goods.

    In addition to the encouraging factors above, China’s LCD-TV market will receive a boost from consumer interest in new flat-panel TV features, such as higher 120/240Hz refresh rates, LED backlighting and Internet-ready capabilities, further cementing the dominance of LCD technology in the world’s most populous country, iSuppli projections show.