Comparative Tablet Teardowns Reveal IPad Design Advantages

By: Ian Mansfield | 1st Aug 2011: 5:51pm

­In the 15 months since the introduction of the iPad, competitor tablet manufacturers still can't match the design efficiency of Apple's groundbreaking product, according to an IHS iSuppli Teardown Analysis of eight tablet models.

" Since Apple controls both the operating system and hardware design of the iPad, it is able to attain design efficiencies that other tablet manufacturers cannot," said Wayne Lam, senior analyst, competitive analysis, at IHS. " These efficiencies become obvious in areas like the memory and the battery, where Apple maintains advantages in cost, space savings and performance compared with every competitor in the business."

Other tablet makers employ operating systems from third-party firms -- such as Google, which provides the Android software used in most competitive products on the market today. Many of these tablet makers also outsource the blueprints of their products to third parties, employing reference designs and design services from contract manufacturers.

This contrasts with the model employed by Apple, which uses its own operating system and maintains tight control of its design, components and contract manufacturers.

" Apple takes a vertically integrated approach to its products, from the operating system to the user interface, to the hardware design, down to the selection of individual parts used in the device," Lam noted. " For example, Apple even uses its own applications processor design in both the iPad and iPad 2. In contrast, Android tablet makers buy those capabilities from the likes of Nvidia, Texas Instruments and Qualcomm. This gives Apple greater control in multiple areas of product development."

The table below presents an overview of the results of the dissection of eight tablet models. Note that the BOM figures accounts only for hardware and manufacturing costs and do not take into consideration other expenses such as software, licensing, royalties or other costs.

iPad's memory and battery stay slim

Apple's control over the operating system allows it to reduce costs by limiting the quantity of memory in the iPad. In the current-generation iPad 2, the density of synchronous dynamic random access memory (SDRAM) is 512 megabytes -- half that of the 1 gigabtye used in competitive designs. This memory density reduction results in a nearly $14 reduction in the BOM of the iPad 2 compared to other tablets. Likewise, the original iPad contained half as much SDRAM as comparable competitive devices with single-core applications processors.

" The iPad's efficient memory usage stems from the fundamental difference in the architecture of the operating system," Lam said. " Apple's iOS handles multitasking differently than other tablet operating systems, allowing it to reduce the amount of memory required to support the microprocessor."

Also, Apple's tight management of its product design, software integration and component selection also allow the iPad's battery to be the thinnest of all competing tablet designs while still having the largest capacity.

Tablet trends

Extensive teardown research also reveals how Apple is setting the pace in the tablet market in the areas of pricing and screen size.

Apple established the sweet spot for tablet pricing, pegged at $500 for the Wi-Fi version of the Apple iPad that included 16 gigabytes of NAND flash memory. Samsung reinforced this pricing standard with the 16-gigabyte version of the new Galaxy Tab 10.1 model.

Other tablets such as the BlackBerry Playbook from Research in Motion and the TouchPad from Hewlett-Packard have gravitated toward that price point as well.

Apple also is setting the standard for display sizes, with the iPad's 9.7-inch screen becoming the default standard in the market. Although some tablets have been introduced with screens in the 7-inch range, notably RIM's BlackBerry PlayBook and the upcoming HTC Flyer, the number of designs in the market with 10.1- and 9.7-inch displays have been more plentiful.

" Dual-ing" tablets

The IHS iSuppli Teardown Analysis Service also illustrates the trend toward multi-core processors in tablet designs. Following the introduction of the Motorola Xoom in February and the iPad 2 in March, all new tablet designs within 2011 have included dual-core processors that deliver higher computing and graphical performance.

In 2012 IHS expects to see this trend to continue with the introduction of tablets featuring quad-core processors for even more enhanced performance.

Click on images to enlarge

Comparative teardown

Worldwide Mobile Phone Market Grew More Than 11% in the Second Quarter

By: Ian Mansfield | 29th Jul 2011: 8:46pm

­The worldwide mobile phone market grew 11.3% year over year in the second quarter of 2011 (2Q11), despite a weaker feature phone market, which declined for the first time since 3Q09. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker, vendors shipped 365.4 million units in 2Q11 compared to 328.4 million units in the second quarter of 2010. The 11.3% growth was lower than IDC's forecast of 13.3% for the quarter and was also below the 16.8% growth in 1Q11.

The feature phone market shrank 4% in 2Q11 when compared to 2Q10. The decline in shipments was most prominent in economically mature regions, such as the United States, Japan, and Western Europe, as users rapidly transition to smartphones. This was the first decline since Q3 2009 and reflected a combination of conservative spending and continued shift to smartphones.

" The shrinking feature phone market is having the greatest impact on some of the world's largest suppliers of mobile phones," said Kevin Restivo, senior research analyst with IDC's Worldwide Mobile Phone Tracker. " Stalwarts such as Nokia are losing share in the feature phone category to low-cost suppliers such as Micromax, TCL-Alcatel, and Huawei."

" For the overall market to grow by double digits year over year, despite the decline in feature phones, is testament to the strength of the global smartphone market," noted Ramon Llamas, senior research analyst with IDC's Mobile Phone Technology and Trends team. " While this is not a new trend - smartphones have been the primary engine of growth for the last several quarters - it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in the vendors' portfolios."

Market Outlook

The feature phone forecast isn't expected to be any rosier in the quarters and years to come. Shipment growth of the device type won't exceed 1.1% in any year forecasted by IDC.

Regional Analysis

• The traditionally slow second quarter in Asia/Pacific was exacerbated by Nokia's channel inventory corrections in China. Apple thrived in China thanks to strong iPhone 4 demand. As well, a number of domestic brands in Southeast Asia like CSL, Nexian, Q-Mobile, and Wellcom grew sales of Android-powered smartphones. China-based vendors gained share in India and Southeast Asia at the low end. In Japan, the impact of the earthquake continued into April and May as component shortages forced manufacturers to release new models in June while customer demand was harder to fulfill.

• In Western Europe, the market declined sequentially compared to the first quarter. The feature phone market declined while smartphone shipment growth slowed as phone makers and carriers reduced inventories in advance of expected third-quarter product launches. Feature phone dependent suppliers were not able to offset feature phone weakness completely with higher smartphone sales. The CEMA markets performed well on a year-over-year basis despite civil unrest in Egypt and other Arab countries, where sales were negatively impacted as a result. Samsung gained share while Chinese brands continued to make inroads in the region.

• In North America, smartphones once again took center stage, propelled by lower prices, key device launches, and enhanced channel marketing. In particular, Android-based devices extended their lead in the United States and took leadership in Canada thanks to Samsung, Motorola, HTC, and LG. Meanwhile, demand for feature phones continued to slide, but there still existed pockets of interest for voice-centric and quick-messaging devices. Still, as the region heads towards a smartphone-centric future, IDC expects feature phones to represent an increasingly smaller portion of the market.

• The Latin America market growth was driven by low-cost smartphones, specifically those with social networking features. Lower smartphone prices, including those of the Android variety, are driving smartphone penetration in several Latin American countries. Price is expected to be a point of differentiation - as well as applications and device features - between Android players in future.

Top Five Mobile Phone Vendors

Nokia's hold on the top global mobile phone spot weakened last quarter as inventory buildups in traditional strongholds, namely China and Europe, led to sharp year-over-year shipment declines. Nokia's global feature phone and smartphone businesses suffered a similar fate. One positive sign for Nokia last quarter were dual-SIM devices the company shipped over 2.6 million of these in the second quarter. Over the long term, Nokia's smartphone fortunes will be dictated by its ability to sell Windows Phone 7 smartphone devices, which are expected to hit the market this year. It is Nokia's primary smartphone platform of the future. In the meantime, Nokia is trying to sustain shipment volume with low-cost mobile phones and devices powered by the aging Symbian smartphone platform.

Samsung posted double-digit growth from the same quarter a year ago, and just slightly slower growth than the overall pace of the market. Like other vendors it realized a decrease in demand for its feature phones, but made up the difference with continued success for its Android-based Galaxy smartphones. The difference between Samsung and market leader Nokia continued to shrink, with less than 20 million units separating the two vendors, mostly resulting from Nokia's struggles in the market. Still, Samsung expects continued growth into the second half, which could put it in closer contention with Nokia.

LG Electronics held on to its number three position during the quarter, thanks in part to its Optimus smartphone sales worldwide. However, a combination of factors - including soft demand for its feature phones, slow pace of smartphone releases, and competitive pressures, led the company to downgrade its outlook for the year by 24%. Originally, LG had anticipated flat growth in 2011 from 2010 levels, even as it expected the overall market to increase by 8%. Should LG's volumes decrease as much as it anticipates, other vendors may jockey for position ahead of LG.

Apple maintained its number four position overall but closed the gap on Top 5 competitors thanks to another record unit shipment quarter. The company easily posted the highest growth rate of the worldwide leaders despite the fact that its flagship iPhone 4 is now more than a year old. The triple-digit shipment volume growth allowed Apple to more than double its share when compared to the same quarter last year. Apple's ability to bring its smartphone momentum to developing economies, where it's less successful, will help dictate the company's smartphone fortunes in future.

ZTE likewise improved volumes and picked up market share during the quarter, enough to maintain the number five position. Long known as a purveyor of simple, voice-centric mobile phones, ZTE has stepped up its smartphone game with the continued success of its Android-powered Blade and Racer smartphones while announcing Libra, Skate, and Amigo smartphones for release in the second half of this year. Feature phones continued to be popular for ZTE, with the release of its 547i, a social networking-centric device in Europe.

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q2 2011 (Units in Millions)

[Apple becomes top smartphone OEM Q2 shipping 20.3 million units, Samsung came in second with approximately 19 million smartphones shipped, and Nokia droped to third place with 16.7 million devices shipped.]New York -- The 103 million smartphones shipped in Q2 represent a YoY growth of 62% and a QoQ growth of 2.2%. While the annual growth rates and 2H 11 outlooks appear healthy for the industry, Q2 did experience some ‘softness’ in the market, driven by macro-economic conditions, seasonality and a sharper than expected decline in Nokia’s smartphone business.

The perennial leader in smartphone shipments tumbled to 3rd place this quarter with 16.7 million devices shipped. Nokia’s smartphone market share has plummeted from 38% last year and 24% last quarter to only 16% in Q2. Driven by the added distribution muscle of Verizon Wireless and China’s growing appetite for premium smartphones, Apple posted record shipments in Q2 of 20.3 million to become the top smartphone OEM after only four years in the business. Right on the heels of Apple, Samsung had an amazing Q2 with approximately 19 million smartphone shipments and over five million Galaxy S II shipments in its first 85 days.

ABI Research Senior Analyst Michael Morgan comments: “Although Apple’s 142% YoY growth placed it as number one this quarter, Samsung’s 500% YoY growth shows that going forward, the top smartphone OEM position is Samsung’s to lose.”

RIM’s growth in international markets was not enough to offset its decline in North America. RIM shipped 13.2 million smartphones representing an 11% QoQ drop. Motorola shipped 4.4 million smartphones in Q2 as sales into APAC were enough to offset Motorola’s iPhone-induced decline at Verizon Wireless. HTC continued its rise to the middle with 11.5 million shipments in Q2 and 113% growth YoY.

ABI Research believes that 47 million Android smartphones were shipped in Q2 giving it 46.4% share of Q2 shipments. Samsung captured 34% of Q2’s Android shipments, HTC shipped 23%, and Sony Ericsson earned itself 11% Android market share with little help from North American shipments.

HTC has announced net profits of NT$17.52 billion (US$607.38 million) for the second quarter of 2011, up 18% sequentially and 103% on year. Second quarter revenues were NT$124.4 billion, up 104% on year which beat its guidance.

Second-quarter earnings translated into an EPS of NT$21.69, a significant improvement from NT$18.36 of the previous quarter and NT$10.56 of a year earlier period.

Total shipments grew 25% on quarter and 124% on year to 12.1 million units in the second quarter, and gross margin for the quarter stood at 28.8% compared to 29.3% in the first quarter due to changes in product mix, the company said.

ASP stood at US$349 in the second quarter, up 2.6% from a year earlier but down 2.8% on quarter due to a ramp-up of entry-level models in the second quarter as compared to the first.

The company projected its revenues to top NT$137 billion in the third quarter, up 10% on quarter and 80% on year, with total smartphone shipments to grow 98% on year to 13.5 million units. Gross margin for the third quarter will hover around 27.5%-28.5%.

Apple Dislodges Nokia as Biggest Smartphone Maker

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Apple Dislodges Nokia as World’s Biggest Smartphone Maker

David Paul Morris/Getty Images

A customer looks at the new white iPhone 4 at the Apple store in Palo Alto, California. Apple accounted for 18.5 percent of global smartphone shipments in the second-quarter.

A customer looks at the new white iPhone 4 at the Apple store in Palo Alto, California. Apple accounted for 18.5 percent of global smartphone shipments in the second-quarter. Photographer: David Paul Morris/Getty Images

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Apple Dislodges Nokia as World’s Biggest Smartphone Maker

Park Ji-Hwan/AFP/Getty Images

Apple's iPhone 3G and Samsung Electronics' Galaxy S mobile phone.

Apple's iPhone 3G and Samsung Electronics' Galaxy S mobile phone. Photographer: Park Ji-Hwan/AFP/Getty Images

‘Unexciting Portfolio’

IPhone Sales

Small-Sized Display Shipments Decline Amid Weak Demand from All Markets - Except Tablets

By: Ian Mansfield | 28th Jul 2011: 6:17pm

­Shipments of small- and medium-sized display (SMD) panels fell for the second straight month in May as demand decreased from cellphones and all other major product categories -- with the major exception of tablets -- according to a new IHS iSuppli Small & Medium Displays PriceTrak report.

Coming on the heels of a 6.9 percent decline in April, shipments of SMD displays from the two major groups of suppliers in South Korea and Taiwan in May fell further to 187.1 million units, down 4.2 percent from 195.3 million units during the earlier month.

SMD panels, which range in size from 1.0 inches to 9 inches, are used in a variety of popular consumer items, including smartphones, tablets, digital still cameras and personal navigation devices. Nearly all of these displays employ liquid crystal display (LCD) technology.

" SMD demand in May was impacted by declining sales to the cellphone market -- the leading application for such displays -- along with other key areas, including digital still cameras and portable navigation devices," said Vinita Jakhanwal, director for small and medium displays at IHS. " The only exception was the tablet market, where demand continued to exceed supply."

Cellphone market suffers in the short term

Suppliers of SMDs for cellphones in May trimmed their forecasts in light of weaker-than-anticipated handset shipments from Nokia and Research In Motion. Both companies have been under intense pressure because of strong competition from Apple Inc.'s iPhone as well as from handsets based on the Android operating system.

Handset panel shipments to China during the period were also disappointing, with officials in the country cracking down hard on an illegal gray market estimated at 255 million units this year, according to an IHS iSuppli China Research Service report. No relief appears in sight, with the gray market in China projected to decline starting next year

The market for SMDs in digital cameras continues to be impacted as panel supplies are shifted to the more lucrative smartphone and tablet spaces. Meanwhile, the portable navigation device segment continued to shrink steadily.

This is expected to be a short-term slowdown, with shipments set to rise for the entire year and during the following years.

Happy tablets for SMDs

The one positive aspect in the SMD market is the fast-growing demand from the tablet segment. Along with their high shipment growth, tablet displays command a relatively high price compared to SMDs in other applications. This is because of their high specifications required for advanced performance.

Taiwanese vendors will start mass-producing for Apple iPad panels starting in the third quarter, while Korean vendors have aggressive plans for capacity expansion to meet demand for PC-type tablets, such as Hewlett-Packard's TouchPad.

Earthquake aftereffects

Fearing possible component shortages after the Japan quake disaster in early March, branded vendors and channels pulled in SMD shipments ahead of time to bolster stocks. However, with inventory in the channel building up and in light of endemic weak demand, panel shipments could not recover and declined in April and May. The uncertain picture in Europe, with rising inflation and sovereign debt issues, was also a contributing factor to the SMD panel decline in general during the period.

[IMSresearch reports smartphone sales will account for nearly 28 percent of the entire global handset market this year.]Austin, TX -- Sales of smartphones will exceed 420 million devices in 2011, accounting for nearly 28 percent of the entire global handset market, according to IMS Research, the leading independent provider of market research and consultancy to the global electronics industry. With the introduction of more affordable “entry-level” smartphones, IMS Research predicts that annual sales will surpass one billion devices by the end of 2016, accounting for one of every two mobile handsets sold.

“But despite the higher margins for smartphones, and the seemingly insatiable consumer appetite for converged devices, it is clear that not all OEMS are equally positioned to capitalize on this market trend,” says Josh Builta, analyst in IMS’ Mobile Technologies Group. “For instance, LG, despite being the third largest OEM in the world, has offered a fairly limited smartphone portfolio in recent years, a factor that resulted in the company reaching less than a three percent share of the total smartphone market in 2010.”

At the same time Nokia saw its portion of smartphone market decline so dramatically that in early 2011 the company dropped the Symbian platform in favor of Microsoft’s Windows Phone OS. In 2Q 2011, Nokia reported smartphone sales fell to 16.7 million, down 34 percent from the same period in 2010.

“Clearly one of the key dynamics of the mobile handset competitive environment in recent years has been the inability of many traditional market leaders to recognize and adjust to the growing smartphone tier,” adds Builta, “The reasons for these failures vary and include everything from poorly designed and manufactured devices, unsatisfactory user interfaces, and portfolios that don’t offer products with a differentiating feature. These lapses have created opportunities for newer entrants to the market, which they have aggressively pursued.”

In recent years, no company has flourished in this environment as much as Apple. Apple’s 2Q 2011 results in which it reported record sales of more than 20 million iPhones indicates it can be expected to remain an influential presence in the market despite the increased competition.

However, Apple is not alone in its success. Of the traditional handset manufacturers, Samsung has demonstrated the best results in recent years. Capitalizing on its diverse portfolio – which includes devices using the company’s own bada operating system along with Android and Windows Mobile – as well as its highly popular Galaxy series, Samsung smartphone market share increased from about three percent in 1Q 2010 to over 13 percent in 1Q 2011. At the same time smaller, dedicated smartphone vendors such as HTC have seen their position rise dramatically.

According to Builta, “These companies are well positioned to benefit from the projected growth of the smartphone market in the future. Though the other OEMs are stepping up their efforts in the space, companies such as Apple, HTC and Samsung have a considerable amount of momentum. Catching them will not be an easy task.”