Domestic Durable Goods Demand – Modest Strength in June
- The U.S. "Durable Goods" report was just released providing a preliminary estimate of June shipments, orders and inventories of domestic electronic equipment and components and related items.
- The 3-month average book/bill ratio for electronic equipment was 1.07 with 1.05 for the month of June alone (Chart 1).
- Although the book/bill is greater than 1.0 both order and shipment growth is still negative (3/12 <1) when comparing April-June 2013 versus 2012 (Chart 2).
- June electronic equipment orders declined slightly due to a decrease in communication equipment bookings (Chart 3).
- The ratio of electronic equipment inventories/orders increased primarily due to the drop in orders (Chart 4).
- Defense capital goods orders rebounded (Chart 5) as their 3-month average book/bill climbed toward parity. It was 1.21 for June alone (Chart 6).
- Aircraft and parts shipments weakened slightly from May but still remained near record levels (Chart 7).
- Communication equipment orders dropped from their May "spike" (Chart 8) while computer orders and shipments showed little movement (Chart 9).
Source: www.census.gov/indicator/www/m3/
PMI Leading Indicators – Encouraging Signs for Europe and U.S.
Markit Economics released its July "flash" manufacturing PMI indicators for a few countries. All improved with the exception of China (Chart 10). The growth in Europe is encouraging.
Source: www.markiteconomics.com
Consumer Confidence Higher in U.S.
Although July’s U.S. consumer confidence index slipped slightly from June this measure of consumer attitudes has been generally improving since its mid-2009 low (Chart 11).
Source: www.conference-board.org
Smartphone 52% of World's Mobile Phone Shipments in 2Q’13 (Chart 12)
For the second calendar quarter in a row, smartphone shipments represented more than half (52%) of the world’s mobile phone shipments. Led by electronics manufacturer Samsung, an estimated 408 million handsets and 214 million smartphones shipped during the second quarter of 2013, according to market intelligence firm ABI Research. Feature phone shipments declined 20% year-over-year to 195 million units as low-cost manufacturers continue to claw their way up-market with increased device specifications.
Due to typical seasonality gains at mid-year, handset shipments grew 0.5% sequentially and more than 7% year-over-year. Smartphone shipments maintained a healthy growth rate of 5.5% sequentially and nearly 44% year-over-year. "Despite concerns of premium tier smartphone saturation, both Samsung and Apple were able to deliver better than expected results in the second quarter," says senior analyst Michael Morgan.
The high end of the smartphone market continued to perform well in 2Q as Samsung Galaxy S4 and Apple iPhones outpaced the overall market. Despite the surprising tenacity of premium smartphones, Apple’s market share (14.6%) dropped to its lowest point since 3Q’2011. ABI Research attributes this share loss to the success of the Samsung Galaxy S4 launch and the continued growth of low cost and mass market smartphone shipments.
"The second half of 2013 will be defined by fierce competition between price-aggressive OEMs moving toward the middle tiers for increased margins while at the same time top tier OEMs are diversifying portfolios into the middle in search of continued growth," adds senior practice director Jeff Orr. As competitors such as Huawei, ZTE and Lenovo move their smartphone portfolios upstream, ABI Research expects increasing margin pressure on the premium smartphone segment where the majority of industry profits reside.
Source: www.abiresearch.com
Worldwide Mobile Phone Shipments Grew 6.0% y/y to 432.1 Million Units in 2Q’13 (Charts 13-15)
The worldwide mobile phone market grew 6.0% year-over-year in the second quarter of 2013. According to International Data Corporation (IDC) vendors shipped a total of 432.1 million mobile phones in 2Q’13 compared to 407.7 million units in the second quarter of 2012. The 2Q’13 total was also slightly higher than the 428.8 million units shipped in the first quarter of 2013.
The growth in the mobile phone market was partly driven by vendors from outside the Top 5 who experienced torrid shipment growth that outpaced the overall market. Several vendors, including Alcatel and Huawei, had high double- and triple-digit growth rates in the second quarter for their Android-based offerings shipped to high-growth countries such as China and India. In 2Q’13, these vendors from outside the Top 5 accounted for 44.8% of the overall shipment volume, up from 42.2% in the same quarter one year ago.
In the worldwide smartphone market, vendors shipped 237.9 million units in 2Q’13 compared to the 156.2 million units shipped in 2Q’12. This represents 52.3% year-over-year-growth, the highest annual growth rate in five quarters. Second quarter shipments were up 10.0% when compared to the 216.3 million units shipped in 1Q’13.
"The smartphone market is still a rising tide that's lifting many ships," said Kevin Restivo, Senior Research Analyst with IDC's Worldwide Quarterly Mobile Phone Tracker. "Though Samsung and Apple are the dominant players, the market is as fragmented as ever. There is ample opportunity for smartphone vendors with differentiated offerings."
"Market opportunities exist at all levels, including the high end," said Ramon Llamas, Research Manager with IDC's Mobile Phone team. "While Samsung and Apple accounted for significant share of the overall market, they were not the only vendors active in the high end of the market, and recent device introductions and upcoming launches signal more vendors targeting this space. Comparisons will certainly be made to the flagship Galaxy and iPhone models, but clearly the competition refuses to be shut out altogether."
"The opposite end of the spectrum is just as, if not more, interesting," added Llamas. "Lower-priced smartphones continue to gain traction, but the key for vendors will be to keep prices low while still offering premium devices and services. We fully expect to see large-screen smartphones and other flagship devices establish a presence within the lower-priced smartphone segment as well."
Note: Data are preliminary and subject to change. Vendor shipments are branded shipments and exclude OEM sales for all vendors.
Source: www.idc.com
Cell Phone Gray Market Goes Legit, as Sales Continue to Decline (Chart 16)
The gray market for cell phones will contract for the second consecutive year in 2013, with worldwide shipments dropping by 12 percent as both makers and buyers of these handsets turn to branded products, according to the China Research Service at information and analytics provider IHS.
Shipments reached their peak in 2011 with a total of 250.4 million gray-market cellphones. But beginning last year, the market began to shrink, contracting to 221.5 million units. The deceleration will continue this year to 194.6 million units, followed by another steep fall to 173.8 million units in 2014. The decline will continue at least through 2017, when shipments will dwindle to 133.9 million units.
The gray market overall is impacted by an accelerated decrease in the sales of lower-end handsets known as feature phones. And while the ultra-low cost handset (ULCH) and smartphone segments of the gray market will continue to grow until 2014, expansion in these segments won't be enough to counteract the drop in the feature phone sector.
Gray-market handsets, as defined by IHS, include counterfeit products like fake iPhones as well as white-box cellphones on which any logo can be readily imprinted. White-box handsets often are illegal despite sporting a logo because they use smuggled chips, lack official certification from China's Ministry of Industry and Information Technology (MIIT), use fake International Mobile Equipment Identity (IMEI) codes and usually are trafficked through Hong Kong to avoid valued-added taxes (VAT) from being imposed on the devices.
"A combination of supply and demand factors is causing demand to decline for gray-market cellphones," said Kevin Wang, director of China research at IHS. "On the demand side, the consumers in emerging markets who used to be the major purchasers of gray-market cellphones increasingly are preferring brand-name handsets. On the supply side, some gray-market handset makers have become branded manufacturers in order to promote their own names in developing countries."
Furthermore, it is becoming harder for gray-handset makers to differentiate their products from a sea of counterfeits and remain profitable. And with the Chinese currency appreciating in value, the gray handset business is no longer as profitable as it once was.
Getting the gray out
Asia-Pacific, including China, is the largest gray-handset market in the world, and the devices have a strong presence also in India, Vietnam, Thailand, Pakistan, Indonesia and the Philippines. The region, however, is not immune to decline, and the Asia-Pacific gray-handset market will contract this year to 103 million units, on its way to 53 million units by 2017.
The Middle East and Africa in 2012 surpassed Central and Latin America as the second-largest gray handset market, driven by increasing demand from countries such as Nigeria, Turkey, Egypt and Iran.
Gray-market handset shipments this year to the Middle East and Africa will decrease slightly to 38.2 million units.
Central and Latin America together represented the third-largest gray-handset market, with 37.3 million units forecast to be shipped in 2013.
Countries in Eastern Europe, such as Russia and Ukraine, also are major target markets.
Branded handsets growing in China
In China, the world's largest handset market, total cellphone shipments from Chinese companies will grow to 840 million units in 2013, up 2 percent from 2012. However, shipments will begin to decline starting in 2014, IHS believes.
Within the Chinese smartphone space, shipments this year will grow to 361 million units, offsetting the decrease in shipments of feature phones from the Chinese companies. China shipments this year also will grow in the ULCH segment, driven by demand from low-income consumers in developing countries buying the Chinese handsets.
Source: www.iSuppli.com
