China's Smartphone Market to Overtake U.S.; Apple's Partner Foxconn Opens New iPhone Plant in China; BlackBerry Maker Posts Loss

China smartphone market 'to overtake US'

Macrh 16, 2012

AFP - China is set to be the biggest smartphone market this year after shipments in the second-half of 2011 outstripped the US, a technology research firm said.

Figures by US-based International Data Corporation (IDC) indicate China will account for 20.7 percent or almost 137 million units of the global smartphone market from 18.2 percent in 2011.

In contrast, the US share of the overall market is expected to decline to 20.6 percent this year from 21.3 percent in 2011, said IDC, which is projecting 660 million smartphones will be shipped in 2012.

"(China) smartphone shipments are expected to take a slim lead over the US in 2012 before the gap widens in the coming years," said Wong Teck Zhung, IDC's regional senior market analyst with the client devices team.

"There will be no turning back this leadership changeover."

Much of the growth in smartphone shipments in China, and also for the other emerging markets such as India and Brazil, are being fuelled by mobile handsets running on Google's Android platform, said IDC.

"A lot of the Android models in China are priced competitively," said Melissa Chau, IDC's regional research manager.

"That is actually driving the huge growth."

Chau said the average price of a non-Apple smartphone in China sold for $324 excluding telco subsidies last year while an iPhone retailed at a much higher $760.

Apple CEO visits Foxconn's iPhone plant in China

March 29, 2012

Reuters - Apple Inc's Tim Cook, on his first trip to China as the chief executive officer, has visited an iPhone production plant run by the Foxconn Technology Group, which is being accused of improper labor practices.

China is the world's largest mobile market and already Apple's second-biggest market overall, but its growth there is clouded by issues ranging from a contested iPad trademark to treatment of local labor.

Picture handouts dated March 28 and e-mailed to Reuters show Cook seen smiling and meeting workers in the newly built Foxconn ZhengzhouTechnology Park in the north central province of Hebei. The facility employs 120,000 people, the handouts said.

Foxconn is a major part of Apple's global supply chain, assembling most of its iPhones and iPads, but has been hit by a string of worker suicides in recent years that activist groups blame on tough working conditions.

The group is the Taiwan parent of Hong Kong-listed Foxconn International Holdings and Taiwan-listed Hon Hai Precision.

Cook took the reins at Apple in August after the death of the firm's visionary founder, Steve Jobs. His closely guarded itinerary has included talks with Vice Premier Li Keqiang, Beijing's mayor and a visit to one of Apple's two stores in the capital.

On Wednesday, state media reported that China's vice premier promised Cook the country would boost intellectual property protection.

"To be more open to the outside is a condition for China to transform its economic development, expand domestic demands and conduct technological innovation," the official Xinhua news agency cited Vice Premier Li Keqiang as saying.

Apple has tie-ups with China Telecom and China Unicom to sell its iPhone, with the only other Chinese carrier, China Mobile, the country's biggest mobile operator, also looking to clinch a deal.

Apple is embroiled in a long-running dispute with Proview - a financially weak technology company that claims to have registered the iPad trademark - that is making its way through Chinese courts and threatens to disrupt iPad sales.

Apple, Foxconn pledge to revamp worker conditions

March 29, 2012

Reuters - In a landmark development for the way Western companies do business in China, Apple Inc said Thursday it had agreed to work with partner Foxconn to substantially improve wages and working conditions at the factories that produce its wildly popular products.

Foxconn - which makes Apple devices from the iPhone to the iPad - will hire tens of thousands of new workers, clamp down on illegal overtime, improve safety protocols and upgrade worker housing and other amenities.

The moves came in response to one of the largest investigations ever conducted of a U.S. company's operations abroad. Apple had agreed to the probe by the independent Fair Labor Association in response to a crescendo of criticism that its products were built on the backs of mistreated Chinese workers.

The Association, in disclosing its findings from a survey of three Foxconn plants and over 35,000 workers, said it had unearthed multiple violations of labor law, including extreme hours and unpaid overtime.

Apple, the world's most valuable corporation, and Foxconn, China's biggest private-sector employer and Apple' main contract manufacturer, are so dominant in the global technology industry that their newly forged accord will likely have a substantial ripple effect across the sector.

Working conditions at many Chinese manufacturers that supply Western companies are considerably inferior to those at Foxconn.

"Apple and Foxconn are obviously the two biggest players in this sector and since they're teaming up to drive this change, I really do think they set the bar for the rest of the sector," FLA President Auret van Heerden told Reuters in an interview.

More immediately, the Apple-Foxconn agreement will raise costs for other manufacturers who contract with the Taiwanese company, including Dell Inc, Hewlett-Packard, Amazon.com Inc, Motorola Mobility Holdings, Nokia Oyj and Sony Corp.

The agreement will likely result in higher prices for consumers, though the impact will be limited because labor costs are only a small fraction of the total cost for most high-tech devices.

Foxconn said it would reduce working hours to 49 hours per week, including overtime, while keeping total compensation for workers at its current level. The FLA audit had found that during peak production times, workers in the three factories put in more than 60 hours per week on average.

To compensate for the reduced hours, Foxconn will hire tens of thousands of additional workers. It also said it would build more housing and canteens to accommodate that influx.

Apple CEO Tim Cook, who company critics hoped would usher in a more open, transparent era at Apple after he took over from the late Steve Jobs last fall, has shown a willingness to tackle the global criticism head-on.

The much-anticipated report marks the first phase of a probe into Apple's contract manufacturers across the world's most populous nation. With 1.2 million workers, Foxconn - an affiliate of Taiwan's Hon Hai Precision Industry - is by far Apple's largest and most influential partner.

BlackBerry maker posts loss; some executives exit

March 29, 2012

Reuters - Research In Motion said on Thursday several senior executives resigned as the BlackBerry maker posted a quarterly loss, stung by slipping smartphone shipments and limited deliveries of its poor-selling PlayBook tablet.

The company reported a fiscal fourth-quarter loss of $125 million, or 24 cents a share, as it booked writedowns on its BlackBerry 7 phones and goodwill.

On an adjusted basis, net income dropped to $418 million, or 80 cents a share, on revenue of $4.19 billion in new CEO Thorsten Heins' first quarter as chief executive. A year ago it earned $934 million, or $1.78, on revenue of $5.56 billion.

Analysts, on average, had expected RIM to earn 81 cents a share on revenue of $4.54 million, according to Thomson Reuters I/B/E/S.

The company shipped 11.1 million BlackBerrys and more than 500,000 PlayBooks in the three months to March 3.

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