Tech Brew Ride Home - Tue. 02/01 – The Premium Smartphone Market, And The Premium-Premium

Starting point is 00:00:00 On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme right home for Tuesday, January 2nd, 2024. I'm Brian McCullough today. Telegram has completely redesigned its app. Microsoft has brought co-pilot to iOS. Camera makers are remaking their hardware for the age of AI. There's the premium smartphone market,

Starting point is 00:00:49 and then there's the premium premium market segment, and those are the only parts of the smartphone market you want to be in. And will 2024 be the year the internet gets weird again? Here's what you miss today in the world of tech. Telegram is rolling out version 10.5.0 offering what they're calling totally redesigned voice and video calls with new animations and backgrounds while using fewer resources. Quoting 9 to 5 Mac. While messaging is the core aspect of telegram, voice and video calls are also super useful, especially as they're also end-to-end encrypted. In this latest update, Telegram has redesigned the UI for voice and video calls with new animations and a better overall look. And notably, this comes with a boost to performance as the new UI is less resource-intensive. The announcement post also says that call quality has been improved and that more improvements are coming in 2024, end quote. That improved resource thing has something to do with what they're calling the Thanos snap effect, which is basically just a new animation that happens when you delete a message. Apparently, the animation itself is so much more resource and energy efficient that, you know, over billions of uses, it has a real impact. Also, did you know that a la Open AIs build your own GPT ecosystem, Telegram, was,

Starting point is 00:02:03 early to the bot game, quoting from their announced post. Telegram's free bot platform lets developers integrate any kind of service into the telegram ecosystem, from simple chatbots to powerful mini-apps that can replace any website. We're closing this year with the largest update to the bot platform in Telegram's history. Among dozens of new features, bots can now react to messages and manage reactions, quotes, and links, send replies to other chats or topics, and much more, end quote. Bitcoin has risen above $45,000 a coin for the the first time since April 2022, after gaining 156% in 2023, its best yearly performance since 2020.

Starting point is 00:02:46 Although, that is still far off its $69,000 per coin peak, which it will never not be perfect that Bitcoin's peak was 69, quoting Reuters. Ether, the coin linked to the Ethereum blockchain network, was 2.6% higher at $2,414 on Tuesday, having surged 91% in 2023. Crypto stocks, which closely tracked Bitcoin prices, surged in U.S. pre-market trading with riot platforms, Marathon Digital, and Clean Spark gaining between 11.3 and 14.8% after Sharp falls in the final trading days of 2022. U.S. Crypto Exchange, Coinbase rose 6.3% and software firm and Bitcoin investor Microstrategy added 9.4%. End quote. So why the rally? Well, you can buy into the Matt Levine theory that crypto and especially Bitcoin,

Starting point is 00:03:36 is basically just a tracking stock for the overall stock market, but especially for tech stocks. We've discussed 2023 as being the turnaround year for the tech industry, but if you look closely, that turnaround happened in the summer. Most of the recovery, at least if you look at stock prices for tech companies came in the second half of the year. Sure enough, the price chart for Bitcoin looks almost identical. In the summer, it was still in the low 20K per coin range it had been in for while. Most of the recent price surge for Bitcoin came in Q4. But remember, a lot of people still think U.S. securities regulators will sign off on at least a couple of the 13 spot Bitcoin ETFs that have applied to begin trading. But there are other theories out there. Bitcoin tends to do well in

Starting point is 00:04:20 election years. 2020 saw a 304% rise in Bitcoin. And also there are the havenings, which coincidentally happen every four years on the election cycle. The previous haveonings came. The previous haveonings came in 2012, 2016, and 2020. Guess when the next one is? You know what? Let's just keep going with this turn of the year trend spotting. Twenty-twenty-three was also a really bad year for the global hardware market. There were weaknesses in overall smartphone sales this year. Counterpoint research has previously estimated that smartphone sales declined five percent year-over-year, moving only 1.2 billion units. That's down 23 percent from the peak year of smartphone sales, which was 2017, and it puts us almost on par with what the smartphone market was all the way back

Starting point is 00:05:14 in 2013. In other words, smartphone sales this year are back to where they were about a decade ago when smartphones were still kind of newish. But there's one area of the market where Counterpoint says smartphone sales are growing, the premium smartphone market, the market for smartphones selling at $600 or more. That market continues to grow. It grew 6% in 2023. But, and listen carefully here, The real news is that the premium smartphone market, the expensive end of the market, continues to increase its overall share of the smartphone market. Basically, one-fourth of all smartphones sold this year were the expensive ones. In 2016, only 6% of the smartphone market was the high-end. This year, it's 24%. Hmm, high end of the market. Who does that help? Apple, of course,

Starting point is 00:06:02 though there is some nuance in the numbers for them, quoting Counterpoint. The premium segment is likely to capture close to one-fourth of the global smartphone market sales and 60% of the revenues in 2023. Over the past few years, the premium segment has emerged as a growth area in an otherwise weak market. Commenting on the premium market's growth, senior analyst Vermun Mishra said, quote, there's been a shift in consumer buying patterns in the smartphone market. Considering the importance a smartphone holds, consumers are willing to spend more to get a high-quality device that they can use for a longer period.

Starting point is 00:06:33 owning the latest and greatest flagships has also become a status symbol for many consumers, especially in emerging markets, where they are jumping directly from the mid-price band to the premium band. Further, these devices are increasingly becoming more affordable due to promotion reasons and financing options, end quote. Apple continues to be the premium market's undisputed leader, however, compared to 2022, its share has declined this year. This is mainly due to Huawei's resurrection in China, driven by the Mate 60 series. Samsung has also gained share, driven by its S-23 and foldable series. Fultables have also emerged as a differentiator in the premium

Starting point is 00:07:08 market, end quote. More on that in the next segment. Apple's share of the high-end market was 71%, which was down from 75%. Huawei had 5% up from 3%. Samsung basically held steady. One more thing, premium market sale growth has been fueled by China, India, Middle East and Africa, and Latin America. Premium sales are growing in not the wealthiest end of the market. There's also a Also, the premium premium segment of the market. Let's call it ultra premium. Phones price at $1,000 and above. And that market segment, it captured over a third of the premium market segment. So the premium of the premium is growing within the premium. One more thing real quick. When I do segments like this with lots of numbers and lots of graphs and charts, I worry that your ears glaze over at all

Starting point is 00:07:57 the numbers. Numbers, I think are better visually. So I did a quick experiment this morning. I produced a quick YouTube video of this exact segment you just heard, but with all of the visual details I just read to you. The bottom link in today's show notes is a link to that YouTube video. Check it out and let me know. If I occasionally did this, if I produced YouTube videos for segments that scream out for visuals and numbers, would that be useful or not? And one more angle on this, also from Counterpoint, I've been wondering several years into producing foldable phones, have foldable phones become a thing for the smartphone market or not? Is there a meaningful foldable phone market at all? Well, Counterpoint also says about 16 million foldable phones were sold in

Starting point is 00:08:44 2023. That's just 1.3% of the $1.2 billion smartphone market. But Counterpoint also argues that foldables are starting to gain traction, at least in the U.S. and China. Counterpoint says foldable phones might capture as much as a third of that premium market that we just spoke about. The phones costing more than $600 by 2027, quoting the Financial Times. This is the year people in the industry really dived in, said Ben Wood, an analyst at CCS Insight. Everybody now is betting on this except Apple. The iPhone maker has yet to show any interest in the category, though. Patent filing suggests it may one day introduce an iPad that folds in half. Every other big smartphone maker has followed Samsung into the market, including Google's Pixel

Starting point is 00:09:25 Fold and Chinese alternatives from Huawei, Apo, and Jaume. We believe foldables are the future of smartphone devices just like electric cars were to the auto industry, said Bon Zhang, UK chief executive of honor, we're approaching a crucial tipping point where foldables may soon become mainstream, end quote. Analysts say that broader adoption of foldables is being held back because consumers are worried about durability still. You know, will that foldable screen last or will it crack and the hinges and all that? Camelist says the return rates of foldable devices are as high as 5 to 10%, which is crazy. How many people are turned off by the whole foldable segment? because they try foldables once and the thing breaks. But that could change over time as the tech

Starting point is 00:10:05 gets better and the reputation for durability increases. There's also the problem of the cost of foldable phones right now. Forget premium being phones above $600. Some foldables are more than $2,000. But what if that price starts to come down as you would expect it would do so after a few years? And we were just speaking about how the ultra-premium part of the market is the part of the market that's growing anyway. Chinese manufacturers like Honor and Huawei say at least in China, sales of foldables doubled year over year. By the way, final bit of numbers for you, Samsung dominates the foldable market with 73% share globally. Camera makers Nikon, Sony, and Canon are developing camera tech that embeds digital signatures into images so that they can be distinguished

Starting point is 00:10:55 from realistic AI-generated fakes, quoting NICA Asia. Nikon will offer mirrorless cameras with authentication technology for photojournalists and other professionals. The tamper-resistant digital signatures will include such information as date, time, location, and photographer. Such efforts come as ever more realistic fakes appear, testing the judgment of content producers and users alike. Deep fakes of former U.S. President Donald Trump and Japanese Prime Minister Fumio Kishita went viral this year. The digital signatures now share a global standard used by Nikon, Sony, and Canon. Japanese companies control around 90% of the global camera market. quote. Yes, that global standard is called Verify. You can check an image free of charge,

Starting point is 00:11:37 and if the image was created with AI or otherwise altered, Verify will tell you it has no content credentials. In the spring, Sony will release technology to incorporate digital signatures into three professional-grade mirror-less SLR cameras via a firmware update. They're considering making the technology compatible with videos as well. When a photographer sends images to a news organization, Sony's authentication servers detect digital signatures and detects. whether they are AI generated. Sony and the Associated Press field tested this tool in October. Canon will release a camera with similar features as early as 2024. The company is also developing technology that adds digital signatures to video. Canon put together a project team in 2019

Starting point is 00:12:17 and has formed a development tie-up with Thompson Reuters and the Starling Lab for Data Integrity in Institute co-founded by Stanford University and the University of Southern California. In addition, Canon is releasing an image management app to tell whether images are taken by humans. Google is coming at this from the other side of the equation. In August, they released a tool to add invisible watermarks to images that have been AI generated. Real quick, I want to catch you up on the fact that while we were away, Microsoft launched Microsoft Copilot for iOS and iPadOS, a free chat GPT-like app that supports GPD4 and Dolly 3, three days after its Android launch, which I think I told you about last week. I don't remember at this point, quoting the verge.

Starting point is 00:13:03 The app gives you access to Microsoft co-pilot formerly BingChat and works similarly to OpenAI's ChatGPT mobile app. In addition to letting you ask questions, draft emails, and summarize text, you can also create images through an integration with the text-to-image generator Dolly 3. And quote, the free version of ChatGPT uses GPT3.5, but this new co-pilot on iOS steps it up by giving you access to GPT4, and you don't need a subscription for it, so that's pretty compelling. Microsoft, remember, is rebranding Bing Chat into Copilot, aiming to deliver an experience akin to ChatGPT, but all on its own. There's now a dedicated web experience for Copilot, making it distinct from the usual Bing interface. Finally today, also from the weekend, friend of the show, guest on the show, Anil Dash, had an interesting essay up in Rolling Stone of all places, arguing that in 2024, the Internet could see the biggest reshuffling of power on the Internet in about 25 years.

Starting point is 00:14:06 years due to what he calls a resurgent human web, also regulators forcing tech giants to open up. So sticking with the sort of old year, new year cadence this episode has sort of become, quote, it's a dramatic, messy era on the internet. Everything is changing rapidly. There's broad dissatisfaction with the dominant search engine and activists are worried about the privacy implications of increasingly intrusive online surveillance. While investors proud on about esoteric topics like digital currencies and virtual reality back in the real world, are concerned with how hard it is to message all their friends on the many different platforms that they're using and perhaps a bit curious about the new social networks that keep popping up.

Starting point is 00:14:45 Across today's internet, the stores that deliver all the apps on our phones are cracking open. The walls between social media platforms are coming down as the old networks fail. The headlong rush towards AI is making our search engines and work apps weirder and often worse. But amidst it all, the human web, the one made by regular people, is resurgent. Consider the dramatic power shift happening right now in social media. Twitter's slide into irrelevance and extremism as it decays into X has hastened the explosive growth of a whole host of newer social networks. There's the nerdy vibes of the non-commercial Mastodon communities, each one with its own set of Dungeons and Dragons rules to play by. The raucous hedonism of blue sky, like your old Tumblr timeline, at its most scandalous.

Starting point is 00:15:23 And the, at least it's not linked in, noisiness of threads, brought to you by Instagram, meaning Facebook, meaning meta. There are lots more, of course, and probably another one is popping up tomorrow. But that's what's great about it. A generation ago, we saw early social networks like Live Journal and Djanga and Black Planet and Friendster and many others come and go, each finding their own specific audience and focus. For those who remember a time in the last century when things were less homogenous and different geographic regions might have their own distinct music scenes or culinary traditions, it's easy to understand the appeal of an online equivalent to different connected neighborhoods

Starting point is 00:15:56 that each have their own vibe. While this new, more diffuse set of social networks sometimes requires a little more tinkering to get started, they epitomize the complexity and multiplicity. of the weirder and more open web that's flourishing today. And then there's someone like Darius Kazemi, a computer programmer and community organizer who's been patiently toiling away building tools that let others build healthy, constructive human-scale online communities, the sort that are full of acts of kindness and genuine connection instead of incessant fights about hate speech. There's been a huge uptick and interest in Darius's work as networks like Twitter have fallen apart,

Starting point is 00:16:28 and a new generation discovers the joys of an internet that's intimate and connected as a friendly neighborhood. And this harkens back to that surprising and delightful discovery that often underpin the internet of a generation ago. Sometimes the entire platform you were using to talk to others was just being run by one passionate person. We're seeing the biggest return to that human run personal scale web that we've witnessed since the turn of the millennium with enough momentum that it's likely that 2024 is the first year since then that many people have had the experience of making new connections or seeing something go viral on a platform that's being run by a regular person instead of a commercial entity. It's going to make a lot of new things possible, end quote.

Starting point is 00:17:14 It is that time of year again, the time of year when we get to see how many times at the top of the show, I say 2023 instead of 2024, something, something still writing that on your checks. But, hey, as Anil says, human-powered media, I'm just one man, y'all, not a bot. So I'm sure I'll screw it up like I always do at time or two in the next few weeks. But also, as Anil says, experimentation. I'm continuing to experiment with more ways to better catch you up on what you missed in the world of tech. So do check out that YouTube video that I did of the smartphone segment. Very bottom link in today's show notes. If occasionally being visual is helpful, we might do more of it. Talk to you tomorrow.

Tech Brew Ride Home - Tue. 02/01 – The Premium Smartphone Market, And The Premium-Premium

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