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Counterpoint Research https://www.counterpointresearch.com Technology Market Research Thu, 02 Jul 2020 14:09:02 +0000 en-US hourly 1 https://www.counterpointresearch.com/wp-content/uploads/2017/06/favicon_counterpoint-150x150.png Counterpoint Research https://www.counterpointresearch.com 32 32 Qualcomm brings 5G Support, 120Hz Screen Refresh Rate and more to Budget Phones with Snapdragon 690 Mobile Platform https://www.counterpointresearch.com/qualcomm-brings-5g-support-120hz-screen-refresh-rate-and-more-to-budget-phones-with-snapdragon-690-mobile-platform/ Thu, 02 Jul 2020 12:48:31 +0000 https://www.counterpointresearch.com/?p=30485 The Snapdragon 690 mobile platform is built on the 8nm node. The platform brings Sub-6Ghz 5G with support for both […]

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The Snapdragon 690 mobile platform is built on the 8nm node.
The platform brings Sub-6Ghz 5G with support for both SA and NSA bands.
Snapdragon 690 also supports 120Hz screen refresh rate, 4K HDR video capture.

At the IFA 2019 trade show in Berlin, Qualcomm announced its plans of expanding the 5G portfolio beyond flagship chipsets. At the Snapdragon Tech Summit in December 2019, Qualcomm announced the flagship Snapdragon 865, along with Snapdragon 765/765G 5G mobile platforms. Now, six months later, Qualcomm has also announced the Snapdragon 690 mobile platform which brings 5G and other premium features at a more affordable price point.

The Snapdragon 600-series chipsets are widely used in smartphones under the US $300 price point. It is the sweet spot and highly contested segment in major smartphone markets. Smartphones under $300 already come with quad-camera setups, fast-charging batteries, in-display fingerprint scanners, and more. The addition of 5G among other features will make these smartphones even more attractive in 5G markets where consumers want to try out the next-gen connectivity without spending a premium.

Snapdragon 600 Series Leads Mid-Tier Smartphone Segment

counterpoint qualcomm sd600 series percentage shareQualcomm Snapdragon 690 SoC: Key Features

Fast Performance, Energy Efficient

The Snapdragon 690 mobile platform brings key improvements over Snapdragon 675 platform. It is built on Samsung’s 8nm LPP process node making it highly efficient as opposed to 11nm node of Snapdragon 675.

The chipset comes with an octa-core CPU featuring Kryo 560 cores in big.LITTLE architecture. Two of these are Cortex-A77 based performance cores clocked at up to 2GHz, whereas six are Cortex-A56 based efficiency cores clocked at up to 1.7GHz.

Taking care of the graphics is the Adreno 619L GPU. The chipset supports up to 8GB of LPDDR4x RAM. Qualcomm claims that the new chipset offers 20% faster CPU and 60% faster graphics performance over the Snapdragon 675.

Advanced Connectivity

The highlight of the new chipset is the support for 5G connectivity, which is a first for 600-series. Just like the Snapdragon 765-series, the Snapdragon 690 also comes with an integrated modem. But while the X52 5G modem on Snapdragon 765 supports both mmWave and sub-6GHz, the X51 5G modem on the Snapdragon 690 platform only supports sub-6GHz.

The modem also supports Dynamic Spectrum Sharing (DSS), SA (standalone), and NSA (non-standalone) bands, FDD, TDD, and global multi-SIM support. It can offer peak download speeds of up to 1.2Gbps (LTE) and up to 2.5Gbps (5G). In terms of upload speeds, it can offer up to 210 Mbps (LTE) and up to 660 Mbps (5G).

The Snapdragon 690 SoC also brings support for Wi-Fi 6 (802.11ac/802.11ax) with Qualcomm FastConnect 6200 Subsystem, WPA3 security support along with target wake time, and Bluetooth 5.1 connectivity as well. What’s more, the chipset also offers NFC and NavIC GPS support.

counterpoint qualcomm snapdragon 690 features

Smooth Display, Fast Refresh Rate

Flagship smartphones now come with either a 90Hz or 120Hz screen refresh rate, offering smooth visual experience while gaming, watching movies, and videos. Even scrolling through webpages or Ui is smooth. Support for the 120Hz screen refresh rate is another first for the Snapdragon 600-series. It supports display resolution up to Full HD+, along with HDR10 and HDR10+ standards.

The feature is a good addition considering the current work from home (or staying home) scenario due to COVID-19 lockdowns. It is the time where content consumption has increased, where consumers are watching videos and TV shows on smartphones, making video calls to connect with colleagues, family, and friends. A lot of users also end up playing mobile games, and having a screen with a higher refresh rate means enhanced user experience.

192MP Camera Support, Improved Video Recording Capabilities

In the photography department, the Snapdragon 690 SoC supports high-resolution camera sensors up to 192MP. Yet another first for the 600-series chipset is the support for 4K HDR video capture with portrait mode. Slow-motion video capture in HD (720p) resolution and up to 240fps is supported. The Hexagon Tensor AI accelerator has also made it to the chipset, which enables smarter on-device experiences such as the smooth transition between camera lenses, social media filters, voice, and security features.

Talking about 5G smartphones outlook, research analyst, Parv Sharma, said “We expect 19% of the smartphone shipments in 2020 will be 5G capable and this share would grow to 67% by 2024. The penetration of 5G in the above price bands will be the key to mass adoption,”

He further added saying, “in 2020Q1 around 10% of the total smartphone sales were from the Qualcomm Snapdragon 600 series. This Snapdragon series is catering to smartphones in the USD100-USD399 bands, around 90% of the smartphones using the 600 series were in these bands. The availability of 5G in the Snapdragon 600 series will provide an impetus towards the growth of 5G in the low to the mid-end smartphone market, thereby driving global 5G penetration.”

Conclusion: Bringing 5G to Lower Tier, A Key To Drive Adoption

5G has been a buzzword for the past few years, and it started to proliferate in China and the Western markets in 2019. Before the coronavirus outbreak, we were expecting 2020 to be a breakout year in terms of device availability, network rollouts, and coverage. 5G has become a default feature and a key selling point for premium smartphones, but COVID-19 impact signals a possible shift in consumer buying intention.

Our recent Consumer Lens Study reveals one in three smartphone buyers will cut their spending by 20% on their next smartphone purchase. The study was conducted across seven major smartphone markets such as Spain, Italy, India, the USA, and the UK among others. With tough economic conditions across the globe, we are also likely to see a lengthening replacement cycle.

Not everyone can afford a flagship smartphone to experience premium features, and OEMs are answering these consumer needs with affordable premium smartphones. Features like quad-cameras with hybrid zoom, fast-charging battery, high refresh rate display, and 5G have been made available on the affordable premium devices. But as consumer spending is likely to reduce, the Snapdragon 690 platform comes at the right time, which will make these features available on mid-range phones.

HMD Global, Motorola, Sharp, TCL, and LG are among the companies that are planning to release Snapdragon 690 powered smartphones in H2 2020.

Related Posts

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Podcast: COVID-19 To Impact Consumer Smartphone Spending by More Than 30% https://www.counterpointresearch.com/podcast-covid-19-impact-consumer-smartphone-spending-30/ Thu, 02 Jul 2020 12:41:12 +0000 https://www.counterpointresearch.com/?p=30475 It’s been a little over six months since the COVID-19 outbreak started, and a lot of things have changed. To […]

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It’s been a little over six months since the COVID-19 outbreak started, and a lot of things have changed. To control the spread of the coronavirus, lockdowns have been imposed in several countries like the US, UK, India, and more. The lockdown may have helped in slowing down the virus spread, but it has severely impacted economic activities across the globe. At Counterpoint, we recently conducted our Consumer Lens Study to understand the changing consumer intention and attitudes during the pandemic.

Due to the coronavirus outbreak, a lot of people have lost jobs across different countries. This has affected their future income uncertainty. As a result, consumer buying behavior will strictly be limited to only the essentials. This also means there could be a reduction in their budget. Our Consumer Lens Study aimed to find out if consumers intent to cut their budget for the next smartphone purchase. Also, with social distancing norms in place, we wanted to find out if consumers will be looking for ‘low touch’ sales channels. For companies in the smartphone value chain, our latest podcast episode will help in understanding the consumer demand dynamics and calibrate strategies accordingly in these testing times.

Spending Intention on Purchasing of Smartphone

In the latest episode, “The Counterpoint Podcast” host Peter Richardson discusses the impact of COVID-19 on the consumer spending pattern with senior analyst Pavel Naiya and associate Arushi Chawla. In the podcast episode, Arushi talks about smartphone markets in which we conducted the study and the key findings. Pavel, on the other hand, sheds light on consumer sentiments over buying smartphones from Chinese companies. He also talks about how smartphone makers are coping up with the demand when consumers cannot go to the store and buy smartphones.

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OPPO Unveils New Flagship Reno 4 and Speeds Up its 5G Offerings https://www.counterpointresearch.com/oppo-unveils-reno-4/ Thu, 02 Jul 2020 07:52:32 +0000 https://www.counterpointresearch.com/?p=30479 On June 5th, OPPO unveiled its latest flagship Reno 4 series through an online product launch. OPPO has placed high […]

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On June 5th, OPPO unveiled its latest flagship Reno 4 series through an online product launch. OPPO has placed high importance on the success of Reno 4 series to help it regain its foothold in the mid-to-high end segment.

In April 2019, OPPO decided to revamp its flagship series and signaled the change by renaming it from the R-series to Reno. However, the new flagship Reno series failed to maintain the glory of the previous R-series. The OPPO R9 still holds the record for the best-selling Android model with 40 million units shipped globally. The Reno series have not been as popular as R series because it takes time to build a new series that echo with consumers. In addition, the Reno series came at a time when the mid- to high-end price segment was becoming increasingly competitive in China.

The new Reno 4 series may be a game changer for OPPO. Carrying on OPPO’s tradition of excellence in photography and video technology, OPPO has further enhanced its video capabilities in the Reno 4 series.  Using OPPO’s self-developed Moonlight Night View Video Algorithm, brightness can increase 74.4% and clarity can increase 33.7% in night-time videos.  OPPO has also upgraded its video stabilization function to capture steady and smooth videos. Another distinctive difference from past generation Reno series is the Reno 4’s slimness and light weight; Reno 4 and Reno 4 Pro weigh only 183g and 172g, respectively.

In addition, OPPO has made it more friendly to vloggers and opened its functions to one of the most popular short video apps, Kuaishou. Kuaishou users can directly utilize OPPO’s features in making short videos.  This bodes well for OPPO’s younger customer base which are more avid vloggers.

Powered by Qualcomm’s Snapdragon 765G SoC, the Reno 4 series joins OPPO’s family of 5G offerings. Though OPPO lagged behind other Chinese OEMs in 5G offerings, OPPO has started to expedite its 5G roadmap and will have no new 4G product launches in the China market.

Like the marketing schemes used for OPPO’s popular R series, OPPO will use celebrity endorsement as a key marketing strategy for Reno 4. OPPO has invited young musician Ouyang Nana to be the celebrity spokesperson for the Reno 4 series and asked social media influencer Li Jiaqi to host a live broadcast sale.

Aside from the Reno 4 and Reno 4 Pro, OPPO also launched three IoT products, Enco W51 TWS, smart band and 5G CPE T1. IoT products will become an important addition to OPPO’s smartphone product line and the Company will invest RMB 50 billion (~USD7.1 billion) in R&D over the next three years in the areas of 5G, AR, IoT and AI.  OPPO has some advantages in developing IoT products such as a wide distribution network from its smartphone business and content from its sister company Xiao Tian Cai. However, its late start compared to Xiaomi and weaker telecommunications technology compared to Huawei could hamper its growth potential in the IoT market.

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Weekly Update: COVID-19 Impact On Global Automotive Industry https://www.counterpointresearch.com/weekly-updates-covid-19-impact-global-automotive-industry/ Tue, 30 Jun 2020 04:30:39 +0000 https://www.counterpointresearch.com/?p=27637 To receive weekly updates on the COVID-19 situation and our latest research straight to your inbox, click this link to register […]

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Click here to get the latest weekly updates on the COVID-19 situation and its impact and implication on the various sectors.

Week 12: Micro mobility – Silver linings amidst the pandemic?


Micro mobility globally has been severely impacted by COVID-19 with lockdowns resulting in reduced ridership. The road to recovery is a tough one, but Counterpoint believes micro-mobility will be the biggest beneficiary from COVID-19 among all forms of shared mobility.

Citizens and governments in many cities are becoming increasingly aware of the benefits of micro-mobility, and companies should prepare for coming opportunities to not only survive, but to grow over the long term.

Counterpoint: COVID19 Impact on Micromobility

Key indicators showing potential for rebound as lockdowns ease:

  • Changing customer preferences – businesses are realising productivity is not an issue. In fact, it has increased in some cases as employees work from home. This is expected to become permanent for many companies moving forward, leading to a surge in short distance travel. People are more likely to choose quick and eco-friendly e-bikes and e-scooters as they travel short distances around their home rather than taking long commutes.
  • Amidst the economic downturn, choices for last mile and personal transportation will need to be economical. E-scooters, e-bikes and kickboards are significantly cheaper than owning a car.
  • Concerns around social distancing will encourage people to avoid public transport, boosting take up of shared e-scooters and e-bikes. In China, bike share operators like Hellobike, Mobike and Didi Chuxing are seeing good growth after easing of lockdowns, as people reduce dependence on public transport.
  • Lockdowns have resulted in less pollution, increasing environmental consciousness amongst the general public. This is expected to benefit the sector in near future. Indeed, high pollution levels in many Chinese cities have boosted the profile of the sector, making bicycles and e-bikes an important mode of last mile transport.

Government support

To aid social distancing, governments are considering infrastructure investments to help the micro-mobility sector to grow.

  • The UK government is urging people to avoid public transport and instead use private vehicles, bicycles, or walk. It has announced an initial £250m (US$306m) emergency active travel fund (the first stage of a £2bn investment commitment) for EVs, cycling and walking infrastructure. Buildout of E-scooter trails in the country will be brought forward to 2020 from 2021. Pop-up bike lanes, wider pavements and safe junctions will be a part of the fund. £10m (US$12.2m) from the fund will be committed to street EV charging infrastructure.
  • Bogotá, Colombia has added 47 miles of cycling lanes to accommodate more riders and aid in social distancing. Cities such as Mexico City and London are benefiting from the current cycling infrastructure.
  • Other cities have blocked some roads to traffic, providing more space for pedestrians and facilitate social distancing. For instance, Oakland, California has restricted traffic on 74 miles, or 10%, of its roads, helping pedestrians and cyclists keep at least six feet apart.

Green shoots

As lockdowns ease, some e-bike companies are already seeing an increase in demand.

  • E-bike maker Vanmoof, which secured funding of $13.5m in May 2020, saw sales increasing 48% YoY during Feb-March period, and over 20% for the Jan-May period.
  • UK-based foldable bike manufacturer Brompton announced its online sales increased five-fold since the launch of the ‘Direct To Home’ service from the start of April.
  • E-bike sales in Germany have seen a significant increase from April with the easing of lockdowns, creating a shortage of e-bikes in many cities.


  • The global micro-mobility market recovery will likely start in 2021, or as we see stabilization in COVID-19 cases. A second wave of infections could delay the recovery further.
  • Most micro-mobility companies are relatively small and localized start-ups, with many already seeing losses before the pandemic started. The market will see consolidation as cashflow continues to tighten. Intel’s recent acquisition of Moovit, a mobility-as-a-service (MaaS) provider, for US$900 million signals the possibility of similar acquisitions in the sector.
  • E-bikes, e-scooters and kickboards are still illegal for travel on roads in many cities. Further, there is a lack of standardization for these types of vehicles.


  • Governments can play a pivotal role in the adoption of micro-mobility. The recovery will vary from country to country depending on favorable government policies, subsidies and infrastructure development.
  • Measures such as self-sanitizing handlebars, onboard sanitizers and periodic cleaning of vehicle fleets will become important to attract riders.
  • Innovative schemes and discounts can help micro-mobility companies through the tough times. For instance, two-wheeler sharing company Bounce is offering its bikes on a weekly and monthly subscription basis.

Utilization of existing vehicle fleets into logistics and food delivery can open up new revenue streams for micro-mobility companies. For instance, two-wheeler sharing company Rapido is looking to earn 25% of its revenues from logistics moving forward.

Author: Aman Madhok


Week 11: US May sales – Is the worst over?

Actual passenger vehicle (PV) sales reported for the US in May suggest the domestic auto industry could be on its way to recovery.

Reported May sales for PVs and light trucks came in at around 1.1m units, down 33% YoY but an improvement over April and March’s respective 45% and 38% declines. Further, breaking the 1m monthly mark for the first time this year, May volumes showed significant improvement over the 350,000 units sold in April, with light trucks being a bright spot.

US auto sales on the rebound

May is traditionally a critical month for the US auto industry as it marks the beginning of the summer sales season. With almost all states having eased COVID-19 restrictions, most automakers in the country have reported sales rebounds during May.

Monthly sales declined over 30% YoY for General Motors, Ford, and FCA. Leading Korean carmaker Hyundai saw a 13% YoY decline, a 5% pt improvement from April. Honda saw a May YoY sales drop of 17%, with trucks performing much better than cars – down 10%  and 25%, respectively. Toyota reported a YoY sales decline of 26%, May’s unit sales were almost double that of April, which fell 56% YoY.

It is possible April could be the low point in a possible V-shaped recovery, with states re-opening and dealerships returning in May. The month has shown significant sales improvement and recovery, highlighting pent-up demand. As well, extraordinary promotional offers by dealers and automakers alike have brought consumers back to showrooms and encouraged buying.

Counterpoint believes that May’s sales pace, while lower than last year, is indeed the start of recovery for the industry. Automakers are already scrambling to replenish inventories as customers return to showrooms. However, there is still a long road ahead, and we will continue to track the market over the coming weeks.

Production hiccups stalling assembly lines

As many states across the country eased shelter-in-place restrictions during the month, May also brought attempts by auto OEMS looking to return to normalcy with restarts at their assembly plants.

However, supply chain issues continued to plague production lines at major auto plants, as they faced problems from suppliers in Mexico. While most plants in the US and Canada restarted by mid-May, most manufacturers in Mexico had not resumed operations even by the end of the month. Given the inter-dependency of the North American automotive supply chain, most plants in the US continue to face parts shortages, resulting in sporadic production operations. It may still be a few months before we see some stability.

Counterpoint estimates prolonged plant/supplier shutdowns have resulted in the loss of nearly 3m units of vehicle production in H1. Anticipating slower line-speeds and reduced demand over Q3 and Q4, we expect full-year 2020 output losses to increase to over 3.5m units, a 22% decline from last year.

In any case, with automakers already concerned about record low inventories at dealerships, carmakers have been looking to continue working over normally planned shutdowns in summer.

Keen on riding the wave in customer demand, especially for light trucks, General Motors has called off its traditional two-week summer shutdown and will continue to produce vehicles at most of its North American plants.

Similarly, Ford Motor Company has shared that most of its US assembly plants will be reducing their annual summer shutdowns to one week.

As well, most other auto OEMs are considering deferring annual summer breaks to later in the year.

Sales recovery to hit headwinds?

The question going forward is whether recovery signs will continue into June and further out.

While recent trends suggest sales are showing steady gains and automotive manufacturing in North America is gradually coming back on stream, there is also the possibility of a resurgence of the virus bringing further economic headwinds.

However, Counterpoint continues to maintain its current outlook for the US auto PV and light trucks market at a base case estimate of almost 13.4m units in 2020, marking a 24% YoY contraction.

Exhibit 1: US Vehicle Sales,’000 units

Counterpoint: Coronavirus Pandemic Impact on US Automotive Industry


Week 10: Changing consumer behaviors and how mobility companies can adapt

The pandemic is affecting most sectors of the economy, especially shared and smart mobility operators. Public-transport usage in major cities has declined anywhere from 70 – 90% of normal loads, and operators are now required to follow strict protocols like requiring face coverings, temperature scans and limiting the number of riders in trains and buses to ensure social distancing.

Similarly, ride-hailing mobility usage has plummeted dramatically, with several players suspending services during lockdowns. In the US, demand for Uber and Lyft fell by over 80% in April from pre-COVID levels.

Over the long term, the outbreak will have lasting impacts on shared mobility as the pandemic alters the economic, regulatory, and technology environment, as well as changing consumer behaviour.

Changes in consumer behavior and preferences

Mobility is an essential aspect of our lives, but how we get around in the future could be significantly different in the post-COVID world. Social distancing is the most significant driver of change in this new environment, with people rethinking their transport modes to avoid the risk of infection. Recent trends in China’s major cities are demonstrating that as bus and subway ridership drops, private cars, walking, and biking are gaining in popularity.

Personal vehicle use may be the winner in the short term, and app-based ride-hailing aggregators are seeing a dramatic decrease in consumers using their services as remote working becomes the norm.

Further demands are being made on share-car drivers and their companies to take responsibility for keeping vehicles clean and virus free. To adapt, mobility industry players are adjusting their tactics, with leading companies focusing on various strategies.


Lyft, which announced cuts and furloughs affecting hundreds in May, stated that rides on its platform in the US reached only 25% of pre-COVID levels during the month, with consumers slowly coming back in cities where lockdown restrictions were eased. Lyft drivers are now required to self-certify within their app of wearing a facemask before they are allowed to pick up passengers.


While the global number for June trip requests are picking up as several countries ease restrictions, rides are still significantly below last year’s levels. In an attempt to improve profitability, Uber has remained focused on its core businesses of ride-hailing and food delivery, and also announced cuts to its workforce. Uber also introduced a new feature requiring drivers to take a selfie of themselves wearing a facemask before logging onto the company’s network. Uber has also been providing disinfectant sprays to drivers, encouraging them to sanitize their cars regularly.

Didi Chuxing

With cities in China now officially re-opened for business, Didi Chuxing, the country’s largest ride-hailing app, is seeing ride-sharing demand coming back to levels similar to last year.  Since May, Didi has been using AI technology to authenticate that its driver-partners are wearing face masks.

Diverse regulatory and policy responses across regions

The current crisis is helping some regions move more quickly towards sustainable mobility, while others are looking to defer or relax regulatory mandates to support depressed automotive industries.

In some markets, incentives such as cash for turning in old cars is driving sustainability through replacement and also encouraging adoption of electric vehicles (EV).  In other regions, like the US and China in particular, regulators have considered relaxing emission targets in support of automakers.

Chinese regulators are also relaxing, at least for now, policies limiting personal vehicle ownership in order to facilitate social distancing. Many governments are also showing interest in dedicating space for pedestrians and cyclists, while some cities like New York are looking to close some streets to vehicular traffic.

Technology development 

Over the short to medium term, the pandemic could delay the development of advanced technologies, such as autonomous driving, as automakers divert research budgets to fund immediate cash requirements. Similarly, investments in micro-mobility and shared-mobility start-ups are expected to fall and could drive market consolidation.

The impact of COVID-19 on EV development will differ across regions. In China, we expect post-COVID EV sales to rebound, with continued investment in development. In Europe, while ramp-up of EVs may be delayed with historically low oil prices, stringent environmental regulatory pressures could remain a counter-balance. In the US, we could see EV demand stagnate should federal emissions regulations be eased and oil prices remain subdued.

Over the long term, however, autonomous vehicles, micro-mobility solutions and other technologies that support physical distancing will benefit. We believe that as the initial crisis subsides, customer demand for these solutions could soar.

How can mobility companies cope?

Even before the pandemic, mobility and automotive start-ups were suffering from slowing growth in major economies. Battered by lockdowns and movement restrictions, ride-hailers around the world have had to resort to cutting jobs and slashing costs.

Looking ahead as the pandemic gradually comes under control, mobility companies will need to look at developing detailed plans to scale up operations, not only focusing on where, but how. A portfolio review aiming to rationalise services can help focus on profitable operations and decide on which technologies are to be prioritised, so to emerge from the crisis leaner and stronger.


Counterpoint believes recent consumer behaviour changes in the mobility space will be temporary, and shared-mobility solutions, including public transit, will rebound. Micro mobility and last-mile solutions, too, will eventually recover, as cleaning and disinfection protocols are practised, with status updated on ride-hailing apps.

Now more than ever, it has become imperative for automakers and mobility operators to review their long-term strategy.

Exhibit 1: COVID-19 Impact to Global Automotive and Shared Mobility IndustryCounterpoint: COVID19 long and short term impact on automotive industry


Week 9: Poised for a rebound?  May’s mixed signals

As the effects of the pandemic are being brought under control, we are seeing gradual automotive sector recovery, though at varied rates.

With most parts of the world easing lockdowns in May, auto sales have begun to show some signs of improving. Prospects for China, having reopened earlier than most, and the US are looking more positive than for Europe.

In the short term, the global automotive industry appears to be poised for a rebound as manufacturers replenish dealer inventories and meet pent-up demand, especially with many consumers expected to take efforts to avoid public transport and ride-sharing.

Longer-term, however, Counterpoint sees a more gradual recovery, with dampened vehicle sales from Q1 carrying over into Q2. Supply-side issues will also cause problems, with stuttering production schedules from broken supply chains, financially stressed suppliers, and delayed new model launches limiting supply.

With some leading indicators now visible, we have decided to maintain our current 2020 PV forecasts. However, key risk factors of a virus resurgence remain high for some locations, with the possibility of markets going into lockdown again.

Below is our latest outlook, incorporating May sales updates from key global markets.


The first country to be impacted by the virus outbreak, China has been quick to recover from the pandemic, and PV sales are almost back to pre-coronavirus levels of growth. Largely on account of the automotive industry’s effective restart in March, sales and production activity approached normal levels in April, with PV sales up 4.4% YoY to 2.1m units. May saw further improvement, with sales rising 12% YoY to 2.1m vehicles.

Pent-up demand drove steady deliveries in April. This was further supported by government subsidies and intensive promotions and discounts offered by dealers. The momentum continued into May, raising our overall expectations for Q2.

However, domestic and global headwinds remain, and the market still faces a high level of economic uncertainty. Consumer confidence is fragile, with fear of unemployment and income loss dampening high ticket, discretionary purchases.

As a sustained, comprehensive recovery is still to be established, prospects for H2 remain cloudy and we maintain our current forecasts.


May sales are estimated at around 1.1m PVs, down 30% YoY, but an improvement to April and March’s respective declines of 45% and 38%. Easing of restrictions across most of the country helped May pass the one million mark.

Throughout the lockdowns, however, the market did demonstrate some resilience, with significant commercial activity continuing as vehicle sales were categorised an ‘essential service’ by many states.

While American retail consumers are coming out again to look at cars and trucks, facilitated by digital retail tools and appealing discount offers, fleet and commercial category buyers, particularly those in rental cars, are not. This is worrying as new vehicle sales to rental car companies accounted for about 10% of the overall market, or 1.7m vehicles, last year. Bankruptcy filings of Hertz and its parent company Advantage Rent A Car in the last week of May will likely weigh down US auto sales.

We maintain our current outlook for the US, with a 24% YoY contraction expected in 2020.

Europe and the UK

European car sales picked up slightly in May after a disastrous April. In Spain, May sales dropped over 72% to 34,000 units, and to almost half previous year totals in France, Italy and Germany, which saw sales of 96,000, 100,000, and 168,000 units respectively, as partial lockdowns remained. Overall, YoY sales for Western Europe fell over 57% in May, to 556,000 units.

For the UK, new car registrations were down 89% YoY in May, with 20,200 cars registered last month. Despite the drop, the figure marks an almost five times increase over new car registrations in April, when only 4,300 cars were sold. The Tesla Model 3 topped the UK new car sales chart for the second month running, with 850 units delivered, making up nearly 5% of all registrations.

With around half a million new cars registered since the beginning of the year, the overall UK market has halved in the first five months of 2020, compared to almost one million units registered during the same period last year. While showrooms in England have reopened after two months, dealerships in Scotland, Wales, and Northern Ireland are still shut.

Reopening’s have helped sales in Germany, with May sales falling by 50% compared to over 60% in April.

As we look ahead, Counterpoint is paying particular attention to any government announcements around fiscal policy or economic relief programs such as that planned for France and Germany, which are looking to lower VAT. While details will vary by country, recent announcements imply modest levels of incentives can be expected.

Even with some signs of improvement in May, the industry remains in crisis, with various stages of lockdowns expected for some time. Our outlook for Europe remains unchanged – a 26% contraction expected in 2020, with the possibility of a gradual recovery in H2 2020 as consumer sentiment improves with the easing of lockdowns.


After zero sales in April, preliminary shipment data for May suggests only 37,000 units were sent to dealerships, an 85% decline YoY, as the country started to open up gradually during the month.

With auto OEMs and dealerships estimated to be holding nearly 300,000 units of inventory – about two month’s stock based on current projected retailing rates – wholesale shipments over the next few months are expected to be difficult.

Overall consumer sentiment in the country remains weak, mostly because of the economic fallout of a complete nationwide lockdown lasting 50 days, depressing GDP forecasts, and increased caution around car loans. For any significant recovery to happen this year, it is critical that automakers and dealers have operations and consumer offers fully in place as the festive sales season commences during the last quarter of the year.

Our India sales forecast remains unchanged. Our base case outlook sees YoY passenger vehicles declining by 25% to around 2.1m units.


While having been a relative bright spot so far, the Japanese market worsened in May. Sales dropped, nearly 55% YoY to 218,285 vehicles, compared with a 29% YoY decline in April.

Consumer sentiment remained depressed, with expectations of an economic downturn curbing big ticket purchases. Also, the government’s declaration of a state of emergency and stay-at-home advisory, which ran into the Golden Week holiday in late April to early May, severely impacted sales, which normally spike during the annual holiday.

While overall economic activity shows some positive signs of recovery since lifting of restrictions in May, our outlook remains unchanged.

Revised Global Automotive Outlook

While varied signs of recovery began to show in May, Counterpoint Research remains cautious and we leave our earlier global automotive sales outlook unchanged at around 72m units for 2020, a 20.1% decline from 2019.

Exhibit 1: Global Automotive Sales (M units)

COVID19: Impact on Automotive Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Week 8: India’s Auto Industry to decline by at least 25% in all categories in 2020

India’s automobile industry, the fourth largest globally by volume, is headed for another year of significant declines as extended lockdowns impact production and consumer demand. Sales volumes of passenger and commercial vehicles are projected to drop to levels not seen in over a decade.

The storm continues

At the beginning of the year, the auto sector was already suffering in the midst of a challenging economy.  Compounding this, more stringent environmental and safety regulations, the growing popularity of shared mobility platforms and cautious lending by banks and non-banking financial companies (NBFCs) negatively impacted vehicle sales. COVID-19 is now making the situation far worse.

Based on data reported by the Society of Indian Automobile Manufacturers (SIAM), March passenger vehicle sales declined 51% YoY to 143,014 units. Sales of two-wheelers fell 40% to 866,849 units, and commercial vehicles declined 88% to 13,027 units. With a nationwide lockdown in effect from the last week of March, the industry saw zero production and sales of new vehicles in April.

Factories and dealerships struggle to resume operations

While automakers began partial operations in May, it has been an uphill struggle. Openings were allowed only after receiving due approvals from respective state authorities, and conditional to following safety protocols such as body temperature scanning, social distancing and ensuring high standards of sanitization.

Shutting down operations was far easier than reopening factories as companies need to manage complex synchronization issues. The resumption of operations requires OEMs to coordinate with hundreds of local and global suppliers, logistics partners and thousands of employees. The biggest challenges come from not having enough workers willing to come back and sufficient and continuous parts supply. It is likely plants across the country will function with a skeleton staff at least until July.

Slow dealership re-openings are another problem, with almost all vehicle sales delivered through them – online sales are a rarity and still under development. As of the last week of May, only 3,500 dealerships were operational around the country, representing 20% of the total network. And amongst these, half were operating only their service departments and not showrooms.

The sharp contraction in sales will also lead to a decline in average manufacturing capacity utilization. For the PV segment, effective annual capacity utilization is projected to drop down to as low as 45%, from 60% a year ago. Two-wheelers and commercial vehicles will drop to below 50% and 35%, respectively, from 65% and 51% a year ago.

Demand outlook for 2020

The lack of government policy intervention for the automotive sector in this year’s national budget and also recent fiscal stimulus packages combined with a lack of visibility around when social and economic demand conditions will get back to normal has resulted in Counterpoint revising our 2020 forecasts. Our base case outlook sees YoY passenger vehicles, two-wheelers, and commercial vehicles declining by 25%, 21% and 28%, respectively. CV sales in particular, have been languishing under the impact of a new axle load norms, and is unlikely to show much recovery this year with freight demand projected to remain low.

Recovery timing

Demand recovery can only be expected around the festive season in the last quarter of the year. With growing consumer preference for cheaper, personal transport, two-wheelers – motorcycles in particular, with their higher rural share – will likely be the first category to see a rebound. Should the government develop scrappage schemes and lower interest rates for vehicle loans, along with reduction in sales and road taxes, as seen across SE Asia, these interventions could accelerate recovery.

Despite the above challenges, we remain positive longer term in view of India’s comparatively low vehicle penetration – 110 two-wheelers and 32 cars per 1,000 – Australia has 740, Japan has 591 and China has 164 vehicles per 1,000 individuals. We expect recovery post-2022, helped by improvement in non-banking financial institutions and the overall economy. Combined with a young population, rapid improvements in road infrastructure, growth in rural demand and possible introduction of entry-level passenger cars, this could significantly boost consumer demand.

Exhibit 1: Key Factors Affecting the Market

Counterpoint: COVID19 Key Factors Impacting Indian Automotive Industry


Exhibit 2: India Vehicle Shipments1 (in Million Units)

Counterpoint: COVID19 Growth Rate of Indian Automotive Industry; Cars, Two-Wheelers and Commercial Vehicles

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Week 7: Southeast Asia Pressure Points

As the world continues to deal with COVID-19, economies are moving into recession. The automotive sector, with its large-scale production and tightly interconnected global supply chain, remains the worst impacted.

This week we focus on the impact to Southeast Asia, with ASEAN representing the fifth-largest auto market cluster in the world.

Lockdown measures introduced mid-March

Like many others, most ASEAN countries underestimated the risk of outbreak at the start of the year, with governments doubtful on it becoming a pandemic. Remaining tentative on diverting resources to public health, most ASEAN countries waited, introducing lockdown measures only around mid-March. As a result, key economic sectors in the region remained, for the most part, unaffected by the outbreak before this time – this included international travel, tourism, and export dependant businesses.

However, as the crisis erupted and lockdowns ensued, millions across the region rapidly began losing jobs as business came to a standstill. As immediate countermeasures, central banks across the region introduced rate cuts and easier lending terms to ensure liquidity. Governments also announced fiscal support measures including direct disbursement, soft loans, and tax cuts to mitigate the impact of the potential economic crisis.

The auto sector has been hit hard, with overall Q1 vehicle sales in ASEAN5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) falling to 683,000 – levels not seen in nearly a decade.

Declines for the month of March are the most revealing, with new vehicle sales plummeting around 40% YoY across ASEAN, and auto OEMs selling only 197,000 vehicles – this compared to 328,000 a year earlier. We expect April to be worse, with auto production remaining shut across the region last month and economic damage possibly worse than the 1998 Asian financial crisis.

Significant revisions to our Indonesia, Thailand, and Malaysia Automotive Outlook

Economic growth in the region was already slowing down due to US-China trade tensions, and lockdowns have only exacerbated the situation – especially in Thailand and Malaysia. The extent and duration of distancing measures have been severe, and we have reviewed our FY 2020 outlook in this updated context.


In Indonesia, SE Asia’s largest auto market by volume, vehicle sales saw a comparatively moderate Q1 decline of 7% YoY to 237,000 units, with negative lockdown effects mitigated by a mid-March rollout. Though skeptical early on, the government eventually announced a partial lockdown on March 18, allowing only essential businesses such as food, healthcare, banking, and utilities to operate; as a result, vehicle sales for the month dropped 15% YoY to 77,000 vehicles.

With the full effect of shutdowns to be felt in the weeks ahead, we project steeper YoY vehicle declines from April onwards. And with a recession imminent, Counterpoint estimates this year’s auto demand to fall 36% to 603,000 units.


One of the region’s largest markets, Thailand reported Q1 sales of 200,000 units, a YoY decline of 24% after an especially bad March, which saw a 42% YoY plunge to 60,000 units. This has worsened the shrinking market, which took a U-turn in 2H19 after two straight years of strong growth.

With a prolonged lockdown, Counterpoint expects broad-based economic challenges resulting in a 2020 GDP decline of -5.5%, the worst drop since the 1998 Asian financial crisis. We have revised this year’s outlook accordingly, and estimate new vehicle sales of 745,000 units, a 28% annual decline.


Malaysia was one of the worst-performing markets in the region with Q1 sales falling by over 26% to 106,000 units. The government implemented its Movement Control Order (MCO) from mid-March, prohibiting all interstate and international travel, and sales of non-essential items including automobiles. Sales plunged by almost 60% in March to around 22,000 units. With no new vehicle production and all dealers in the country closed, zero vehicle sales have been reported for April.

While Malaysia has begun to ease lockdowns, allowing resumption of partial manufacturing operations, restrictions on reaching full capacity at automotive plants remain in place until June 9. Counterpoint estimates Malaysia’s vehicle market this year to fall by over 29% to 426,000 units.

The Philippines and Vietnam

The Philippine market is fell in Q1 by over 16% YoY to 90,000 units, with the impact of the pandemic becoming evident only in March when the government began mid-month to lockdown the country’s most populace regions. We expect the full effect of the pandemic to become more apparent from April.

Vietnam was the region’s worst-performing market during the quarter, with sales estimated to have dropped around 32% YoY to 50,000 units. Its comparatively bad performance was due to Vietnamese authorities in February taking an earlier stand to contain the spread of the virus. Recently on May 20, the Vietnamese government, in a move to stimulate automotive demand, has approved plans to reduce vehicle registration fees by 50% till the end of the year.

2020 ASEAN vehicle sales outlook

We have revised our overall vehicle sales projections for 2020 and now estimate a YoY decline of 30% to 2.3m units, with country breakdowns as follows:

Exhibit 1: ASEAN5 Vehicle Sales, Q12019 & Q12020, ‘000 Units

Counterpoint: COVID19 ASEAN Automotive Sales


Exhibit 2: ASEAN5 Vehicle Sales, 2016-2020E, ‘000 Units

Counterpoint; COVID19 ASEAN Annual Vehicle Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Week 6: Challenges in Syncing Supply Chain

As the COVID-19 pandemic broke out in China at the beginning of the year, vulnerabilities in the global automotive supply chain were exposed with nearly 85% of the world’s supplies dependent on China in some way or another. The ripple effect was felt globally, and most auto manufacturing came to a sudden halt as lockdowns shut plants.

Even before the pandemic, the industry was stressed financially from increased emissions-related upgrade costs and increased R&D investments in emerging technologies. As manufacturing operations resume, the added burden of COVID-19 safety protocol compliance, plummeting demand, and inefficiencies from underutilized capacity are further exposing OEMS and suppliers to severe liquidity issues. Further disruptions are likely to continue, bringing the possibility of major consequences to specific segments of the auto ecosystem.

Most regions remain vulnerable, and Counterpoint expects substantial volume drops in 2020. For example, in the major markets of North America and Europe, we expect base case sales of 13.4m and 13.6m, a YoY decline of 24.1 % and 25.7%, respectively.

Below is our analysis around April updates from key global markets.


China’s April auto sales were up 4.4% YoY to 2.07m units, as reported by China’s Association of Automobile Manufacturers (CAAM). February and March saw MoM declines of 79% and 43%, respectively. With April having apparently turned the corner with an MoM increase, we expect the trend to continue over at least the next two months with potential pent-up demand being fulfilled.  However, even as China is now in recovery mode, CAAM expects auto sales to drop 15% in 2020 to 21.3m units. This is in-line with Counterpoint’s recently downgraded forecasts.


While US passenger vehicle demand tanked over the past few months, April sales slightly exceeded our expectations falling 46% YoY versus our estimate of a 50% decline. While a catastrophic hit in any other year, the number does offer a glimmer of hope, especially in the context of states and local governments lifting restrictions at manufacturing facilities, dealers opening their doors, and online channels continuing to engage with customers.

Adhering to new safety norms, i.e. frequent plant sanitization, wearing of face masks, and temperature checks upon entry – Daimler and Hyundai have resumed production at their Alabama plants in the last week of April. The UAW union has also given a go-ahead for its members of the Detroit 3 (GM, Ford, and FCA) to return to work. Other automakers plan to follow similar protocols, including modifying layouts and floor plans of manufacturing sites to have fewer workers at each work station. All these additional safety measures will limit the pace of ramp-up and eventual production line rates. While parts inventory may theoretically be available – with WIP material already in place before the shutdown – it will take time to rebuild and stabilize the supply chain, with component suppliers needing to implement safety measures at their facilities too.

May should mark the start of a gradual recovery in US output, although volumes for the month are still projected to decline by 65% YoY. Even with all plants back online, subdued demand will result in lower production volumes. As a result, we expect 2020 passenger vehicle sales to remain 24% below last year.

Europe and the UK

With lockdown measures in place since mid-March, some markets have registered almost no registrations in April. France’s sales fell by 88% last month, while sales in Italy plunged 98%.

New car sales in the UK fell 97% as dealerships remained shut. Interestingly, the month’s top-selling brand, typically dominated by traditional automakers such as Ford, Volkswagen, and Vauxhall – was the Tesla Model 3, selling 658 units, outselling the next two best-sellers combined (Jaguar I-Pace and Vauxhall Corsa at 367 and 264, respectively). Overall, however, the numbers were very small when compared to a year earlier, when Ford’s Fiesta topped the list with 5,606 registrations. In possibly a sign of changing times, Tesla’s online sales system, with buyers pre-ordering their cars and being directly delivered with a contactless handover, may have just given it the edge. Britain’s biggest car factory, operated by Nissan in Sunderland, will not resume production until June.

Overall, Western European registrations fell 80% YoY in April, compared with April 2019, and we expect the declining trend to continue through at least the next six months with risks remaining high on growing unemployment and soaring government debt, as well as the possibility of virus cases picking up as lockdowns are lifted.


With the lockdown of all showrooms and manufacturing facilities, the Indian auto industry saw zero production and sales in passenger and commercial vehicles (PVs and CVs) in April, which followed March’s 50% and 88% drop in PVs and CVs, respectively.

The largest carmaker in India, Maruti Suzuki, only managed export shipments of 632 units during the month with port operations having been partially resumed. Similarly, exports of Hyundai and Mahindra stood at 1,341 and 733 units respectively last month, while having reported zero domestic production and sales. Compared to April 2019, when the country reported total PV sales at around 320,000 and exports at 56,800 units, the current lockdown will surely leave some deep economic wounds. With the partial opening of a few plants allowed from last week subject to strict safety and social distancing protocols, every auto manufacturer is working with dealers and supplier partners to rebuild the ecosystem.

With no clear definitive indication of when the social and economic conditions in the country will get back to normal, Counterpoint is holding to its base case scenario of 20% YoY decline in auto sales, and revising the worst-case outlook to a 35% YoY decline should the GDP growth outlook become negative.


South Korea remains the industry bright spot as the country continues to be successful in managing the pandemic domestically. Sales increased 8.3% YoY in April, a second consecutive month of YoY growth. However, a recent resurgence of some new coronavirus cases may be a growing concern.

There continues to be an increased risk that global passenger vehicle demand could drop to 70m or below if the current economic recession becomes further entrenched or a second significant wave of the virus occurs post-lockdown. While economic interventions and industry incentives could have a big impact on reversing demand declines – as we saw with scrappage schemes implemented during the 2008 financial crisis in North America – the success of any stimulus package will depend on the quantum of financial support from governments, the duration of such initiatives, and qualifying criteria for consumers.

Revised Global Automotive Outlook

The scale of distress to the automotive supply chain in the current crisis is unprecedented. A general lack of visibility, particularly on the lower tiers of the supply chain, means the weakest links will inevitably be revealed as production restarts and companies scramble to secure components. The most financially vulnerable are the smaller tier 2 and 3 suppliers, specialist tooling suppliers, and some logistics providers. As a result, our global 2020 base case sales growth estimate is around -20%.

As current FG stocks near depletion, future production planning will need to be revised to the new normal of lower demand. Although the adage ‘with every crisis there is an opportunity’ still rings true, things will be especially tough as the industry right-sizes and become leaner.

With efforts initiated by automakers and suppliers to consolidate, Counterpoint’s outlook remains cautious. Keeping in mind production already lost, the challenges in returning to work and the risk of prolonged low-capacity utilization from subdued demand, our revised global passenger vehicles sales outlook is around 72m units for 2020.

Exhibit 1: Impact of COVID19 on Global Automotive SalesCounterpoint:COVID19 Impact on Automotive Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Week 5: Digital Auto Retailing to Become More Widespread


Car sales have traditionally been a single, decentralised sales channel, i.e. automakers/importers sell cars to dealers, and dealers to consumers; COVID-19 is shifting some of this dynamic towards digital.

We have recently seen dealers ramping up their websites to help buyers select desired models, process payments and complete related paperwork.

Mercedes Benz has plans to convert 25% of its sales online by 2025, and long term, it is possible some automakers may adopt a Tesla-like business model by going fully online and removing the dealership from the equation.

However, we believe many car buyers will continue to want a brick and mortar experience, preferring to kick the tires and test drive before buying. Dealerships will continue to account for a vast majority of cars sold globally during the next decade.

The Tesla Model 

All Teslas are sold online and delivered to the customer’s doorstep. Company-owned showrooms are limited and located at high footfall places like malls. The purpose of the showroom is not to close sales, but to educate, display the product, showcase the latest technologies, and answer any customer queries. By removing franchise dealers from the buying process, Tesla is able to save on dealer commissions and control the overall buying experience. Maintaining closer contact with car-buyers not only enhances this, but also helps Tesla better understand customer expectations and communicate offerings.

Tesla is the only major automaker to have shown increasing sales during Q1 2020. An important factor behind the company’s performance was that its supply was less disrupted due to COVID-19 compared to competitors’, which depended on traditional dealerships. The success of the Tesla business model is expected to encourage other automakers to shift part vehicle sales online.

Exhibit 1: Factors Driving the Shift Towards Digital Retailing

Counterpoint: Factors Driving the Shift Towards Digital Retailing

Key Drivers of Online Sales

  • With most car sales in many countries happening online due to COVID-19, car-buyers are becoming more aware and accustomed to the idea of buying cars online. Dealers are enhancing their online selling capabilities and using unconventional ways to communicate with car-buyers, using Zoom calls and WhatsApp for instance. Initial industry feedback has been somewhat surprising, revealing an overall better buying experience via compared to walk-ins.
  • Growth of comparison and buying sites like Cars.com, Carvana and Vroom provide a wealth of information like availability, specifications, comparisons and video reviews to aid buying decisions. Price comparisons influence buying behaviour by helping consumers make informed decisions around costs.
  • The COVID19 pandemic has accelerated the shift towards digital retailing. Dealers lacking online capabilities are now partnering with third-party apps to connect and communicate with car-buyers online.

Key Hurdles

  • Automakers are bound by franchise agreements and many states do not allow direct selling by automakers.
  • Many state governments require in-person signature on the documents making full online sales impossible.
  • Many car-buyers prefer to evaluate the car in person and take it for a test drive before making a decision.
  • Arranging home test drives would add to extra time and costs for the dealers.
  • In many countries the e-commerce ecosystem is not developed enough to fully support online sales.


With social distancing unlikely to disappear in the foreseeable future, e-commerce will become an important buying channel for almost everything, including cars. Automakers and dealers are being forced to accept online sales or lose business. An online presence will soon become a ‘must have’ feature. However, dealerships and walk-ins will likely continue to account for the vast majority of car sales through the long term, mainly due to customer preference for test driving and seeing the vehicle in person.

Author: Aman Madhok

Week 4: Automotive Industry Creeping Forward

The COVID-19 pandemic continues to pummel the global auto industry, resulting in its one of the worst performing quarter since the financial crisis of 2008.

With governments having mandated various lockdown measures over the past few months, both supply and demand have been affected. Automakers in China, Europe, and the United States suspended plant operations, disrupting production, and consumer demand has waned as showrooms have closed and people shelter at home.

This week, while many production centers globally have announced extending shutdowns further into May, some automakers have also begun the process of re-starting manufacturing, albeit with caution.

Ensuring Enhanced Safety Protocols

Automakers and suppliers are taking the required steps for safe operations. These include things like temperature screening, daily health update questionnaires, reconfiguring of assembly lines to facilitate one-to-two-meter social distancing, and requiring the use of facemasks and gloves.

Some manufacturers are going beyond the requisite measures. Ferrari will offer voluntary blood tests to check for virus exposure, and FCA’s unions are proposing to move mealtimes to the end of shifts, allowing employees to avoid crowded canteens by clocking off 30 minutes early and eating at home or elsewhere.

Global Plant Openings

In the United States, several large automakers, including FCA, Honda, and Toyota, are aiming to restart production during the first week of May. In Europe, major automakers are hoping to begin building vehicles again in early May. Other automakers around the world are also publicly releasing opening dates, signaling to their suppliers when to ramp up for restart of production.

China Already Back to Business

In China, the initial epicenter of the outbreak and the world’s largest auto market, manufacturers in lockdown since late January resumed operations progressively from mid-February to early March; Volkswagen, Nissan, Hyundai, and Honda announced plant re-openings in mid-February, while General Motors, BMW, Toyota, and Volvo announced re-starting of plants from early April, including those in Wuhan province where the virus outbreak began. Volkswagen has managed to restart manufacturing at 32 of its 33 Chinese plants.

US Big Three in Re-Start Discussions with UAW

For the Detroit automakers, the United Auto Workers union (UAW) plays a critical role in deciding when and how plants will restart. Among the union’s primary concerns is to ensure members who report being ill will not be penalized for time away from work. The UAW has already supported GM and Ford’s efforts to launch the production of essential ventilators at their US plants – operations that have allowed the companies and the union to try out new safety protocols.

Ford, GM, and FCA are looking to restart some of their US plants in early May, and establish regular health protocols like screening, sanitizing, and social distancing. Production of Ford vehicles and engines is expected to resume during this period. Among others, Volkswagen has announced it will restart operations at its Chattanooga, Tennessee, plant. Volvo and Hyundai too hopes to restart work at its US plants by early May. Tesla is going to extend its factory shutdown orders through the end of May, following the extension of shelter-in-place orders in the Bay Area. Hyundai and Kia started operations of in their Alabama and Georgia on May 4.

 European Plants Returning to Normalcy

In Europe, an estimated one million jobs have been lost, with production losses at around two million vehicles. Several automakers have now started some limited production at their plants. Toyota resumed operations at its French and Polish facilities on April 22, after a month-long shutdown. Volkswagen restarted production in Zwickau, Germany, the first assembly plant in the country to restart operations. Audi restarted its engine plant in Gyor, Hungary on April 21. However, the luxury carmaker from the Volkswagen Group is yet to resume its car production in Germany. VW plants in the UK, Turkey, and the Czech Republic are likely to commence operations by early May. Jaguar Land Rover announced last Thursday it will gradually resume production at its Solihull facility in the UK, as well as its factories in Slovakia and Austria from May 18.

Hyundai has restarted output at its plant in the Czech Republic, while Renault has reopened its Portugal plant. The French carmaker’s Romanian facility is likely to resume operations soon. Volvo Cars announced its plants in Sweden and Belgium restarted work on April 20. Daimler’s contract manufacturer, Magna Steyr, restarted production of the Mercedes G-Class luxury SUV at its site in Austria last week. Italian sports car manufacturer Ferrari, one of the first carmakers to close its plant, is preparing to roll out cars from its Maranello facility in the next few weeks.

Indian Auto Industry Given Government Go-Ahead

Automobile, auto parts, and tractor manufacturers in the country have resumed operations after receiving due approvals from respective state authorities, conditional to following precautionary protocols such as social distancing and ensuring high standards of sanitization and hygiene.

Bajaj Auto, India’s leading 2W and 3W manufacturer, restarted operations this week at two of its plants, prioritising production of knock-down kits for export markets. Mahindra & Mahindra also commenced assembly at its tractor plant. Truck and bus OEM Ashok Leyland announced a partial production re-start.

In contrast, and despite having received necessary state approvals, Maruti Suzuki, India’s leading carmaker, has chosen not to resume production at its Haryana facility, as it wants to ensure both its own operational preparedness, and that of its entire supply chain.

Revised Global Automotive Outlook

Despite efforts initiated by automakers to resume manufacturing, Counterpoint remains cautious about the practicality, consistency, and effectiveness of these plans. Automotive supply chains are complex, and depend on many suppliers from disparate locations to be in sync. Shortage of even a single component can hold up an entire production line, resulting in inventory and cashflow backlogs. Unless the entire supply chain is up and running smoothly, vehicle production will remain challenging and constrained. Keeping in mind production already lost, extended lockdowns, challenges in returning to work, and the anticipated subdued demand, we have this week further downgraded our global sales outlook to around 73m units in 2020.

Exhibit 1: COVID-19 Impact on Global Automotive Sales, 2020Counterpoint: COVID19 Impact on Global Automotive Sales in 2020

Week 3: New Health and Safety Features to Come in Cars

Safety features in cars have long been considered critical and fitment mandated by policy continues to progress in this area. The COVID-19 pandemic now brings new health considerations and preventative features to the fore.

Counterpoint Research sees a rising trend over the next few years around health-related features being requested by car buyers – especially amongst vulnerable older age groups, those spending considerable amounts of time in their cars, and drivers and passengers of shared mobility and other public transport options.

Emerging Health and Safety Features in Cars

Preventive health and safety features currently offered by popular automakers as well as those under development are outlined in the exhibit below.

Exhibit 1: Emerging Health Features in Cars

Counterpoint: Upcoming COVID19 Specific Health Features in Cars

COVID-19 Specific Safeguard Features

Recent features developed by OEMs specifically for preventing the ingress of virus and bacterial contagions like COVID-19 include the following:

  • An N95 certified Intelligent Air Purification System which prevents bacteria and viruses from entering the car’s interior environment has been introduced by Geely Motors in China. The OEM is also developing self-cleaning and anti-bacterial surface treatments for commonly used touch points like grab handles.
  • Jaguar Land Rover (JLR) is working on adding a special ultraviolet (UV-C) light sanitizing unit as a part of future models’ HVAC systems to kill germs, bacteria, and viruses.
  • MG Motors recently partnered with Singapore-based Medklinn to explore areas related to car cabin and surfaces sterilisation. Car sterilisation is also gaining popularity in the used car market and workshops.

Given the current climate, these recently introduced health features could prove to be a key consideration for customers, all other things being equal. For instance, clean-air filtration systems are already popular, driven by a growing awareness around rising pollution levels. Additional safeguards combatting bacteria and viruses could further improve brand image by conveying innovation, safety and customer centricity.

With the continued spread of COVID-19, we expect other OEMs to follow in the footsteps of Geely Motors, JLR and MG Motors in the introduction of similar health features, though much is currently unknown about the spread of COVID-19 and efficacy of new features will need to be proven.

Other prevention-related growth areas include aftermarket products of car disinfectants and anti-bacterial seat covers.

Non-Embedded Connected Car Health Applications an Emerging Revenue Opportunity

While embedded health systems fitted as original equipment will add to development time and costs, non-embedded connected services (via smartphones, wearables, and personal devices connected to car infotainment systems) can be implemented more quickly and cheaply. These types of applications can become an alternative alert system for drivers, providing important information on things like hospital locations and infection hot spots as well as enabling general health-related services. Increasing consumer awareness around healthy lifestyles may boost the popularity of such apps, opening potential revenues streams for stakeholders across various sectors.

Exhibit 2: Non-Embedded Connected Health Services Key Stakeholders Counterpoint: Ecosystem of COVID19 Related Health Services

Author: Aman Madhok


Week 2: Vehicle Sales Tracking Severity and Subsiding of Outbreak

Global Update

With almost all countries having initiated varying levels of COVID-19 lockdown measures in March, a significant decline in global vehicle sales for the month was to be expected. Sales numbers from key markets confirm the impact, tracking the growing severity, as well as subsiding, of the COVID-19 outbreak.

Exhibit 1: Global Automotive Sales, M Units

Counterpoint: COVID-19 Automotive Sales Forecast by Region


With automotive production having stopped mid-March, US car sales for the month have dropped by over 39% YoY to around 1m units, the lowest volume for March in over a decade.

The biggest losers in relative volume terms are Chevrolet, followed by Toyota, Nissan, and Honda which have declined by over 60,000 units each.  In most states, however, sales figures for the first week of March were relatively normal, so the reported figures may not yet provide an accurate picture of the full virus impact. April and May will continue to be dismal in light of extended lockdowns, counterpoint expects full year US sales forecast to 13.9m units.


Day-to-day life is now reportedly gaining some normalcy in China, with auto plants cautiously resuming manufacturing operations and consumers slowly coming back to showrooms. Most dealers, however, continue to face inventory shortages; the Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

According to the China Association of Automobile Manufacturers (CAAM), car sales declined 42% YoY in 1Q20 largely on the near 80% drop in February, which saw only 310,000 unit sales. Overall, the Chinese automotive market remains weak and fragile, with last month having seen 1.3m vehicles sold, a 46% decline over March 2019.

In a normal year, China would have sold more than 6m new cars in the first quarter; this year, the figure is around 3.6m.

As automakers restart production, boosting demand is now the industry’s main priority. The government has announced cash incentives to stimulate demand and support the industry’s recovery. Several metro cities and provincial administrations are offering cash subsidies of as much as $1,400 per vehicle.

Earlier in April, Beijing announced extending subsidies and tax breaks for new energy vehicles (NEVs) for two more years. It is now evident that electric vehicles have suffered more than the broader market. In March, only 53,000 NEV cars were sold, less than half compared to a year earlier.  It should be noted, however, this number excludes Tesla, which is pushing hard to deliver to its Chinese customers resulting in some replacement effect.

In any case, while the car market may rebound slightly in the second quarter, it is unlikely to sustain nor be able to make up for the first-quarter losses. Counterpoint Analysts are holding to their estimates that China’s auto sales decline this year will be approaching double digits, close to 9%.

South Korea

The one bright spot in the global auto market is South Korea.  The country saw its domestic industry – comprising of Kia, Hyundai, Renault-Samsung, GM Korea, and SsangYong – bounce back nearly 10% in March after seeing big declines in February, when it was down nearly 20% YoY, on automaker shutdowns. 


The situation in Europe remains critical. With Spain and France having gone into lockdown in mid-March, new vehicle sales fell by almost 70% in each market. Sales in Germany, the largest market in the region, dropped by nearly 40%. In the UK, where March is traditionally the strongest selling month with new number plate series being registered,  passenger cars and SUV sales declined nearly 45%. Figures for Western Europe as a whole showed an over 50% sales decline in March.

Counterpoint Analysts expect April sales to be far worse, with lockdowns remaining until at least the end of the month, and likely into May.

Exhibit 2: COVID-19 Impact on Global Automotive Sales, 2020

COVID19:Automotive Sales Forecast 2020E, Counterpoint

Note: The unprecedented and unpredictable nature of the current global health crisis means that we cannot rule out further revisions to the global 2020 automotive forecast.

Week 1: Current Status and Upcoming Challenges

Recent Developments

US: The US is the new epicenter of COVID-19, where automotive production has entirely stopped with automakers GM, Ford and FCA not announcing any specific dates for reopening their plants. Other automakers Honda, Toyota, and Hyundai plan to open their plants by mid-April, however, considering the situation in the US, these automakers too are expected to extend the shutdown.

China: Life continues to gain normalcy in China. Automotive plants have started to resume operations, and footfall is increasing in showrooms. Most dealers, however, are facing inventory runouts and car shortages. The Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

Europe: The situation remains critical in Europe. According to the European Automobile Manufacturers Association (ACEA), the EU-wide production loss now stands at over 1.5 million vehicles, with an average of 18 working days.

Exhibit 1: COVID-19 to Lead Global Automotive Industry into Recession

Counterpoint: Coronavirus impact on global automotive growth

Long Term Impact

The COVID-19 impact to the global automotive industry will linger for the next few years:

Exhibit 2: Current and Future Impact of COVID-19 on Automotive Industry

Counterpoint: COVID-19 Upcoming challenges for automotive industry

Regional Growth

  • China will recover the fastest considering the sustained steps to curtail the virus from resurging, growing indication of normalcy, and the inherent latent demand for vehicles.
  • Historically, Europe has taken more time over economic rebounds compared to the US. For instance, it took European economy over eight years to rebound to the pre-2008 financial crisis level.

Each country will have its own economic recovery packages, incentives, and policies to boost consumer demand. Automakers will need to recalibrate sales and launch strategies, depending upon the recovery timeline of each country.

Cash Crunch

Early April, Daimler has signed up to a new US$13 billion credit line with banks, improving on its financial flexibility. In March, Volkswagen CEO Herbert Diess had announced that plant shutdowns were costing the company US$ 2.2 billion per week. Small suppliers, who do not have much financial buffer, are expected to suffer most amid plant shutdowns. Many of them will need to close if the shutdowns extend beyond a couple of more weeks. While automakers continue to incur costs such as salaries and debt repayments, sales are seeing a steep decline, impacting revenues. We expect most economic relief packages will be in the form of loans (instead of grants), leading to more highly leveraged balance sheets for the coming years.

A Shift in Sourcing Strategy

Having experienced severe supply disruptions during the last few months with an over dependency on China as a manufacturing base, automakers will review their supplier strategy across geographies, and possibly rely more on indigenous suppliers. Japan has earmarked US$2.2 billion to help companies shift manufacturing base from China to Japan, and US$214 million to other countries.

Product Development Delays

Product development cycles and new model launches will be delayed due to the financial challenges and supply chain disruptions. The spend on R&D may likely be reduced as automakers look to conserve capital. Investments in new technologies, like autonomous vehicle, will be deferred. On April 7, GM announced postponing launch of updated models – Chevrolet Equinox, Silverado, and Bolt EV, as well as the GMC Terrain, Sierra, and Cadillac XT4 in the US to year 2022.

Regulatory Changes

Emission norms could be relaxed for automakers to cope up with declining sales. Automakers are already lobbying European Commission to delay the introduction of stricter CO2 norms. During the recession in 2008/9 the governments in the US and Europe implemented scrappage schemes to encourage consumers to replace older vehicles and inject spending into the auto sector. Counterpoint expects the return of similar schemes, with escalating rebates for the most fuel-efficient cars such as full electric.

Author: Aman Madhok

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iOS 14 to macOS Big Sur and Apple Silicon, Top Announcements from WWDC 2020 https://www.counterpointresearch.com/ios-14-macos-big-sur-apple-silicon-top-announcements-wwdc-2020/ Mon, 29 Jun 2020 13:19:33 +0000 https://www.counterpointresearch.com/?p=30401 Last week, Apple held its annual developer conference, WWDC, which was different than the past few years. Instead of having […]

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Last week, Apple held its annual developer conference, WWDC, which was different than the past few years. Instead of having developers and journalists from across the globe in the auditorium, Apple went ahead with a virtual keynote, as this is becoming a new normal in this COVID-19 pandemic situation.

The WWDC 2020 conference saw Apple executives announce software updates and new features coming to iPhones, Macs, iPads, and Apple Watch devices. Apple also announced software updates for Apple TV, AirPods Pro, and HomeKit.

counterpoint wwdc os announcements

And, as expected, the much-rumored, but potentially game-changing ARM-based Apple Silicon was also announced. Future Macs will cut their reliance on Intel, and run on Apple-made custom chips instead.

Here’s a quick summary of announcements made at WWDC 2020, and what it means if you are an Apple user.

iOS 14 Brings Improved Siri, Widget Customization and More

App Library and Widgets

As iOS does not come with an app drawer, all the installed apps go on the home screen and other pages. And as the number of apps that we use increases, organizing them was becoming a nightmare for some. Apple has taken that into account when working on iOS 14.

Apps are now automatically organized in the App Library, which is a new space at the end of your home screen. It offers a simple and easy-to-navigate view. The folders are now categorized based on Entertainment, Social, Game, Productivity, and other apps. This also allows you to hide other pages that you do not want. On the top, you also get newly added apps, suggestions and search bar too.

counterpoint wwdc ios 14 app library

Widgets have been a part of iOS for a while now, and they offer information at a glance, without having to open the app. Apple has added the ability to have widgets in different sizes, and now you can add them to the home screen and other pages too. There is another interesting addition called Smart Stack, which will display a widget based on the time of the day – like top news in the morning, upcoming meetings in the afternoon, and activity information in the evening.

Picture-in-Picture For Uninterrupted Viewing

Similar to the iPad experience, the picture-in-picture feature is now making its way to the iPhone with iOS 14. When you are watching a video, and swipe up for the home screen, the video screen will minimize and you can continue watching even when you move around the apps. It will be in the form of a small overlay on top of apps.

Siri Gets a New Visual Interface and Improvements

Currently, when using Siri, the iPhone switches to a full screen. With iOS 14, Apple is introducing a new compact design where the Siri icon appears at the bottom while it carries out the task. So, say you are in the Notes app or browsing through your Instagram feed, and you want to know about the weather. Just say, “Hey Siri, how’s the weather?” and the result will pop-up on the top of the screen as a notification, rather than taking up the whole screen. You can now even ask Siri to send audio messages.

counterpoint wwdc ios 14 siri

Apple is also introducing a new translate app, which allows for on-device translation in 11 different languages. These include Mandarin Chinese, German, Arabic, Russian, and more. Turning the phone to landscape view brings up conversation mode with a side-by-side view for two people to follow the conversation. The best part here is that the app will intelligently detect the language you are speaking and translate in the other language.

counterpoint wwdc translate
Credit – Apple

iMessage Gets New Features

iMessage has been a big part of iOS, and the new update now lets you pin messages on top of the list. This way all your important conversations are always on top. What’s more, you also get a nice animation when you get messages from these pinned users.

counterpoint wwdc ios 14 imessage
Credit – Apple

For group conversations, there is a new in-line replies feature. It allows you to reply to a specific conversation. Apple has also added a mentions feature, so you can direct the message to a specific user. And as group messages can get chaotic, you can mute it, and only get a notification when someone mentions you.

Maps and CarPlay

Apple has been working on improving its Maps app and brought new features over the years. Now, the improved maps will also be rolling out in UK, Ireland, and Canada. Maps will also offer guides with suggestions for great places to eat, city-explore, and even shop.

counterpoint wwdc ios 14 maps
Credit – Apple

You can also get cycling directions across the city. It will alert about elevation, quiet or busy roads. This feature will be available in New York, Los Angeles, San Francisco, Shanghai, and Beijing. There is also EV routing feature, which will help electric car users to easily route to charging points of compatible vehicles from BMW and Ford.

counterpoint wwdc ios 14 car keys
Credit – Apple

CarPlay now gets new wallpaper options and new categories which include parking, charging, and food ordering. The surprise announcement was the digital version of car keys – allowing you to leave your keys at home, unlock and start your car with your iPhone. It relies on NFC to unlock your car. There is also a security element attached to it, enabling you to disable the digital-key unlock feature via iCloud. The feature will work on BMW’s 5-series from 2021, with support for more car models to come later.

App Clips – Instant Apps for Quick Use

App Clips on iOS 14 is similar to Instant Apps on Android. The feature will let you use an app without downloading it. It will also take away the hassle of signing up to create an account. App Clips will load a lightweight version, allow you to use Sign In with Apple or Apple Pay to carry out the transaction.

counterpoint wwdc ios 14 app clips
Credit – Apple

Improved Security and Privacy

Apple announced three new security features coming to iPhones with the iOS 14 update. Unlike Google, Apple’s business model is to sell hardware and services, so it does not have to rely on advertisers. And privacy has been one of the unique selling points for Apple iPhones. With the new iOS 14, Apple will not let you know when an app is using the microphone or camera. A small orange dot will appear above the network bar as an indicator. In such challenging times when everyone is using more of voice and video calls, this is an important feature to have.

counterpoint wwdc apple privacy recorder
Credit – Apple

While not many users are aware of this, apps can track your activity in the background. With the new OS, you will get control over the data that is bring shared. Whenever apps try to track you across services, you will now be able to choose between “Allow Tracking” or “Ask Not to Track.” This can definitely help in limiting the Ad Tracking so as to reduce getting targeted ads. What’s more, app developers will also need to declare the data they collect. This will help you have more clarity over information that apps collect.

counterpoint wwdc app privacy
Credit – Apple

List of iOS 14 Compatible Devices

iOS 14 is compatible with a total of 16 devices. These include the iPhone 6s and 6s Plus, iPhone 7 and 7 Plus, iPhone 8, and 8 Plus. It is also compatible with the first-gen and second-gen iPhone SE, iPhone X, XR, iPhone Xs, and Xs Max, and the iPhone 11-series. iPod touch (seventh-generation) will also get the iOS 14 update. It is good to see that the iPhone 6s-series and iPhone SE first-gen models are also a part of the list, and most of these features will make it to them.

The Developer Beta version is already out, while the iOS 14 Public Beta is expected sometime in July. The official version will be rolled out later this year in the fall, right after the new iPhones are launched.

iPadOS 14 New Refinements

There is no denying that the iPad is getting as powerful as many computers, and can do most tasks that you can on a laptop. The latest iPad Pro also comes with an add-on full-size keyboard with a trackpad. With the new iPad OS 14, Apple is bringing redesigned widgets to the iPad, like what we have seen for iPhone with iOS 14.

Compact Call Screen

Today, when you get calls on an iPad, it takes up the entire screen, and that changes with the new OS. Now, the call window is compact on the top, displaying the name, number, and call answer and reject button. As it doesn’t take up the whole screen, you can continue using the app after you accept the call.

counterpoint wwdc compact call screen

Handwriting Recognition

Apple has introduced a new feature called Scribble. When using the Apple Pencil, you can start writing in a free form anywhere in the Notes app, copy and paste in the other app. It will automatically convert handwriting to text. You can also write in your handwriting using the Apple Pencil on the Search Bar or in the To-Do List, and it will automatically convert that into text. There is also a Smart Select feature where you can select the handwritten text and make it bold, change color, and so on. Besides handwriting, it can also detect shapes as you draw and snap them into an ideal form.

counterpoint wwdc ipad handwriting

iPadOS 14 Compatible Devices

The iPadOS 14 is compatible with iPad Mini fourth-generation and upwards, iPad Air second and third generation, iPad fifth generation and upwards, and iPad Pro models. Similar to iOS 14, the iPadOS 14 developer preview is rolling out, Public Beta coming soon, and final version on the fall. Users who have iPad Pro models along with Apple Pencil are the ones who will benefit most from the new features.

AirPods Pro Get Spatial Audio

The AirPods Pro already offer a great audio experience with a noise-cancellation feature. With the latest update announced at WWDC 2020, Apple is bringing spatial audio via a software update. Apple says it will help deliver theatre-like audio listening experience. That’s not all, a new automatic device switching feature will let you switch between iPhone to iPad and MacBook with ease. Say you are listening to podcasts while the AirPods are connected to the MacBook, and you get a call on your iPhone, the AirPods will automatically switch to the phone, and once the call is complete, it will then switch back to the Mac.

counterpoint wwdc airpods

Apple Watch gets Sleep Tracking and More

The WatchOS 7 brings a bunch of new features, such as the ability to share Watch Faces, Cycling Directions with the Maps App, and more. And along with tracking workouts such as cycling, running, jogging, and more, it can also track your dance workout. But two of the most exciting features for me would be the Sleep Tracking and Hand Washing modes.

Yes, Sleep Tracking is finally here. The Apple Watch will now be able to use the accelerometer to notice the movements and differentiate between walking and sleeping. When you go to sleep, the Do Not Disturb mode will be activated and dim the Watch display. In the morning, you will get sleep analysis and average bedtime for the past few days.

counterpoint wwdc apple watch
Credit – Apple

With the COVID-19 pandemic, washing hands frequently with soap has become more important than ever. Using the microphone (to determine water sound) and motion sensors, the Apple Watch can detect handwashing and start a 20-second timer, helping you wash your hands properly.

Siri on Apple Watch can translate 10 languages and has on-device dictation too. The new features will make way to Apple Watch Series 3, 4, and 5. Though, not all features will make it to older devices. The developer beta is already out, with Public Beta coming out next month, and the final version in the fall.

macOS Update Brings Improved Safari Features and More

The macOS is also getting a big update, and the new version is called Big Sur. The new update brings a refreshed dock with a sleek design and new icons. Apple has also brought the control center to the Mac, giving you quick access to Wi-Fi and Bluetooth controls among others. There are other design retouches and performance improvements too.

counterpoint wwdc macos big sur control center
Credit – Apple

But the one update I am looking forward to is the new Safari browser. You now get a customizable start page, giving the ability to add background images, iCloud tabs, and reading lists. Along with improved tab design, Apple has also added support for extensions from your favorite developers. For instance, you can get Grammarly, Duck Duck Go search engine, Pockets, and a lot more.

The Safari browser can also intelligently track websites you browse and offer a weekly Privacy Report. In case of a data breach or so, the browser will also let you know if your passwords have been compromised. Improvements also bring 50% faster loading time, and up to 3 hours more battery life.

counterpoint wwdc macos safari

Compatible devices include MacBook Air and Mac Pro models from 2013 and later. MacBooks from 2015 and later, iMac Pro from 2017 and later, iMac and Mac Mini from 2014 and later will also be compatible with macOS Big Sur.

‘Find My’ Network to Help Track Lost Items

We have been hearing rumors about Apple working on a Bluetooth-enabled item tracker like Tile, but there has been no product in sight yet. However, Apple did announce something that could be setting the state for a product launch later this year. The “Find My” app has been baked into iPhones since 2017, allowing users to locate lost devices on a map. It uses signals like Bluetooth, GPS-powered location services, and internet connectivity to locate devices.

counterpoint wwdc find my network

Apple is now extending the Find My network capabilities for compatible devices. Even devices without internet connectivity, such as popular Bluetooth tracker Tile, will be able to sync to the network and become locatable. You can attach these trackers to your keys, wallets or bags, making them trackable. Developer preview of the same is out now, and official announcement could be expected in September along with the iPhone 12 series.

The Rumored Apple Silicon Goes Official

For more than a year, the rumor mill has been abuzz about Apple ditching Intel to bring its own custom chipsets. And it is finally happening. At WWDC 2020 the new Apple Silicon, based on an ARM architecture, was announced. While Apple did not reveal many details about the chipset, it did demo a Mac running on Apple Silicon called A12Z Bionic.

counterpoint wwdc apple silicon

Apple is promising better performance and lower power consumption with the new ARM-based chipsets. It will allow Apple to have a common architecture across iPhone, iPad, and Mac, which will also help developers in writing a single code, to make their apps available across devices. For instance, an app designed for the iPhone, will also be scalable to be used on iPad and Mac.

The Apple Silicon will also bring HDR display support, high-performance video editing and GPU performance, high-quality camera processor, machine learning, neural engine, among others. The new chips also mean Apple will have tighter software and hardware integration; something that has been at the heart of the iPhone’s impressive performance.

counterpoint wwdc apple silicon features

Apple mentioned that the first Mac devices powered by the new chipsets will arrive at the end of 2020, and the transition from Intel to the new silicon will take two to three years. In the meantime, new Macs with Intel chipsets will arrive later this year.

WWDC 2020: Apple Ecosystem Stats in Numbers

  • Siri now has 25 billion monthly requests
  • iMessage sees 40% growth over last year, 2x growth in group messages
  • Apple CarPlay now available on 97% of new cars sold in the US
  • Outside US, CarPlay is available on 80% of new cars that are being sold
  • Sign in with Apple now has 200 million accounts since launch
  • In 10 years, Apple has shipped 2 billion SoCs

Key Takeaways from WWDC 2020

As I mentioned above, this year’s developer conference was different than the usual. The new features introduced look functional and meaningful. Even the demos were shot well to give an idea of how the features will benefit the users. Here are some of my concluding thoughts:

  • The ability to use your iPhone as a digital key to unlock your car and even start it shows how deep Apple is invested in the connected future. It is something that will help Apple differentiate from the competition.
  • Pinned conversations and new features in group chats shows how serious Apple is in giving competitor platforms like WhatsApp, WeChat and Telegram a tough fight. The ability to receive and respond to iMessages from across Apple devices makes it stickier still.
  • A lot of iPad Pro users use Apple Pencil to jot down Notes and draw rough sketches. The handwriting recognition and other features will make using the iPad Pro more productive for creators.
  • New features like Sleep Tracking and Dance Activity trackers will make the Apple Watch an even better fitness-focused device. Features like ECG and Heart Rate Sensor already make it a great activity tracker.
  • Apple also demoed face recognition and activity zones for HomeKit accessories, which will let users make the most of these connected devices.
  • For me, the Apple Silicon announcement was the star of the keynote. It shows how Apple is putting a lot of its focus and efforts towards supporting the ARM transition. It ends Apple’s longstanding partnership with Intel, but Apple Silicon will help Apple design a powerful and energy-efficient device ecosystem, offering a smooth app continuity experience from iPhone to iPad to Mac.

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Post Event Coverage: Logicalis’ Journey to Become “Architects of Change” in LATAM ICT Environment https://www.counterpointresearch.com/post-event-coverage-logicalis-architects-of-change/ Fri, 26 Jun 2020 09:46:48 +0000 https://www.counterpointresearch.com/?p=30380 Logicalis is an ICT (Information, Communication Technology) infrastructure and service provider, a UK based company, with a strong global presence. […]

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Logicalis is an ICT (Information, Communication Technology) infrastructure and service provider, a UK based company, with a strong global presence. It is unique as Latin America is the company’s biggest region in terms of revenue and number of employees. It has more than 3200 LATAM-based employees and the region represents 37% of its global revenue.

Logicalis has a solid relationship with all major global hardware and software providers. So much so that it has gained many awards. For example, it is Cisco Global Gold Certified reseller, Oracle Platinum Level Partner, etc. Furthermore, in 2019 Cisco awarded it the Latin America Customer Experience Partner of the year.

Cisco recently stated that it has 15,000 SD-WAN sites in LATAM and Logicalis has installed 12,350 of them. So, it already has a good relationship with a significant number of regional and multinational customers. These clients naturally turn to Logicalis to solve their digitalization demand. Logicalis has more than 800 customers in LATAM that cover all major industries though 50% are from the telecommunications sector and 30% from finance.

Logicalis grew through various acquisitions. Thus, the services offered in each market may vary, depending on the merged or acquired companies. In 2008, Logicalis Brazil merged its existing operation with Promon Tecnologia, one of the region’s biggest and oldest IT integrators. This merger allowed it to gain significant business and valuable human resources in Brazil. Most of the management in Logicalis Brazil today are from Promon. Logicalis is the fourth biggest ICT business provider in Brazil, outperforming large multinationals companies such as Nokia.

This year Logicalis Analyst Summit was a two-day event in Sao Paulo, Brazil. The company took the opportunity to showcase its plans to evolve from a traditional IT integrator to what it describes as, “Architects of Change” within the LATAM’s digital transformation. It plans to leverage all the digital infrastructure it buids, to expand into technology and business consulting to design technology solutions.

Exhibit 1: Logicalis Latin America Service Portfolio

Logicalis Latin America Service Portfolio
Source: Logicalis Latin America Strategy Presentation

To do so, it has projected its growth based on several strategic pillars: Cloud, Information Security, Data Intelligence and IoT services (exhibit 2). It has built a team of professionals in each of these pillars. During the event, it showed that it possesses the capabilities and partnerships to offer clients end-to-end services and solutions in each strategic priority area.

Last but not least, Logicalis’ key success factor lays on its ability to demonstrate to clients potential cost savings or revenue potential of implementing a solution. This is a value-added service that IT managers appreciate, as many projects undertaken in the region have failed to prove a positive return on investment.

The COVID-19 crisis will impact the revenue of most businesses in the region. However, it has also exposed how little prepared many businesses were to cope with new way of working. This will force private and public enterprises to embrace and increase the digitalization of their operations. Thus, Logicalis’ ambition to shape the LATAM digital transformation path looks more relevant than ever.

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Weekly Update: Global Coronavirus Impact and Implications https://www.counterpointresearch.com/coronavirus-weekly-update/ https://www.counterpointresearch.com/coronavirus-weekly-update/#disqus_thread Thu, 25 Jun 2020 19:00:44 +0000 https://www.counterpointresearch.com/?p=26439 To receive weekly updates on the COVID-19 situation and our latest research straight to your inbox, click this link to […]

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Click here for the latest weekly updates on the impact and implication of COVID-19 situation on the Automotive industry.

COVID-19 Update Week 26

As we have been highlighting for several weeks, Latin America and particularly Brazil, has become the epicenter of the COVID-19 outbreak. The USA too is experiencing a sharp rise in cases. The data in the following chart shows the sum of new daily cases. It is unsmoothed hence the rapid oscillations day to day, but the trajectory is clear. Europe, which was the center of the pandemic in March and early April, has largely brought the outbreak under control, although the level of control is fragile and likely to suffer some recurrences over the coming weeks.

The USA was the next epicenter – with New York state a particular concern. However the USA tried to move quickly towards reopening and, in some states, had not fully locked down in the first place. These states are now seeing rapid increases in the viral outbreak.

But even the USA is being overtaken by Brazil in terms of daily new cases and the wider Latin America region seeing a large spike in cases, with 18th June recording a new daily high for any region with almost 85,000 new cases. However, as we’ve said from the outset, the level of testing is likely insufficient to reveal the true extent of the outbreak.

Counterpoint - Sum of new daily cases by continents since March 1st - Week 26 Update

Daily new cases in India are also on the rise. For several weeks, the number of official new cases seemed to be oddly consistent day after day. However that trend has now broken to the upside – with an average of over 15,000 daily new cases in the last week, compared to fewer than 10,000 in the first week of June.

The US and India are two of the three largest smartphone markets globally. In both countries lockdowns are easing and we’re seeing the smartphone markets returning to growth. But both markets are at risk of renewed restrictions on freedom of movement, though returns to full lockdowns remains unlikely.

Counterpoint - Weekly average of daily new cases by countries since March 1st - Week 26 Update

Jobless claims likely to surge

Many of the financial support packages implemented to help companies furlough workers are likely to come to an end over the coming weeks and months. These schemes served to forestall widespread redundancies in many countries. As these financial props come to an end, it will inevitably lead to a sharp rise in redundancies as companies seek to align their cost bases to much lower revenue run rates.

The US had few such packages which led to the sharp rise in jobless claims over the last two months. This has continued with an additional almost 1.5 million new claims in the last week. The unemployment rate in the US is running at over 13%. While some employers have started hiring again, others are continuing to make layoffs at roughly the same rate.

Now, we expect the waves of redundancies seen in the US to start occurring in other countries. Qantas, the Australian airline has announced 6000 lay-offs – adding to 10s of thousands of other travel-related job cuts.

Unemployment is usually a lagging indicator in recessionary times. Given the severity of the economic downturn caused by coronavirus, the response of the unemployment rate may be much sharper than we’ve seen in previous recessions. Unemployment always impacts consumer confidence and will likely therefore dampen any recovery in sales as lockdowns continue to ease.

COVID-19 Update Week 25

China is trying to contain a flare up of new cases in Beijing – which has caused a partial tightening of restrictions in some areas of the city. This is raising concerns about the potential for a second wave of infections. However the first wave is still gathering pace in most of the world.

COVID-19 Dashboard by CSSE at JHU - Week 25 Update
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

The total number of official cases has risen by almost exactly one million in the last week, with Brazil on course to surpass 1 million cases within a few days. This is very likely a gross underestimation of the actual situation in Brazil following President Bolsonaro’s calamitous handling of the outbreak.

New Daily Cases by Country since March 1st - Week 26 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

Beyond Brazil, which is now the new epicenter of the outbreak, we’re seeing significant increases in cases in several states in the USA that had moved away from lockdowns around the middle of May. States seeing record daily increases in infections include Florida, Arizona, Texas, Oklahoma, Nevada and Oregon. After bringing its rate of infection growth down from its peak, the US has settled into a pattern of averaging over 20,000 new cases per day – while there are fluctuations on a day to day basis, taken over a period of seven days, the trend is flat.

India, which is also relaxing its lockdowns, is now seeing new cases moving higher, although the official statistics for India still look strange with reported daily new cases within a very tight range. This may simply be a function of the availability of testing, rather than a specific effort to manipulate the statistics, such as we have seen in Russia. But this notwithstanding, the trend in India is upward. This is also the case in neighbouring Pakistan and Bangladesh. Indonesia has also seen its highest level of new daily cases in the last few days.

Sum of New Daily Cases by Continent Since March 1st - Week 25 Update
Source: data from European Centre for Disease Prevention and Control, Counterpoint Research

Many politicians have contracted COVID-19 over the last few months – notably the UK prime minister, Boris Johnson. There are now several more senior politicians either with confirmed infections or self-isolating. These include the president of Argentina – a country that has seen several cases among politicians. The president of Honduras has been admitted to hospital with pneumonia linked to coronavirus. And in central Asia, the national leader of Kazakhstan has tested positive for the virus.

With infection levels continuing to climb in many markets around the world, should we therefore expect the imposition of new restrictions on movement and the closure of shops again?  We currently think that this is unlikely. Countries have to balance the need to protect the public with the pressing economic reality that businesses cannot return to any kind of normalcy with lockdowns in place, crippling output and constraining wages or preventing people from earning at all. This is especially acute among informal workers that make up the majority of workforces in many emerging economies. The threat from malnutrition and other diseases of poverty is likely greater than from COVID-19 itself. The new normal may be having to live with COVID-19 as a constant threat, or frequent feature of the disease landscape of the world.

COVID-19 Update Week 24

The USA has surpassed 2 million confirmed cases. A grim statistic, but at the population level it is not worse than several other countries. As the US eases its lockdown measures across the nation, we are monitoring the viral response. The US is off its highs of daily new cases – seen in late April, but the rate of infection has not slowed much for several weeks and continues to run at around 20,000 new cases per day.

Counterpoint COVID19 Dashboard by CSSE at JHU - Week 24 Update
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

Brazil stopped reporting official case numbers and deaths last weekend. But its supreme court has ordered the restoration of reporting. It’s not a surprise that the Brazilian government wanted to supress the information, because it is so bad. Brazil has cemented its position as the second worst affected country after the USA. The real infection rate in Brazil is likely far higher – and could exceed that of the USA, based on analysis from the University of Pelotas.

Counterpoint Daily New Cases per Thousand Population After Countries Reached 100 Cases per Day - Counterpoint - Week 24 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

However Brazil is not the only country seeing cases rise. Mexico has reported its highest daily rise in cases within the last few days. Also of concern is India, which had observed one of the world’s most severe lockdowns. However, it is progressively easing the lockdowns despite a high levels of viral transmission in the country. Like Brazil, India has limited capacity for testing, so the official figures likely under-represent the true picture of infection levels in the country. The data from India is also strange in that the total of daily new cases has been consistent, a few cases below 10,000 for five days in a row. This looks suspiciously like data is being manipulated. Similar patterns were seen in Russia, which has been manipulating its data.

Irrespective of individual country anomalies, the pattern of new daily cases is far from flattening, it is actually getting steeper; every day since May 28th has seen more than 100,000 new daily cases globally.

Counterpoint New Daily Cases by Countries Since March 31st - Counterpoint - Week 24 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

Economic Impact

The impacts, both direct and indirect, are seen in economic data that continues to show the world slipping into a deep recession. The OECD published its forecast earlier this week and it makes for sobering reading. The OECD has outlined two scenarios – the first being a deep recession followed by a slow return to growth – a so-called U-shaped recovery. The second scenario factors-in the potential impact of second wave of coronavirus infections, that may emerge in the latter part of 2020 and in to 2021; fall and winter in the Northern hemisphere.

Counterpoint Research A Collapse Followed by a Slow Recovery - Counterpoint - Week 24 Update
Source: OECD 2020

Despite the dire economic data, we continue to believe the smartphone market is relatively resilient compared to many industries. Consumers rely heavily on their mobile devices for information and entertainment, however they may delay upgrading to a new model when economic uncertainty is high. This is most likely to disproportionately impact low-end devices – those favored by consumers on marginal incomes – as they are the ones most likely to find their jobs impacted by the economic downturn.

Some updates from companies in the smartphone supply chain indicate less negative outlooks than many fear. Some of this is likely due to supply issues resolving, but there are also positive indicators connected with OEM demand as shops reopen. We will continue to monitor these modest green shoots because we expect they will move to more solid indicators of demand recovery.

COVID-19 Update Week 23

The focus of the pandemic in Latin America, especially Brazil, continues to gather pace. Recent analysis by the University of Pelotas suggests the real rate of infection is seven times higher than the official rate. We expect the situation in Brazil will continue to worsen for some time as lockdowns have been relatively poorly observed, and even those that have been, are being relaxed. Furthermore, the lack of widespread testing makes it impossible to assess at what stage the infection is at. However, notwithstanding that, if the actual caseload is seven times the official number, it would imply the true figures of those infected in Brazil could be almost double that of the USA.

Counterpoint Sum of New Daily Cases by Continent Since March 1st Week 23 UpdateUnglobalization

The coronavirus pandemic has contributed to a trend we’ve been seeing develop over the past several years – that of a gradual weakening, and in some cases a reversal, of globalization.

China arose to become the workshop of the world over the last three decades. This was especially true in the smartphone ecosystem where the vast majority of smartphones have historically been manufactured in China – mostly in and around Shenzhen.

The China-US trade dispute has accelerated focus on the location of manufacture as some OEMs fear that any escalation in the tussle between the two countries will risk their ability to export goods.

Other self-interested projects, such as Brexit, which is driving a wedge between the UK and the rest of the EU, is further fracturing the fragile stability in global trade.

Now COVID-19 is adding new pressures to international divisions that were already evident. The fact that the Chinese government seemed to supress initial information about the novel coronavirus, potentially missing opportunities to contain it before it became an international problem, has harmed China’s perception around the world. And the extent to which various industry sectors are exposed to fluctuations in supply is more evident now than it was before.

As markets try to gradually reopen following the pandemic, it is unlikely that we return exactly to the way things were before the virus outbreak. Travel to develop new products was curtailed during the worst phase of the outbreak, leading to delays in product launches. It is probable that travel continues to be restricted in various ways. Immigration for work will be increasingly constrained as governments impose limits on visa grants – often in response to those imposed by others.

National governments have tended to become more nationalistic – favouring local players, many of whom they will have had to prop-up with crisis financing – this again will hurt international trade. In India, there has been a backlash against Chinese applications. This has spawned a rise in apps that target Chinese apps for removal from devices, though these apps have themselves run into problems.

In the telecoms sector, Huawei was already under suspicion in the US, Oceania, India and parts of Europe as a vector for Chinese espionage. The US has been lobbying governments to ban Huawei from critical telecoms infrastructure. The responses to COVID-19 and other developments in China, for example the pressure on Hong Kong, are leading governments to look again at previous decisions on Huawei, potentially leading to reducing its potential involvement.

The US is also piling-on pressure by extending its year-old inclusion of Huawei on its ‘entity list’. The new extension will effectively prevent Huawei from using TSMC as a foundry for its Hisilicon-branded chipsets. We write about it in detail here.

And TSMC is making strategic investments to build new fabs in the USA, something it hasn’t done before. This is no knee-jerk reaction however; decisions this big are years in the making.

Nevertheless, it does point to a new trend that we expect to see post-COVID-19 – more diversified supply chains. Instead of relying on few suppliers and geographic locations, we expect manufacturers to develop a broader web of suppliers. The net result will be greater complexity, possibly slower development and slightly higher costs, but more resilience.

COVID-19 Update Week 22

Little evidence showing a slowdown in new cases since last week. Over 700,000 new cases have been added to the total in the last seven days. Global official deaths have now exceeded a third of a million. However this total is likely a significant underestimate. For example, the official UK total is 37 thousand deaths. However deaths in which coronavirus was a likely cause of death, but no testing was carried out to confirm it, is closer to 70,000.

COVID-19 Dashboard by CSSE at JHU - Week 22 UpdateNevertheless, new cases are continuing to moderate in Europe and North America, with the focus shifting more and more to Latin America, as we identified in last week’s update. The latest data shows this trend quite starkly.

Sum of New Daily Cases by Continent Since March 1 - Week 22 Update

Brazil is a large part of this rise, it now ranks second globally in terms of cases – and this despite a lack of testing, so the real number is likely far higher.

Brazil is a populous country, but accounting for the population size the following chart shows that Brazil is now leading in terms of daily new cases.

Daily new cases per thousand population after countries reached 100 cases per day - Week 22 Update

Our Latin America Senior Analyst, Tina Lu, summed up the situation in Brazil as follows:

Everything is feeling quite chaotic in Brazil.  As the number of confirmed cases and deaths in Brazil continues to increase, the not poorly organized lockdown has taken a toll in the economy. The PT, the previous ruling political party, which ruled Brazil for 20 years, is asking for President Bolsonaro’s impeachment, which is bringing increased uncertainty to the country.

Recently, the president, the state governors and some legislators agreed to work together. This truce is providing some measure of political stability that is adding confidence to the market.

Bolsonaro was pushing for states to reopen, but currently Sao Paulo and Rio are both on lockdown until May 31st and Sao Paulo may remain locked-down through June, as this state is seeing one of the highest impacts in Brazil.

Despite the turmoil, most smartphone production facilities are continuing to operate. All major OEMs’ factories are currently in operation, although output is around 40% to 50% of normal levels due to the need to observe strict hygiene and social distancing measures. In addition the market itself is sharply lower.

Despite the situation, OEMs are launching new models. For example, Nokia-HMD launched the brand in Brazil with its Nokia 2.3 model.

Channels are operating as best they can, almost all shopping malls are closed, but many have implemented store pick up.  In addition, online sales, with WhatsApp aid, is increasing, especially for large sales ticket items.

Despite the decline in output, stores have sufficient stock to cover the reduced sales; demand having reduced more than supply.

COVID-19 Update Week 21

While many countries are now either beginning to ease restrictions or are planning to do so, the number of cases continues to rise. The WHO reported on 20th May, that the highest daily increase was registered on 19th May – over 105,000 new cases. The world has also reached a new milestone in the total number of infections – it has now exceeded five million. While these numbers, as always, must be seen in the context of broader availability of testing, it does indicate that the pandemic is showing no signs of abating.

COVID-19 Dashboard by CSSE at JHU - Week 21 Update
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

Of the countries that are faring worst in terms of case numbers and deaths from COVID-19, there is an emerging pattern. Those countries with populist and/or authoritarian leaders tend to do worst (US, Russia, Brazil, UK) while those with progressive, democratic (and often female) leaders are doing best (New Zealand, Germany, South Korea, Finland). It is not within the purview of Counterpoint Research to speculate about politics, but it is relevant if you see any of these markets as being critical to your business fortunes. Countries that are not coping well with the pandemic are likely to experience more severe and prolonged coronavirus outbreaks with the potential for extended periods of disruption.

Poorest Countries Becoming Focus – Latin America Worst Hit

As we have discussed in previous weekly updates, the impact on emerging markets is likely to be felt most strongly. This is because they don’t have healthcare systems capable of responding to a pandemic like the coronavirus. For example, Uganda has more cabinet ministers than critical care beds in hospitals.

Brazil is a case in point. It officially has the third worse outbreak in reported numbers of cases. But testing is not widely available so the real level of infection is likely far higher – quite possibly the highest globally, with some experts in the country estimating at least three million cases.

Brazil has a populist president, Jair Bolsonaro, who has consistently played-down the threat from the disease, urging people to defy attempts by Brazilian state authorities to maintain lockdowns and social distancing measures. Brazil has lost two health ministers since the start of the outbreak – both in disagreements with Mr Bolsonaro.

Reports from Manaus, which is the biggest city in the Amazonas region, suggest that the healthcare system has been completely overrun. They also show the use of mass graves as the conventional burial processes are unable to cope.

Mexico is also experiencing a rise in the level of infections, even as it begins to relax lockdowns in some municipalities. Like many emerging countries the level of testing is low, so the real situation is difficult to assess with any confidence.

Peru is another country in Latin America that has experienced a severe outbreak. Testing of stallholders in a market in the capital Lima, showed that almost 80% were infected. And this despite Peru otherwise applying relatively sound quarantine measures. It is thought that public produce markets across the Latin America region have become significant vectors for viral spread.

Counterpoint Sum of New Daily Cases by Continent Since March 1st - Week 21 Update
Latin America is emerging has a coronavirus hotspot as daily new cases in Europe and North America continue to moderate (Source: European Centre for Disease Prevention and Control and Counterpoint Research)

In our revised handset forecast, Latin America is notable because we expect it to suffer the most significant downturn of all the world’s regions. This is because the economies were already fragile and because online channels are underdeveloped relative to many other regions. In most Latin American countries, mobile handsets are not regarded as essential items and are thus unable to be sold. If you would like more details of our regularly updated forecasts, please contact your Counterpoint representative, or contact info@counterpointresearch.com.

COVID-19 Update Week 20

Many people are impatient to be out of lockdown. This is understandable. Lives and businesses have been put on hold. The economic disruption is likely to be long-lasting and profound.

And the straightforward facts are that even in the most heavily impacted countries very few people have actually contracted COVID-19. This means there remains a large percentage of the population that has had no contact with the virus and has not developed immunity. So countries are therefore vulnerable to new spikes in infections, such as has been seen recently in South Korea. A vaccine, should one even be possible, is unlikely to be available widely until late 2021. So, what should we do until then?

The disease is potentially deadly. But the vast majority of people who catch it, recover without issue. And many never knew they even had it in the first place as they were asymptomatic. Until broad scale population testing is undertaken, we won’t know for sure the exact mortality rates. However based on current data, COVID-19 has a mortality rate of between 0.5% and 1%. At 1% it would be 10x deadlier than seasonal flu. But this still means that even among those that do contract the disease, only a small number will become seriously ill. For most it is a mild disease with no long-lasting impact.

Policy Models

Policy responses by governments are based on modelling the direct impacts of COVID-19 – but not other impacts to the well-being of the economy or society. For example the mental health impacts of being made redundant or of businesses going bankrupt.

The most common policy response has been a lockdown. In most cases this is done to reduce the pool of people susceptible to infection, lowering the transmission rate and easing pressure on stressed healthcare systems. But what has been the impact of different policy responses?

Sweden did not implement a severe lockdown. It essentially asked the population to apply common-sense, to not gather in large numbers and to practice social distancing as far as possible. Its outbreak, as illustrated on the following chart, has not been significantly different than other countries that did implement more severe restrictions.

Daily New Cases per Thousand Population After Country Reached 100 Cases per Day - Week 20 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

We expect that governments will be forced to continue gradually lifting the lockdowns despite the potential for infection levels to return to a pattern of growth. US states are starting to reopen. This despite the fact that, outside of New York State, infection rates were not consistently falling.

For countries that have a much higher percentage of casual workers, less developed healthcare systems and little to no social welfare, it is likely the impact of the lockdown on people’s lives and livelihood will be more severe than the disease itself and will be difficult to continue to enforce without draconian measures or the risk of civil unrest.

And it is likely the disease will be here to stay. It will not disappear as abruptly as it appeared. It may undergo mutations over time – most likely to a form that is less lethal.

So life should start to move to some sort of post-COVID state – but what will that look like?

The Hangover

The impacts on our ways of life have been profound and there is much talk of the ‘new normal’. Twitter has told staff that are able to work from home that they may continue to do so, forever. Several other organizations, Facebook and Google for example, have implemented homeworking for some roles until later in the year, but Twitter is the first to make the change effectively permanent. It is unlikely to be the only one. Vodafone, in its results presentation highlighted that 90% of its European-based staff had switched to home working. It said that productivity had not been significantly impacted, though it did note that staff were working longer hours.

Changes in many industries are likely to be long lasting. With even a modest increase in the numbers working remotely, the use of digital collaboration tools will increase, commuting levels decline and international travel – for both business and leisure – also likely to be permanently altered. Vodafone said it had seen a dramatic fall in roaming revenue of between 65-70% which is likely to cost it Euro 0.5Bn, although lower churn is leading to savings on connection commissions. It also experienced a rise in SMEs asking for payment delays or suspensions and large enterprises delaying projects.

Retail has seen a strong shift to online channels. There may be some return to offline when restrictions ease, but much of the shift is likely to be permanent. Vodafone said that through March and April it saw a strong shift to digital channels.

Changing Forecasts

We have revised our forecasts for the year to account for more severe impacts. We now expect the smartphone market will be down 10% year over year in 2020 – driven by shifts in replacement rates and the impact of a deep and longer recession. However, we continue to see mobile communications as essential. All our consumer research has highlighted the fundamental role it plays in people’s lives; a smartphone is usually the last thing someone looks at before sleeping and the first on waking. However, for most people, buying a new smartphone is a discretionary purchase and one that can be delayed in the face of economic uncertainty. But it’s not a purchase that can be delayed indefinitely. This means the market for smartphones is likely more resilient than many others, but it is not immune from the impact of the current economic turmoil. For more details on our forecasts, please contact us directly.

COVID-19 Update Week 19

More financial results have confirmed the picture that was emerging from early reports. The impact of the coronavirus is hitting all companies but with wildly different levels of severity. This will play out as countries move towards a relaxation of the most severe levels of lockdown. The focus now shifts to the shape of the economic recovery.

Economic activity rebounded in China quite quickly, but remains at a reduced level compared to where it would otherwise have been at this time of year. The initial rebound looked promising – an expectation that businesses would get back to pre-coronavirus levels. But this has not fully happened. Much of daily life remains curtailed – fewer people are eating at restaurants, using public transport, visiting shopping malls. As we consider countries that are behind China in the progress of the disease’s development and that were harder hit, for example Europe and the USA, what can we expect?


Countries across the region are now moving toward easing the most severe restrictions. Germany, the EU’s largest economy, started to allow small shops, hardware stores and car dealerships to reopen in late April. Restaurants and hotels can reopen from May 9th. Even the Bundesliga football season can resume from late May – albeit with matches played in empty stadiums. Large gatherings may be permitted from September provided there’s no resurgence in the levels of infection.

Italy allowed manufacturing and construction to resume earlier this week. Shops will be allowed to reopen from mid-month. Schools will not resume until September.

France is allowing some stores to reopen from May 11th, but people are being encouraged to continue working from home until at least June.

Spain is extending its state of emergency through May 23rd, though it is allowing people outside to take exercise.

The UK is reviewing its options and will make announcements at the weekend. It is expected to introduce a phased relaxing of the lockdown.


There is a patchwork of different approaches to relaxing stay-at-home orders across different US states. The US administration is anxious to get the country back to work as jobless claims in the last seven weeks have exceeded 30 million.


India has extended its lockdown until at least May 21st. It has also introduced three zones to identify the most and least affected areas, with greater relaxations allowed in the so-called green and orange zones. However the red zones include the major economic centers such as New Delhi, Mumbai and Bangalore.

For the above markets, we expect some level of normalcy will have been reached by June – with most stores open and people starting to return to offices, though we do not expect a full move away from increased levels of remote and home working, perhaps ever.

This is unlikely to be a smooth resumption of economic activity. There is a high chance of new spikes in infection – especially if measures to maintain physical distancing – are not observed. This can lead to the R0 or reproduction number exceeding 1.

Our regular chart of the rolling seven day average of new cases across several important markets highlights several concerning points:

  1. While the new cases in the US are trending lower, the pattern is not consistent – even with averaging. We also note that widely available testing is still not in place in all parts of the country, so, as with many countries, the true picture of infections is likely far higher.
  2. Russia has been included this week instead of Germany. Like many dictatorial states that like to control the news flow, Russia was slow to acknowledge that coronavirus was even a problem. But now it is officially reporting more than 10,000 new cases per day. With an economy that’s highly dependent on oil, the outlook for Russia is bleak.
  3. Brazil’s new case line continues to rise – and has now exceeded the patterns observed in the most severely impacted markets in Europe. Given the tension between President Bolsonaro and state governors, which is creating confusion in the country about how best to respond, we expect that the numbers in Brazil will continue to worsen.
  4. India – the new daily cases also continue to rise, even as the government plans some easing later this month. Should this curve continue its upward trajectory, extensions to the most severe restrictions may not occur.

Daily New Cases After Country Reached 100 Cases Per Day Week 19 UpdateV, U or W shaped recovery?

That the world is in the grip of a recession is not in doubt. The question is what does the future hold in general and what does this imply for the technology sector in particular?

Economic forecasters are wrestling with the data. The most likely outcome for the global economy in the first quarter was a year over year contraction of around 1.3%. The US is thought to be running at around 12% lower than it was a year ago. Goldman Sachs estimates that the impact of a severe lockdown, such as applied in Italy, leads to a GDP decline of 25%. Even countries that successfully contained the outbreak, such as South Korea can expect a GDP decline of 10%.

Surveys of consumers in several countries suggest that many will not rush to return to pre-coronavirus lifestyles – for example a reluctance to visit bars, restaurants and jump on aeroplanes. But as we noted in last week’s update, spending on streaming services, gaming, online retail etc, has been holding up. So any recovery will have a different complexion than the economy before the coronavirus outbreak.

However, governments will not be able to prop-up ailing companies and furloughed employees indefinitely. This will likely lead to a rise in companies going bankrupt and employees, currently being kept in a state of suspended animation, being made redundant. This suggests the rate of unemployment in many countries will trend down or, at best, flat for many months. Unemployment is normally a lagging indicator in ‘normal’ recessions. This one is far from normal, unemployment has immediately spiked higher. Some of the casual workers that were quickly laid off, may be able to find new positions as economies rebound, but salaried worker unemployment is likely to get progressively worse for months to come – exacerbating already poor levels of consumer confidence.

The indicators all point to a lengthy period of reduced economic activity – so a U-shaped recovery is more likely than V-shaped. And any re-emergence of coronavirus infections either later in 2020 or in early 2021, will almost certainly cause a second dip – producing a potentially even more destructive W-shaped economic pattern.

COVID-19 Update Week 18

Since last week, we’ve now had many more companies reporting results for 1Q as well as giving their assessments of what the future holds. Companies rarely have perfect visibility of their downstream markets, and even if they do, take care not to over or under play the risks for fear of being penalized by the financial markets. But much as a school of fish or flock of birds simultaneously change direction, insights can be gleaned by listening to their collective voice. And what we hear is: the first quarter wasn’t so bad, the second quarter will be worse. The outlook for the year is unclear, but the nearest analogue we have is the 2008/9 financial crisis, so until greater clarity emerges, we will use that as our guide.

Economic tide recedes

In addition, we’ve had initial GDP numbers from several countries – notably the USA that posted a fall of 4.8%, its largest contraction since the financial crisis of 2008, an end to the longest period of expansion in its history, and likely the first taste of a more severe downturn in the second quarter. The US has also now recorded 30 million jobless claims in the last six weeks.

The US GDP number comes on the heels of China’s official GDP statistics – a drop of 6.8% – its first contraction in GDP for four decades. And although China’s economy is now gradually moving forward again, its GDP outlook for the year will be little better than 1% growth, in the best case.

The COVID-19 wildfire continues to rage

An update on the COVID-19 numbers. Several grim milestones have been reached this week. The world passed 3 million confirmed cases, the US alone accounting for almost a third of them and its total number of deaths, as has been widely reported, has exceeded the number of US service personnel killed in the Vietnam War. However it’s European countries that have the highest number of cases and deaths per 1000 population. But the number of confirmed cases is not the same as the real total number of cases because it is a function of the level of testing. Many emerging countries do not have the facilities to test widely, so the official numbers likely underplay the impact in many countries. This fact will become more and more apparent over the coming weeks and months.

Counterpoint Daily New Cases After Country Reached 100 Cases Per Day - Week 18 UpdateAmong the countries that have been hardest hit so far, the picture continues to improve. South Korea that was hit early, but instituted rigorous levels of testing, and tracking and tracing, has reported no new cases on 30th April; it’s new case load has been hovering at around 10 per day for several weeks. Even countries that had severe outbreaks, such as Spain, are managing to contain the spread of the disease through strict lockdown and physical distancing measures. This is leading to the cautious restarts of grounded economies, the phased opening of schools, and efforts to return to some semblance of normality. Some US states have been jumping ahead, even while the outbreak still rages. The danger of relaxing the lockdown too soon, will be new spikes in infections. Let’s see.

Early Results

As the Q1 earnings season progresses, we’re seeing the impact of the virus on companies financial results and forward guidance, if given.

Sectors hardest hit include those involved in travel, hospitality and tourism, offline retail of non-essentials, automotive and oil.  Those actually benefiting include grocery retailers, online retail specialists and software and service companies supporting remote access and working. Telecom operators and internet companies that have mixed revenue sources not overly reliant on advertising, are generally holding up, though the pattern of the businesses is changing. And the 5G rollout continues, with a few hiccups, so infrastructure players are reporting respectable results. A selected few companies highlight the trends:


Reported earnings yesterday. Given its broad exposure to the mobile communications market, it should be indicative of the general health of the sector. It indicated that the initial impact of the coronavirus outbreak was around a 20% fall in handset sales – mainly from China (see our analysis of the market here). Qualcomm expects this to deepen to a 30% fall in the second quarter, as the impact of the outbreak ripples across the globe. However its overall outlook for the year, is for around a 10% annual decline. It nevertheless continues to hold its forecast for 5G devices for the year – though its forecasts covers a wide range (175m to 225m).


Apple reported iPhone volumes were 7% lower y/y in the first quarter. It started the quarter strongly, before the coronavirus hit the Chinese supply chain and consumer demand. Apple now has a much more diversified revenue base than it did a few years ago, so benefited from more people accessing its digital life services and adding wearable devices to their personal portfolio of Apple devices. And while Mac and iPad volumes were down, many of the buyers were new to the products. More detailed analysis here.

Texas Instruments

TI has exposure to many industries – so provides a broader snapshot of developments. Its results and commentary highlighted the nuances that are characterising the impact of the coronavirus-driven downturn. It reported broadly flat sequential revenues, down a few percent y/y. It said March orders had rebounded following the China New Year extended shutdown, but this surge in orders had started to evaporate into April. It is, nevertheless, continuing to build inventory, speculating that the market may prove to be more resilient, while expecting around a 20% drop in 2Q. TI further said it is basing assumptions on the 2008/9 financial crisis – in the absence of anything better to work with. Management highlighted the snapback in demand in 2009 as the reason it is building inventory in the second quarter.

Another chip vendor with a broad customer base, Microchip, also saw March orders rebound. It is also assuming a pattern similar to 2008/9, but unlike TI, Microchip is trimming its costs.

Intel has a narrower customer base. Its first quarter benefited from stronger sales of notebook PCs and for datacenters – especially from cloud providers. While its business looked strong, it maintained a cautious outlook given the economic conditions, and pulled back from guiding for the year.


Microsoft is benefiting from the massive rise in remote and home working. It reported that in a single day in March, its system hosted over 200 million meeting participants generating over 4 billion meeting minutes (I have been in meetings that felt that long). It’s also benefiting from the rise in gaming; with nearly 90 million active users of Xbox Live. Xbox Game Pass has more than 10 million subscribers. Its Windows OEM, Surface and gaming revenue increases were enough to more than offset declines in ad-driven search.


Facebook and other social media platforms, have seen surging use during the last few weeks as locked-down consumers turn to platforms like Facebook, WhatsApp, Instagram and Messenger to stay in touch and assuage boredom. It has surpassed 3 billion people using at least one of its services. The surging use, though, is coincident with falling advertising revenues and falling advertising rates, as advertisers seek to cut costs as their industries are directly impacted (travel, entertainment) and channels to market are closed for others (offline retail).

Google’s parent Alphabet reported similar patterns in ad revenues, though Google is benefiting from stronger cloud computing revenues; its business is more diversified than during the 2008/9 downturn.

Operators – holding us together

The importance of high quality, high capacity, resilient networks has never been more starkly shown than now. It’s testament to the work that telecom providers do that they are able to flex to the increased demand with barely anyone noticing. With most operator stores closed, sales of mobile phones are lower, but this also means churn has trended lower, so acquisition costs have not weighed on the financials. However, with many consumers and businesses using fixed-price plans, increasing usage does not necessarily translate to substantially higher revenue. Two operators from different parts of the world illustrate these trends:

Orange – the France-based operator with shares in operators in Europe, Middle East and Africa, saw first quarter sales up 2% – with decent performances across its properties apart from Spain – but here it was more competition than coronavirus that impacted its progress.

America Movil – one of Latin America’s largest operators, also saw a 2% improvement in sales in Q1. It has seen many of its stores close amid tight lockdowns across the region. But it reported that most sources of revenue were higher. However, the second quarter will be tougher because most of the first quarter was unaffected – AMX’s outlook for the second quarter and rest of 2020 is more downbeat as it expects a severe economic pullback to hurt demand.

Offline retail battered, online strongly up

Grocery retailers – both online and offline are having a good crisis. But most offline retailers are faring badly. In the tech sector, results from the UK’s Dixons Carphone, which includes the mobile retailer Carphone Warehouse provide a good illustration.

Immediately prior to the coronavirus outbreak, Dixons Carphone announced it was closing over 500 of its Carphone Warehouse stores and moving to a store-in-store model with its large Currys-PCWorld consumer electronics stores. The viral outbreak accelerated the Carphone Warehouse store closures and forced the temporary closure of Currys-PCWorld offline stores as well. However, in the latter part of March and into April, the company has seen a 166% increase in online sales – with the early emphasis on homeworking products – PCs, printers — then food preparation and storage products. More recent sales have emphasized health and fitness. It says that the rising online sales have replaced around two-thirds of the missing offline sales.

Automotive – a car crash

Auto sales have started to rebound from low levels in China during February; Nissan is the latest company to report encouraging signs. However, the broader sector continues to struggle across Europe and the US. The current consensus from car companies is an expectation of a 20% reduction for the full year, though some are talking of current sales being only 20% of what they would normally expect. The problem for the car companies is that the pandemic is coming amid the biggest ever transition for the industry – from internal combustion engine to electric drive trains. This transition alone was an existential threat for many car companies; sales of ICE cars are relatively profitable – electric cars are not. That profit from ICE car sales was needed to fund the colossal investment needed to shift to electric cars. With near-term sales mortally wounded, the investment outlook, which was already challenging, has become even cloudier.

COVID-19 Update Week 17

While the countries around the world start to consider their next steps – furthering lockdowns or easing them – companies are now reporting results from the first quarter. These provide an indication as to the likely impact for second quarter as most economic activity was seriously impacted only in March and will likely deepen before, hopefully, recovering by mid-year.

Economic pressure mounts

Oil prices are often viewed as an important economic indicator. Indeed, during the early 2000s, as China’s economy grew along with many other emerging markets – the so-called BRIC economies – the oil price rose as demand for the commodity increased, reaching a peak of $146 per barrel in 2008, just before the last recession.

Currently, Brent Crude is hovering around $22 per barrel, off its lows but still at levels not seen for decades. Oil is not a particularly good economic indicator, because it is subject to the vagaries of politically motivated variations in supply. However, the current low price shows that the market has little confidence in the global economy, suggesting we’re likely in for an extended, deep, recession.

Unemployment is a better economic indicator, but one that typically lags in periods of recession. But the coronavirus is causing an atypical economic situation. Millions of workers across the developed and emerging economies are out of work. Around 26 million workers have filed new unemployment claims in the US in the last few weeks, more than 15% of the workforce.

In emerging economies, the situation for millions of casual workers is bleak. In countries including India, Bangladesh, Indonesia, Philippines, over 70% of workers are in the informal economy with most unable to work during the lockdown, but with government support patchy or non-existent.

Lack of remittances

For many emerging economies, remittances from citizens working abroad, form a significant portion of the economy – especially for poor families. Many of these emigrants work manual jobs in the hospitality, transport and building sectors – all of which are working at reduced levels, or not at all, which is causing the flow of remittances to dry-up – heaping further stress on already weakened economies.

Low income, little chance

Even in developed countries, the impact of coronavirus is falling disproportionately on the poorer segments of society. Research by a team of economists that interviewed 4,000 US workers in late March, showed that 16% had already lost their job and among the 20% least able to work from home, 40% had lost their jobs. Conversely, those with relatively high incomes, above $60,000 per year, had seen relatively little impact on their employment status.

These data feed through into how spending on products like smartphones is likely to respond to the coronavirus crisis. For many consumers, high cost discretionary purchases are being put on hold. For the smartphone market this means longer replacement cycles. However, buyers of high-end and premium smartphones are the ones least likely to be directly affected by the economic meltdown. As they come to terms with the new normal, their levels of anxiety are likely to diminish, confidence rise and we therefore expect purchasing of essential technology products, which smartphones are, to rebound. The short term however, will be characterised by a short, sharp, slowdown. And products typically purchased by those on the margins of the economy, prepaid, low-end smartphones and feature phones, are likely to be disproportionately more impacted, though this may be offset by people opting for cheaper alternatives. In Europe, phones for elders – mostly feature phones – have seen an uptick in sales as families provision loved ones with every available means to remain in contact at a time when physical distancing is required.


As companies’ 1Q 20 results are starting to be reported, the impact of the lockdowns is becoming clearer. European car sales were down by more than half in March compared to 2019; March is usually a strong month for sales. February sales, by comparison, were flat y/y. Nevertheless, after enduring several weeks of lockdown, several car manufacturers, including Daimler, VW and Renault are starting to reopen plants in Europe.

AT&T reported decent results, but sales of phones were down sharply in the quarter.

LG Display reported a sharp contraction in sales, citing weak demand for TVs and smartphones, though demand for monitors, laptops and tablet devices was improving, to support increased remote and home working.

Building 5G Networks – a burning issue

Problems continue in the UK and other markets where conspiracists are drawing a link between 5G and the spread of coronavirus. This absurd notion has led to several base stations (the vandals have little idea which are and are not 5G) being set on fire. Government bodies and telcos are appealing for sense to prevail, but conspiracists are deeply distrustful of the authorities and continue to spread the rumors via social media.

In addition to vandalizing base stations, telecom engineers have been harassed and threatened with physical harm, even when not actually working on 5G infrastructure.

The combined impacts of this, together with the needs for social distancing and the difficulties in obtaining planning approvals during lockdowns, is slowing network rollouts.

Impact of telecoms

Although challenges are mounting, most telcos and ISPs are delivering resilient services in the face of substantially increased demand for services. For example, US telcos are reporting:

  • Core network traffic up ~25%
  • Hotspot usage up 60%
  • Gaming traffic up 75% or more
  • Lower cell-to-cell handoffs – by 30%-55% as people stay home
  • Wi-Fi calling up 85%-105%

Impact on other tech

Gaming is one of the sectors seeing the greatest surge in use as people turn to gaming in increased number to escape the boredom and anxiety caused by extended lockdowns. However game developers are finding the new remote working mode is increasing the challenge of readying new titles for release. While much of the coding can be, and has been,  done remotely, the coordination costs are sharply higher when teams are no longer collocated. This may delay the launch of some new titles this spring.

How to exit lockdown

Daily New Cases After Country Reached 100 cases per day Week 17 update

With the numbers of new daily cases in many markets slowing, or at least flattening, governments are trying to balance their need to get their economies rolling again with the fear that opening up too quickly will cause a surge in new cases. This fear is well-founded. Research from China, Korea and Italy suggests that people that previously had COVID-19 continue to test positive for the virus even a month after the symptoms are gone. And even in the most badly affected countries, only a tiny proportion of the population has been infected, meaning that if those that have recovered from the disease do have immunity, this will apply to very few people in total.

Nevertheless, various countries are cautiously opening up. Spain has allowed some construction and manufacturing workers to return to work. In Germany, shops up to 800 square meters in size and car dealers are being allowed to open. However France has extended its lockdown into May – as has India.

Several US states are discussing how to reopen their economies – some under pressure from protesters. The states include New York, the worst hit in the US, and California.

Contact Tracing by Phone

One of the tools that will enable economies to reopen, is the ability to test widely and then track and trace those that may have had contact with an infected person. Apple and Google have taken the unprecedented step of aligning their Bluetooth protocols for iOS and Android. This will allow app developers to use the capability to develop apps capable of alerting phone users that they may have been in close proximity with someone who became ill with coronavirus. The system uses the Bluetooth LE protocol. When an appropriate app is installed, the smartphone continuously broadcasts a unique code while simultaneously listening to codes from other phones in the vicinity; Bluetooth LE’s range is up to 9 meters. Phones will create records of which codes it has ‘heard’. Should a user of the app subsequently fall ill and test positive for COVID-19, the code of the infected person’s phone will be broadcast, allowing all phones with the app to cross match if it was in close proximity with that of the infected person.

This could prove an excellent way to tighten the contact tracking and tracing process, which is notoriously difficult, resource intensive and time consuming. However, it both requires that a high number of smartphone owners install the app – ideally significantly more 50% of the population – and that there is widespread and easily accessible testing, which currently only applies to a few countries. Markets where similar initiatives have been tried, for example, Singapore, have not achieved the requisite numbers of app installs despite a relatively compliant population.

A further hurdle is the lack of Bluetooth LE support in many phones, especially feature phones that are still widely used in many emerging markets.

So while the accord between Apple and Google is remarkable, it’s no silver bullet.

COVID-19 Update Week 16

The global total of official infections now exceeds 2 million, with the worst affected country, the USA, accounting for over 30% of the total. The real number of infections likely far exceeds the official total; many countries are still unable to test sufficiently large numbers to verify the extent of the disease outbreak.

Nevertheless, for several countries in Europe and the United States, the rate of new daily cases is noticeably slowing. And the rate of slowing in new cases has been sufficient for several European countries to have either already started to lift the most severe restrictions, or start to plan for this to occur. Borders are being reopened gradually, though in Europe, this is partly to admit agricultural workers to harvest crops that would otherwise rot in the fields.

Counterpoint Daily New Cases After Country Reached 100 Cases Per Day
Source: data from European Centre for Disease Prevention and Control, Counterpoint Research

As restrictions are relaxed, there is a strong possibility of further flare ups in infections necessitating a re-tightening of restrictions. And lockdowns continue to be enforced in India and many other markets, with prospects for these to be extended into May.

But while there are positive signs from tracking the path of the disease, the global economy is far from out of the woods. Claims for unemployment support are soaring. The US released new unemployment claims today that exceeded 5 million, meaning the total of new claims for the month have exceeded 20 million.

While some European countries have seen unemployment rates rising, governments across the region are paying up to 80% of employees’ salaries in a variety of furlough schemes. These governments learned from the problems caused by the 2008 global financial crisis, when such schemes weren’t widely deployed. This resulted in several European countries, notably Spain and France, suffering high unemployment rates for up to a decade following the recession. Germany, that did use the furlough scheme following the 2008 recession, recovered more quickly.

Governments that are capable of doing so, are putting in place schemes to support companies and even the self-employed, so that as the coronavirus wildfire passes, green shoots of recovery can quickly be nurtured. But the pattern of recovery, will vary dramatically from sector to sector and even company to company.

The International Labour Organisation says that the sectors facing severe declines in output and therefore a high risk of layoffs or furloughs employ almost 38% of the global workforce, which equates to around 1.25bn people. This implies that even a V-shaped recession will likely be deep. And any U-shaped recession will cause an extended period of misery for many.

Emerging market stress

Capital flight from emerging markets has been acute. This can be seen in the foreign exchange markets where the Mexican Peso, Brazilian Real, Russian Rouble and South African Rand have all depreciated substantially against the US dollar. The slump in world trade and almost complete cessation of tourism is also hitting many emerging markets. So while many of these markets are not feeling acute pain from the impact of the viral outbreak, their economies are under severe strain.

US Dollar to exchange rates with various currencies
US Dollar to exchange rates with various currencies, Source: Trading Economics

Consolidation in corporate power

Many large companies were in a healthy condition before the outbreak, with ample cash on their balance sheets and limited debt. They will likely be comfortably able to withstand the inferno and come out the other side, not only in a reasonable shape, but finding the landscape less cluttered than before; a consequence of the viral outbreak will be that smaller and weaker firms, are less able to survive. And those that do, will be vulnerable to being acquired. Expect therefore that power will concentrate in the hands of those that already had most of it before the outbreak.

A further consequence is likely to be an acceleration in the diversification of supply chains. Companies that were overly reliant on China were hurt early in the outbreak. But before the coronavirus crisis, we’d already seen companies moving to diversify their manufacturing bases away from China; Vietnam and India are likely to be the biggest beneficiaries.

COVID-19 Update Week 15

The rolling seven day average of new daily cases of corona virus show that lock downs and physical distancing do work, though it takes time. They work by reducing the pool of potential people that the virus can infect, which slows the spread and allows authorities a chance to contact-trace and quarantine those that have been infected or that have been in contact with people infected. It is a mammoth task and economically destructive.

The US was slow to implement lockdowns and they’re still not universal across the country. The chart below shows the rolling seven day average of new daily cases for selected countries. A rolling average is used because the data is noisy and the average helps to smooth out anomalies. Previous epicentres in Italy and Spain are trending lower. The UK (including Prime Minister, Boris Johnson) continues an upward trend, though at a slower rate.

The US is, very clearly, still escalating rapidly though the rate of growth is slowing, however this may be more a function of the number of tests being carried out.

Counterpoint Daily new cases after country reached 1000 cases per day
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

China and South Korea continue to offer encouraging pictures with new daily cases in the few 10s and daily life returning to normal, even in Wuhan.

Economics of a pandemic

Our concern is now shifting more and more to the long term economic impact that the pandemic will cause. The world is officially in a global recession as declared by the International Monetary Fund around 10 days ago. However the impacts are likely to be felt differently among the developed and developing countries.

Lockdowns, while effective at slowing the spread of the virus, are economically harmful. In a crisis, perfection is the enemy of the good. We have seen governments rushing to close borders and lockdown cities, while also creating financial lifeboats to help citizens and corporations weather the storm. While many of these measures are good and necessary, the haste with which they’ve been established has left many vulnerable people outside the safety nets.

In rich countries, governments have the capacity to support the economy for months. In developing countries, this is not the case. In India, the government acted with great speed to lockdown the country. But in so doing, it seemed to forget the millions of migrant and casual laborers that make-up a large percentage of the workforce. Many found themselves not only jobless, but also homeless – more or less overnight. With nowhere else to go, and little functioning public transport, many embarked on journeys by foot, for hundreds of kilometres to their home villages. In some cases carrying the virus with them. And many of the world’s poor live in overcrowded conditions with little access to facilities to carry out the mandated regular handwashing.

There are similar cases throughout the developing world. South Africa and Brazil, among many other countries, have implemented lockdowns of varying severity, meaning many migrant and casual workers are out of jobs, but with limited or no savings to fall back on. This puts casual workers in an invidious position, either starve, or try to continue working in some capacity and risk either contracting the virus, the wrath of the authorities, or both.

And the governments of emerging economies are not strong enough to support their populations or corporations during lengthy shutdowns. And worse, capital is fleeing to safe havens – which has meant the US dollar, almost exclusively. The US Federal Reserve is easing access to the dollar for some countries, but this is likely scant comfort.

The US, while rich, is a highly stratified society with a large underclass working low paying jobs, effectively on a casual basis; most American employment contracts have few protections against immediate dismissal. And even those with decent contracts tend not to have access to statutory sick pay. As a result jobless claims have skyrocketed – 16 million new claims in the past three weeks. And those were the ones able to negotiate flaky jobless claims websites that continually crashed under the weight of numbers, or visit overcrowded unemployment offices, running the risk of contracting the infection while doing so.

Rich countries have, nevertheless, created massive cash lifeboats to support companies unable to continue operating at capacity, or, in some cases, at all. Some countries, the UK for example, are also creating support packages for the self-employed – such as builders, plumbers and electricians. These packages should mean that as the countries come out of lockdown they can rapidly resume economic activity at something close to previous levels. The calculus is that a rapid resumption of economic activity will start fiscal flows to start paying-down the massive debts that governments are establishing.

We doubt, however, that the resumption of activity will be smooth across all sectors of the economy. Furthermore, the new ways of working for many may become a new normal, with more people than ever working from home. Companies may be able to reduce the size of office space as they realize that as many as a third of employees can work effectively from home on a near continuous basis.

Sectoral Impacts

We have updated our assessment of sectoral impacts. These are not designed to be read as detailed forecasts, but to guide thinking around which sectors are likely to be hardest hit and which are, conversely gaining in the current situation.

Counterpoint COVID-19 Expected Impact Relative to Baseline ForecastSmartphones: The smartphone market in China saw a sharp hit in January and February but was already recovering before the end of March as supply chains, retail activity, return to normalcy. We expect 2Q to reflect a slight rebound with further slight positives throughout the balance of 2020.

The smartphone market outside China is contracting sharply as retail stores are shuttered leaving online as the principal route to market. The downswing had already started before lockdowns were implemented. It may be as deep as China’s sharp slowdown but will likely last longer. Unlike China, where at least a part of the slow down was supply driven, the rest of world’s contraction is driven more by consumers withholding replacement activity until they get more comfort with the new economic realities of their situation. Assuming the lockdowns ease within a few weeks, the recovery should be strong, though we can expect some consumers to change their spending patterns.

Automotive: The auto sector is likely to be hit hard globally. In the early part of the year Chinese car sales almost halted entirely. And while they are recovering, there is now a mismatch between supply and demand. This pattern is likely elsewhere. In Europe the COVID-19 crisis has also coincided with new and highly restrictive emissions regulations. It is likely part of government stimulus spending will encourage consumers to scrap older, higher polluting cars, in return for cash subsidies.

Hearables: following a modest supply interruption we expect sales of hearables will benefit. Consumers that are self-isolating, working from home and relying more on streamed media will likely seek out high quality audio.

Retail: the impact is nuanced.

  • Offline Retail: Grocery is seeing a surge as consumers stockpile for isolation and/or disturbed supply chains. Non-essential stores however, are being forced to close.
  • Online Retail: sees a surge in demand as consumers forego venturing out to physical retail stores. Provided deliveries can still be made, consumers realize a preference for online over physical retail and while there is a mean reversion, online remains slightly ahead of physical

Streamed media: Physical isolation causes an uptick in demand for streaming media services especially video and games. Streamed music benefits less as consumers seek sources of news through radio stations or news-based podcasts.

Transport in all forms is hard hit. Airline travel is sharply lower, with many fleets grounded or flying extremely limited schedules. Tourism is also largely halted. The recovery is likely to be long, slow and painful with many companies seeking bailouts from governments.

Telecom: not charted, but we are seeing telecom service use substantially higher. For some mobile operators the reduction in international travel means lucrative roaming revenues are reduced, but more use of hotspots to enable home working means many are using networks more with many users migrating to higher data packages as a result, so a net benefit to operators – both fixed and mobile.

Cashless Payments: cash is being seen as a potential vector for the virus. This is stimulating the faster adoption of digital payment mechanisms across the world, even overcoming fears about the security of some systems.

Big Tech: in general the established tech giants are faring well. Use of cloud resources and over-the-top applications supporting audio and video-conferencing and collaborative remote working are seeing strong upticks in demand. Aside from a few early teething troubles, the services have flexed to accommodate the increased demand effectively underscoring the importance of resilience, quality and capacity.

One additional positive for the tech sector is that governments preoccupied with fighting the impact of the viral pandemic will spend less time scrutinizing M&A. This together with substantial pull-backs in valuations will likely mean a number of new deals will be made through 2020.

Related Posts

Coronavirus (COVID-19) – Update Week 14, 2020

The novel coronavirus continues to wreak havoc on daily life around the world, and in an increasing number of countries; 180 have now reported cases. In the past seven days the total number of confirmed cases has doubled again and is still accelerating – with new cases increasing by around 20% per day (75,000 between March 31st and April 1st).

But physical distancing and lockdowns do bring results – Italy’s number of new cases on April 1st was almost the same as the previous day – indicating that it is nearing the top of the new case growth curve and should see a decline in the days to come. However more worrying were spikes in new cases in Spain and France, both countries that had previously seen slowing growth. However, the data is noisy, and a slowing trend is seen in most markets that have been rigorously enforcing lockdowns and physical distancing measures.

Last week we said the US was, ‘almost certain to overtake all other countries..’, it didn’t take long. The US now has a massively higher number of cases than all other countries – almost twice as many as Italy. We indicated our concern about the US when we started keeping this weekly update and this has now been borne out. The fast growth in newly reported cases is partly a function of greatly increased testing, which is now uncovering the extent of the infection. Despite the sharp rise in cases, March manufacturing data from the US was more resilient than feared. But new jobless data shows a massive rise in new claims 6.64 million compared to an expected 4.88 million. That the new number is so much worse than even the most pessimistic forecast highlights that the full extent of the impact remains unclear.

Coronavirus COVID-19 Global Cases by John Hopkins University (JHU)
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

However, while many states in the USA have implemented lock downs, there is still a stark contrast in indicators of activity. For example, two snapshots taken at the same time and at the same scale, from FlightRadar24, show the level of air traffic over the US compared to that over Europe. Pre-COVID you would see comparable levels of air traffic, though the US has always been somewhat higher. But in the midst of the current crisis, we are surprised at the continued level of passenger air traffic in US airspace. While the one over Europe is early evening and that of the US is around 2pm EDT, there is clearly more traffic over the US. Inspection of the flights does show a high proportion of cargo, but many are still passenger flights. By contrast, around 80% of the flights over Western Europe are cargo flights. On April 1st, the Trump administration said it was considering isolating hotspots from flight traffic, but has not yet imposed such as restriction. That said, data shows the number of passengers in the US is dramatically lower. So while many aircraft continue to fly, most are almost empty.

FlightRadar24 – images taken on March 31st at around 2pm EDT. (2)

FlightRadar24 – images taken on March 31st at around 2pm EDT. (1)
Source: FlightRadar24 – images taken on March 31st at around 2pm EDT

Income and Infection – strongly linked

New York City accounts for almost half the cases in the US. Data released by the city by zip code indicates a strong correlation between median income levels and the number of cases. This is unsurprising as the localities with the lowest incomes see the most overcrowded living conditions, where people have the greatest difficulty in self-isolating. This also gives us concern about fast growing and emerging markets that exhibit similar living conditions.

The Dharavi area of Mumbai is home to around a million people living in extremely high population density, in make-shift housing. The first coronavirus casualty was reported overnight. It is reasonable to expect the number of cases in the area to multiply rapidly. The Indian authorities are enforcing the largest lockdown globally. While official cases remain relatively low in the country, the lack of testing means that real number of cases is likely far higher. We continue to monitor the situation in India with concern as it is now the second largest smartphone market globally and still growing – unlike China and the US. A deep and sustained impact from corona virus will have a profound impact on the global smartphone market.

Indonesia is the world’s fourth most populous country. It has also seen an uptick in infections. While again the official number is low, we also think community infection is likely occurring unseen due to the lack of testing and preparedness. Expect the case rate to move sharply higher in the coming days and weeks.

Brazil has seen a sharp rise in cases. President Bolsonaro has been dismissive of the threat posed by the disease and has been urging Brazilians to return to work. However, most of Brazil’s state governors are defying the government and requiring people to self-distance and remain home. Nevertheless, it is likely that community transmission is underway in Brazil and cases will grow exponentially.

Daily new cases by continent show how the virus has spread East to West. Asia is not out of the danger zone yet.
Daily new cases by continent show how the virus has spread East to West. Asia is not out of the danger zone yet.

Economic Impacts

The International Monetary Fund declared that the world had officially entered a global recession. Given the scale of reductions in economic activity across multiple sectors, this is not surprising.

Forecasts are being updated as the situation unfolds. Currently, most economists are expecting a contraction in economic growth of around 2% y/y in 2020, which represents a downside swing of some 4.5 percentage points over previous forecasts.

Change in GDP Growth Due to COVID-19 in Selected Countries
Source: Economist Intelligence Unit

Smartphone Market Impact

We have modelled the most likely impact on the smartphone market based on the mix of factors we have seen so far, and expect to see over the next few months. We have looked at parallels from recent recessions to help guide our thinking. Our conclusion is that we expect to see a sharp contraction as consumers withhold making discretionary purchases during periods of maximum uncertainty. The result is an extension in the replacement cycle. However we expect that extension will be limited to no more than six months. We further expect that the long run average market growth rate will not vary significantly – but the near term growth rates will reflect the slow down and then rebound — a similar pattern to that seen in recent recessions but allowing for the different level of market maturity.

Other Sectors

Automotive remains hard hit. Most production facilities across Europe and North America remain closed. It’s a similar story in India. During the recession in 2008/9 the governments in the US and Europe implemented scrappage schemes to encourage consumers to replace older vehicles and inject spending into the auto sector. Given the strict new emission norms being implemented in Europe, governments in the region are likely considering the potential to gain benefits from newer lower emission vehicles that will go some way to addressing air pollution, while also pushing money into the hard hit auto sector. We are therefore expecting the return of scrappage schemes, perhaps with escalating rebates for the most fuel efficient cars such as full electric.

Subscribing clients can request more detail of our forecasts across a number of sectors including smartphones, IoT, automotive and more.

Coronavirus (COVID-19) – Update Week 13, 2020

A week is a long time in politics, and also in this coronavirus outbreak. In the past seven days, the number of confirmed cases has risen by 255,000 and still accelerating – currently by around 50,000 cases per day.

Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

China still has the most cases, but Italy is fast catching up. Italy and Spain have recorded more deaths than China.

Statisticians have observed that the coronavirus outbreak precisely follows mathematical models and it is these that are informing government behaviours once an initial period of denial is overcome. The stages are clear and follow a consistent pattern. This from a former colleague, Dr Timo Partanen:

  1. Discovery phase – the virus has been present for days or weeks, spreading within a population but largely unnoticed because testing has not taken place. Testing starts to happen but is lagging behind. The daily growth rate of cases is very high.
  2. Exponential growth phase – the unrestricted spread of the disease is about 25% per day. This can be observed when the virus is spreading freely in a community without any social distancing measures, but testing is comprehensive enough so that significant numbers of new cases are recorded. Italy stayed in this stage for around the first 12 days of March.
  3. Declining growth phase – When social distancing is established, the growth rate starts to decline in a somewhat predictable pattern. How long and how quickly it declines varies by country based on the measures taken. This has happened in Italy for more than a week; yesterday’s growth rate, 7.5%, was again lower than the previous day. Spain, at 18% is behind Italy but growth rates are starting to slow. France 13%, Germany 13% are below the unconstrained growth rate. The UK, at 18%, is still high, but social distancing measures have only just been rigorously applied. The next two weeks should show a declining rate of growth in the UK.

What about Korea and Japan?

Both countries followed a different pattern, because their strategies were to test and track the epidemic intensively. They didn’t get a long period of 25% daily growth, because they followed every case and isolated all contacts. That cut the “natural growth” towards 10% a day.

And where is the USA?

As a whole it is still in the discovery phase and the numbers are distorted by the lack of tests. Some states have applied tough measures – such as California. But at the country level the growth rate in cases in the last 24 hours was almost exactly 25%. It is still not under control and there is no clear indication of how widely the virus has spread already. For example, in New York testing was expanded properly only last week and it is now undertaking more than 15k tests per day, and is finding 5k cases per day. The federal government is unwilling to impose the most stringent levels of control for fear of impacting the economy more deeply. This will likely mean a longer period of unconstrained growth in cases, unless almost all individual states apply the lockdown in a coordinated fashion. But it is the federal government that controls air traffic, for example.

It is almost certain that the US will overtake all other countries, including China, with the highest total number of cases.

Anomalies in the numbers

Iran is likely far, far worse than official statistics imply. Iran has not imposed a lockdown, so we expect there to be an almost unconstrained spread of the virus among the population. But with little testing and a government that rigorously controls communication, we may never know the true extent.

Russia too is likely to be experiencing a worse outbreak than official numbers suggest. It has established special facilities to deal with the outbreak, but is not reporting its cases freely.

India – the official number of infected is low. But while it is growing relatively quickly (20% in the last 24 hours) the government has moved fast to implement draconian lockdown measures that should slow the spread even if the real level of infection is much higher. The problem for many places in India is that social distancing, in some of the most densely populated areas, will be difficult to sustain for long. India has implemented the fiercest measures of any country. It will be a test case of how to bring the outbreak under control across a vast and populous country.

Counterpoint Covid Weekly Update: Air Traffic
Air traffic over India March 26th. Almost all flights visible are overflying. Source: FlightRadar24

Impact on the Global Economy

There is a high probability of a global recession occurring in Q2 and Q3 of 2020. Sectors most obviously impacted include travel and tourism, hospitality and entertainment; people are not travelling, eating out or going to the cinema. These sectors employ millions globally and have come to an almost complete stop in many countries.

The stark economic indicators seen in China in February are now being replicated in many other countries, even while China gets back on track.

The disruption to international travel is hurting trade already. Over half of global air freight is carried on passenger aircraft. The image below from FlightRadar24 looks similar to last week’s. But an examination of the aircraft criss-crossing the Atlantic shows that around half are cargo planes. The American Association of Port Authorities, an alliance of ports of the US, Canada, Caribbean and Latin America has warned that cargo volumes during the first quarter are likely to be down 20% y/y. Jobless rates in the US are surging, applications for income support in the UK have jumped.

Counterpoint Covid update: Reduced air traffic over the Atlantic
Reduced air traffic over the Atlantic and half of it freight, March 26th. Source FlightRadar24

Governments are acting fast though. The experience of the financial crisis of 2008/9 showed that decisive action helped address the damaging levels of uncertainty. Central banks in Europe, US and in other countries have prepared stimulus packages of staggering magnitude. Yesterday, the US Senate approved a package totalling around $2trn (9% of GDP). The total extra fiscal stimulus announced so far amounts to more than 2% of global GDP – far more than was applied in the wake of the 2008/9 financial crisis.

The stimulus and support packages may help. But consumer uncertainty tends to lead to withholding spending in times of trouble, only returning to previous levels once confidence returns.

Developed countries are fortunate in being sufficiently wealthy that they can afford to support the economy and workers for an extended period. In addition, healthcare systems are well-developed. Poorer countries have a higher proportion of casual workers and patchy healthcare, so the impacts will likely be, proportionally, greater.

Impact on Smartphones and Technology

We have developed new forecasts that are available for subscribing clients. These show a sharp fall in demand, moving in a wave across from China to the west, consistent with the viral spread. Under lockdowns, almost all offline retail activity ceases, though online continues to function.

The smartphone market is resilient; smartphones are perceived by consumers as essential. However, aside from replacing a broken phone, the purchase is usually discretionary and can therefore be delayed, effectively extending the replacement rate. The resulting contraction in the market will likely be short term in nature, we expect it to recover relatively quickly once the worst of the outbreak passes.

Homeworking and social distancing are underscoring how important technology is to keep people connected and entertained. While we see the Coronavirus pandemic as a sharp, short-term negative, we continue to believe the long term impact on the market will be marginal.

Counterpoint will be hosting a webinar to talk through the likely impacts as we see them. Click here to register

Coronavirus (COVID-19) – Update Week 12, 2020

While the pandemic escalates in the west and increasingly wreaks havoc on daily life, China and South Korea are starting to get back to normalcy. Early, stringent action by the authorities was effective at containing the outbreak. There is chance of flare-ups but we expect those to be dealt with rapidly. Other countries such as Taiwan, Hong Kong and Singapore also appear to have been successful in limiting the disease spread. The biggest risk for these nations now is nationals returning home from countries on the fast escalation curve – notably Europe and the USA.

In the last eight days, the number of confirmed cases has risen by almost 100,000. Almost a quarter of these new cases are in Italy, with many more in Spain, France and Germany. The UK has also seen a steep rise in cases, with London the epicentre of its outbreak.

The US continues to give us concern. The country as not been able to test widely, so we continue to believe the official number of confirmed cases massively under represents the true scale of the problem.

India, Russia, and many parts of the Middle East and Africa, and much of Latin America, have either been successful at preventing the virus from spreading or, more likely, are not able to test sufficiently effectively to reveal the true scale of the pandemic.

The bottom-line, is that the picture from Johns Hopkins shown below is just the ‘tip of the iceberg’. The full scale of the disease may not be known for months or even years.

Coronavirus COVID-19 Global Cases by CSSE at JHU
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

Impact on Commercial Activity

Turmoil continues on stock markets. Central banks are releasing unprecedented funds and instituting quantitative easing, but investors continue to lack confidence as they cannot see an end to the disruption. In this environment only safe haven assets are in demand – recently the US dollar. The price of gold had escalated but sold-off to cover investors’ losses in other asset classes while others opted for the US dollar above all other assets.

Many countries are being progressively locked-down. Italy has been in this state for a couple of week and is being joined by France, which is imposing penalties on citizens straying outside without good reason. Many European countries are closing land borders to prevent foreign citizens from entering. Canada and the US have closed their land border. Brazil has closed its border with Venezuela.

In markets that are locked down, all but essential stores are closed. Online remains active though and has seen strong upswings in activity.

Airlines are reducing flights, with many grounding part or all of their fleets, and temporarily laying off staff.

Reduced air traffic over the Atlantic compared to normal on 19th March.
Source: FlightRadar24

Travel and tourism, and hospitality more broadly, is hard hit with hotels empty and restaurants and bars being shuttered.

Impact on the smartphone market

Mobile phones are considered a necessity by most people. This means it is a resilient market. Recent parallels include the sub-prime mortgage crisis and subsequent global recession in 2008/9, the tech bubble bursting in 2001 and the impact of SARS in 2002/3. In each case, the market was knocked back but rebounded in the aftermath.

The market has changed since 2009 – it is now much more mature, and in the markets currently most severely impacted, almost everyone has a smartphone. For many consumers, the purchase of new smartphone is a discretionary purchase; they can choose when to buy. The consequence of this has been seen over the last few years in lengthening replacement cycles, which has caused the smartphone market to contract as people hold on to their phones for longer and longer. The immediate impact of the coronavirus pandemic, is that the replacement cycle is likely to stretch still further. But consumers will replace. So while the market will slow down during the worst period of the crisis, it will rebound; we don’t think volume will be lost – just that the pattern of demand will change.

There are two main risks, that could cause a material lowering of our long-term outlook:

  1. An extended global recession. Currently we are assuming a relatively sharp, but short recession, on a global basis.
  2. A second wave of viral infections peaking in 4Q 2020 and 1Q 2021. Past pandemics have seen this double peak. COVID-19 may be the same.

There are also mitigating factors:

  1. Preparation of a vaccine – many teams around the world are working hard to isolate a vaccine – though this is unlikely to be ready until 2021.
  2. Effective treatments – there are some promising lines of research applying current medicines to treat those most affected by this coronavirus.
  3. Herd immunity – if sufficient people in a population are infected, recover and develop immunity, it is harder for the disease to spread. It is unclear how effective this is with COVID—19.

We are updating our forecasts more frequently during this period. Subscribing clients will receive regularly-revised short-term forecasts that assimilate the latest information.

Impact on other technology markets

Demand for home working equipment and services are sharply higher, displays and headsets, and conferencing services. Access to Microsoft Teams was temporarily impacted earlier this week as thousands of normally office-based workers across Europe tried to access the service from home. More capacity is likely being made available.

Automotive Markets

Car companies are still coping with supply issues arising from the initial outbreak in Hubei Province that caused many parts to go into short supply. These companies are now having to contend with potential shortages of labor, as workers either become sick or have to self-isolate. Several factories in Europe and North America are implementing temporary closures.

We also expect demand for new vehicles to be sharply lower in many markets as car dealerships are closed.

Audio visual equipment and streaming

With higher numbers spending more time at home, demand for streaming entertainment is escalating sharply. This may trickle over into demand for new equipment such as TVs, but big discretionary spends are more likely be deferred. However, demand for hearables is likely to rise as households try to manage the situation of multiple people enjoying their own content without disrupting others. Hearable devices are readily available from online stores.

Coronavirus (COVID-19) – Update Week 11, 2020

As we predicted two weeks ago, the WHO has been forced to pronounce the coronavirus a pandemic. It doesn’t change anything much in relation to the likely viral spread, but should help focus the minds of governments that may be reluctant to take the necessary steps to contain the outbreak, or mitigate its worst effects.

Also as we noted last week, the coronavirus infection rate in China is decelerating. This is good news and should allow most factories outside the Hubei province to move back toward normal, seasonal activity levels by the beginning of the second quarter.

In other countries, however, the picture is less positive with more than 25,000 new cases reported in the last week.

Coronavirus COVID-19 Global Cases Johns Hopkins CSSE
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

The pattern of infection and recovery is becoming clearer. The infection spreads rapidly through a population, reaching a peak and then subsiding almost equally rapidly once there are no new people to infect. By locking down areas and curtailing socializing, the pool of potential virus recipients is reduced, causing the outbreak to moderate more quickly. This is what happened in China. But a rapid lockdown it is not what has happened in Iran, Italy and many other parts of Europe, and the United States. The disease has likely been in the community in these countries for several weeks before being formally identified. Containment measures are belatedly being taken in some countries, Italy for example.

Counterpoint COVID-19 Many Fewer Flights Than Normal Originating and Terminating in Italy
Source: FlightRadar24

Many Fewer Flights Than Normal Originating and Terminating in Italy

But in most other countries, little is being done to either monitor the virus’ spread, or to prevent it. Angela Merkel, Germany’s Chancellor, has warned that as many as 60-70% of the German population may become infected, if stringent measures are not taken. It is reasonable to assume that this rate of infection would apply to other, similar countries.

The USA is most concerning. Evidence from Seattle suggests the existence of coronavirus in the community as far back as early February, but the Centers for Disease Control and Prevention (CDC) was not able to effectively test for the virus at that stage and even prevented some research laboratories from reporting their own positive test results. The alarming conclusion is that the reported positive cases in the USA likely massively underrepresent the true picture of infections in the USA.

Stock Shocks

As the potential impact of the virus has become better understood, stock markets have been hit hard, with major indices registering falls in excess of 10%. Some of the falls were also related to a conflict between major oil producers that saw a sharp fall in the price of oil. Nevertheless, money markets are trying to price-in a short sharp shock to the world’s economy with little to guide them on what this will actually look like.

Supply-Driven Downturn

Most recessions have been caused by falls in demand. The most recent one of 2008-9, was triggered by a financial crisis that spilled over into a sharp reduction in demand as banks spiralled into a debt crisis of their own making.

In this case, there is the potential that workers will be prevented from working due to illness or having to isolate themselves at home. If this occurs for a significant proportion of the population at any given time, it will have a short-term negative impact on economic activity – initially from the supply of labor, but then also in demand, as consumers will refrain from buying much beyond core necessities. The shock to the system should be short-lived and likely resolved relatively quickly. We expect a rebound in most economic activity to occur before the year end.

Central banks are continuing to offer support. The Bank of England in the UK has cut interest rates by 50bps in a move that echoes that of the US Federal Reserve, last week. However in a supply-driven crisis these moves are unlikely to do much to stimulate economic activity. Governments are likely to need to support small and medium sized businesses that will inevitably struggle with cash flow problems, and support workers that are forced out of work. The UK government is implementing a raft of measures to support small businesses and the self-employed who may not otherwise be eligible for sickpay.

Impacts beyond the numbers

Rumors have been circulating for several weeks that Apple will delay the launch of the, yet to be named, lower cost iPhone. This is to be the successor of the iPhone SE, built around the same form-factor as the iPhone 8 series (SE2, iPhone 9..?).

Problems with the launch were initially thought to be because initial volume ramps could be delayed due to Foxconn’s inability to start production. Travel restrictions on Apple’s engineers flying to China to supervise pre-production testing might also be a factor. And if all these were not problematic enough, just holding a launch event at this time, is difficult. So we expect Apple to postpone the launch for a few weeks at least. Other smartphone manufacturers are continuing to launch new products however (link to blogs)

The E3 2020 expo in Los Angeles is the latest among more than 250 trade shows to be cancelled or converted to online events.


We continue to expect a rapid increase in infections in Europe, USA and many other countries over the next eight to twelve weeks before returning towards normal during 3Q and with an expectation of largely normal levels of economic activity by the year end.

Coronavirus (COVID-19) – Update Week 10, 2020

There is cautious optimism that the worst of the outbreak in China is now past. Factories are beginning to ramp up production slowly, though many are still below normal capacity at this time of year. Foxconn said it is running at about half its normal low-season capacity – this equates to about 25% of full capacity. While factories are anxious to ramp-up production, they’re also being careful that labour-intensive work does not rekindle viral outbreaks.

While this is somewhat positive for China, the outlook in the rest of the world is rather more bleak. And the realization of the potential for lasting economic disruption has caused a sharp falls of up to 15% in the value of shares on many stock markets. This has prompted central banks to intervene with support – for example a 50bps cut in interest rates by the US Federal Reserve.

Last week we outlined countries of concern as, South Korea, Japan, Iran, Italy, UK and US. We think these will be good analogues for how the virus is likely to spread more widely.

Coronavirus COVID-19 Global Cases Johns Hopkins CSSE
Source: Johns Hopkins CSSE

South Korea has continued to see infection rates escalate – mostly centered around the southern city of Daegu.

Japan is considering delaying the Olympic Games until later in the year, but has not yet cancelled the event.

Iran has the highest number of deaths outside China, but due to efforts by the regime to deny the extent of the outbreak it has likely led to a greater level of infection in the country. The number of deaths do not tally with the reported number of infections, which must be far higher than the official numbers would indicate.

Italy – it is likely that the virus was circulating for several weeks before being fully recognized. This has led to the level of infections seen and also allowed for travellers to take the infection to other countries.

UK – while the number of cases remain low, several people have been diagnosed who have not been to centers of infection or knowingly interacted with those that have. This indicates that containment is likely no longer possible. The UK government has enacted an emergency plan in which the realistic worse case scenario would see up to 20% of the workforce either off-sick or self-isolating.

USA – new cases are emerging at a fairly rapid rate now, which suggests the virus is circulating and containment is no longer possible.

More than 80 countries have now reported cases, although the actual numbers of reported cases are likely to be the tip of the iceberg; many people have only mild symptoms and may not be counted.


As China gradually recovers from the initial peak of infections, we expect factory production to gradually return towards normal. However, the reduced capacity is likely to continue into the second quarter.


While some supply restrictions ease, we are becoming more concerned about the probable impacts on demand as consumers moderate economic activity in the face of growing infection rates in multiple countries around the world. Our current scenario models a relatively modest decline in demand for smartphones outside China, but there is a growing likelihood that we will revise our estimates downward.

We have also modeled the likely impacts across a range of industry sectors relative to our base line forecasts. Some of these are shown in the chart below:

Counterpoint Coronavirus COVID-19 Expected Impact Relative to Baseline Forecast


The impact to supply and demand was most acute in China. Supply restrictions have started to show up in other global markets. However we are now expecting to see some impact to demand in global markets as consumers moderate their economic activity in the face of personal and economic uncertainty. We nevertheless expect a rapid reversion as the worst of the infection passes with a slight positive rebound effect.


The Chinese automotive sector came to almost a complete halt in January and February. This was mostly driven by a massive drop in demand, although factories also ceased activity through a combination of the Lunar New Year and coronavirus.

Internationally, auto makers have been hit by reduced supplies of parts made by Chinese companies. Several have reported the need to reduce production until supplies return to normal.

We are modelling the Chinese and global automotive sectors to rebound relatively quickly with a slight positive rebound, though we doubt all of the shortfall will be recovered in the near term.

Streaming Media and Gaming

We expect the enforced isolation that many will experience will lead to a greater consumption of streamed media such as music and video, and an increase in online gaming.


Airlines are already cutting capacity – even between countries where there are limited outbreaks. This is driven by business travellers reducing flying – partly due to generally lower activity levels and partly due to the cancellation of large events, for example MWC and the Geneva Motor Show. We expect that as travellers realize that alternatives such as teleconferencing offers a good experience and people think harder about the need for travel – especially in the face of mounting climate change evidence — there will be a longer-term reduction in absolute person/km travelled. UK regional airline FlyBe collapsed late on 4th March. It had been struggling financially, but it cited reduced bookings caused by the coronavirus as a significant factor in it halting operations. It will likely not be the last airline to fail caused by coronavirus.


We think retail will be a tale of two types – offline, brick-and-mortar stores, are likely to suffer a short term decline, while online stores will benefit. Though if there is any significant and sustained impact on logistics, then online stores may also suffer. We expect both to revert to the mean over time, though online may enjoy a slight boost while offline suffers a slight long-term reduction.


The likely extent of infections remains unclear however, we expect countries outside China will likely see a peak in infections in the May/June period before recovering towards normal by the end of 3Q beginning of 4Q. Countries’ ability to contain the outbreak now looks challenging with the emphasis shifting to managing the impact as best they can.

We will continue to monitor and update our scenarios as the situation unfolds.

Coronavirus (COVID-19) – Update Week 9, 2020

  • Global stock markets are, perhaps belatedly, responding to the escalating impact of the Coronavirus outbreak and have started falling on expectation of extended and systematic supply chain disruption. Oil prices are also lower on fears that transport will be affected. Traditional safe haven assets, such as gold, have increased in price.
  • The Coronavirus is likely to be declared a pandemic. A pandemic is when an epidemic spreads to multiple regions/countries. There are political implications to declaring a pandemic, but it doesn’t change the dynamics of the disease spread – though it will serve to heighten peoples’ focus on the potential transmission of the disease and may also contribute to further disruption.
  • With cases escalating fast in S. Korea, Iran, Italy and Japan – and further cases emerging in Germany, Brazil and several other countries, it’s probable the World Health Organization (WHO) declares a pandemic within the next few days.
  • Despite initial failings in recognizing and reporting the novel Coronavirus, China has been quite effective at limiting people’s movement and therefore spread of the virus. But other countries may be less successful at containing outbreaks. And as China is the manufacturing source for N-95 facemasks, supplies for export will be restricted. India likewise is restricting exports of facemasks. Some drugs are also likely to become supply constrained.
  • Developed nations have vulnerable supply chains – shops in big cities are resupplied daily, for example. Any breakdown in supplies can lead to panic buying, shortages and further disruption to travel and many normal behaviors at a population level. At extremes, civil unrest can result in looting and a breakdown in law and order.

Countries to watch closely for developments:

South Korea: a spike in cases and lack of clarity among potentially infected peoples’ movements will lead to more cases developing over the next week or two. Containment currently looks challenging despite the alert level being raised to RED.

Italy: a popular tourist destination, Italy is now attempting to lock-down parts of the country most badly affected. Nevertheless, cases are emerging in other countries based on people travelling from Italy. Likely a prime source for infections across Europe. The forthcoming Italy vs Ireland rugby international match has been postponed based on concern about the virus spreading with travelling fans.

Japan: most cases relate to the impounded cruise liner, Diamond Princess, but the true number could be higher due to poor handling of passengers on the cruise ship.

Iran: even the health minister has been infected. Cases likely under-reported and given the importance of some infected areas to Muslim tourists, high likelihood of spread to other Muslim nations in the region.

U.K. has now started testing people showing flu-like symptoms but who have not been to known infected areas. If infection is found it will indicate that the viral spread has not been contained.

U.S. it is likely that the true extent of cases is unknown and unreported due to lack of screening on ports of entry, lack of sufficient diagnostic testing and lack of funding to health agencies to take effective action. Increased testing, like in the UK, will reveal to extent to which the viral spread has already occurred.

Overall, our expectation that we see widespread transmission of the disease and a concomitant impact on retail sales, supply chain disruption and other economic disturbance has risen from somewhat unlikely to likely. Companies will need to plan for an extended period of disruption to a business-as-usual situation – likely lasting well into the second quarter.

Impact on China and Global Smartphone Demand

  • Demand-side: the PRC economy has been impacted severely during this period. Sales have fallen sharply and will recover slowly. We estimate a 30% drop during the lock down period. The lock down period and travel restriction period will last for at least two months, so affecting through the end of March. Some offline retailers are saying they have experienced a 50% drop in sales during the late January period. However there is some sales offset by an increase in online sales.
  • Supply-side: there will be impact to new devices to be launched in the first half which have facilities in China, as factories will not function properly. Components sourced from China will also be impacted as all factories will resume operation slowly and cautiously. This will range from displays from BOE, CSOT and semiconductors from YMTC and further on. So the negative impact from the supply chain side will last until end of Q2 minimum.
  • Our initial expectation was that the virus would be contained within two months and take three further months for things to get back to normal. We now expect Q1 PRC sales to be down by around 25% compared to our original forecast. This is 18% lower than Q1 last year. But this can worsen if the virus is not contained. Global sales will also go down 7% compared to same period last year. Overall we think Q1 and Q2 will show negative growth both globally and in PRC before rebounding.
  • This is our base case scenario. The downside risks are increasing daily and we will likely revisit this forecast based on emerging information over the next days and weeks.
  • We also expect  China smartphone sales to drop over 20% in Q1 2020. The impact of nCoV could be much more severe than many currently expect. (Click here to listen to the latest Counterpoint Podcast on the Coronavirus)

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5G MEC – Deployment Options and Challenges for Mobile Operators https://www.counterpointresearch.com/5g-mec/ Thu, 25 Jun 2020 12:27:39 +0000 https://www.counterpointresearch.com/?p=30045 One of the major promises of 5G is low latency, with target levels of 1 millisecond being specified for the […]

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One of the major promises of 5G is low latency, with target levels of 1 millisecond being specified for the air interface in 3GPP’s Release 16 document. Low latencies will enable Mobile Network Operators (MNO) to introduce a wealth of new applications and services. However, achieving these low latency levels will require them to build a dense network of Multi-Access Edge Computing (MEC) data centres at considerable cost and with significant business risk.

MEC Deployment Options

MEC platforms can be deployed at multiple locations in a network with the chosen location depending on various factors, including required performance criteria (for example, latency), physical deployment constraints, scalability and use case requirements. As shown in Exhibit 1, the most suitable locations are at the tower, network aggregation points, mobile core and central office sites.

  • Level 1: Tower/Base Station – this is the closest point in the mobile network to the mobile user and, therefore, the one with minimal latency. However, often this may not be the best choice for several reasons, including power limitations (most cell sites are limited to 1-2 kW), the lack of fibre resources at individual tower locations and the increasing trend within the wireless industry to aggregate radio management at central locations, for example, at C-RAN hubs.
  • Level 2: Network Aggregations Points – in a macro cellular network, possible locations include at multi Radio Access Technology (RAT) points, Service Access Points (SAPs) or at C-RAN hub sites. C-RAN hubs typically control around 30-40 cell sites and enable RTT latencies to and from the base station of around 10-20 milliseconds.
  • Levels 3 and 4: EPC, Central Offices, etc. – in the case of incumbent MNOs/telcos, possible locations include EPC sites and fixed network nodes such as regional data centres (large central offices), local data centres (small central offices) or other aggregation sites.

Real-World Latency Levels

Although there is a lot of hype about the 1 millisecond latency target, the actual levels of latency in public 5G networks will depend on real world deployments. As a result, latency levels in the 10-12 millisecond range are more likely than 1-2 milliseconds and will probably require a heavy reliance on fibre and optical switching in the transport network. However, it is likely that single-digit millisecond delay times will be possible for URLLC[1] use cases running on private, industrial 5G networks, which are essentially controlled environments not subject to the typical traffic congestion issues within public 5G networks.

MEC Infrastructure Costs

Adding MEC will clearly increase the cost of 5G networks, with the actual costs depending on how it is implemented. The most expensive option will be if MEC is implemented at every tower location, with likely thousands of sites per MNO (Level 1). Deploying at RAN aggregation points or other Points of Presence (PoPs) would reduce the number of MEC sites from thousands to hundreds per MNO and cost significantly less. The most cost-effective solution, however, would be deployment at a few tens of EPC sites and large central office facilities (Levels 3/4). This is the option that most MNOs will likely adopt initially and is the preferred option of, for example, SK Telecom and Deutsche Telekom, both of whom launched limited commercial MEC services during 2019.

Exhibit 1: RTT Latency at various points along a 5G network

Counterpoint: Suitable low latency MEC locations in 5G Networks

Other challenges may also drive MNOs towards the Levels 3/4 option. For example, the physical space available at many cell sites is limited and an adequate power supply to power the additional equipment may not be easily available. There will also be a higher risk of theft in some countries for MEC equipment which may result in higher security costs.

Central vs Distributed MEC Architecture

While it is likely that more applications will emerge that require sub-1 millisecond latency in the future, Counterpoint Research believes that the main focus in the short term will be on Layer 3/4 MEC data centres. MNOs should start by deploying MEC at Levels 3/4 locations and then progressively expand to Level 2 and finally to some Level 1 locations. In this way, MNOs can address new opportunities without needing to impose unachievable ROIs on their MEC business cases. Some MNOs may take a bold decision and adopt a much more distributed MEC architecture. For example, Rakuten Mobile has deployed more than 4,000 vDU[2]/MEC sites across Japan. However, this is a green build 4G LTE network development.

Rather than building its own MEC infrastructure, MNOs may choose other options. For example, there are discussions among MNOs on sharing MEC sites. There are also tower companies, CDN players and edge data centre providers planning to extend their network infrastructure further to the edge with the intention of leasing capacity to MNOs. This may be a more suitable option for smaller MNOs.

[1] Ultra-Reliable Low Latency Communications

[2] vDU = virtual Distributed Unit, one part of the virtualized baseband


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5G Network Slicing Versus Private Networks: Benefits and Drawbacks

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Podcast: IoT Platform Competition Intensifies with Cloud-To-Edge Approach https://www.counterpointresearch.com/podcast-iot-platform-competition-intensifies-cloud-edge-approach/ Thu, 25 Jun 2020 11:46:45 +0000 https://www.counterpointresearch.com/?p=30281 As more and more devices are being connected to the cloud via internet, IoT is becoming more pervasive. These devices […]

The post Podcast: IoT Platform Competition Intensifies with Cloud-To-Edge Approach appeared first on Counterpoint Research.

As more and more devices are being connected to the cloud via internet, IoT is becoming more pervasive. These devices help in real-time monitoring, data collection, analyzing and then taking the required action. At Counterpoint Research, we recently completed the latest in-depth analysis using proprietary CORE (COmpetitive Rankings & Evaluation) framework to evaluate the leading 20 IoT platform players. They were evaluated based on over 35 capabilities and parameters highlighting completeness, comprehensiveness, and competitiveness.

In most scenarios, sending data to cloud, waiting to process and then taking the required action is not feasible. Due to this edge computing is becoming important. This is also a reason why cloud-first leaders such as Amazon AWS, Microsoft Azure, IBM Watson, Cloudera and others are extending their IoT platform capabilities from cloud to edge.

Exhibit 2: Counterpoint CORE – Leading IoT Platform by Completeness i.e. End-to-End Capabilities

Counterpoint CORE – Leading IoT Platform by Completeness i.e. End-to-End Capabilities

But as the IoT ecosystem continues to expand, and move from cloud to edge, security cannot be neglected. This is especially true for devices that gather and store your personal data. In the previous episode of “The Counterpoint Podcast”, we discussed the Future of IoT Security. In the latest episode, host Peter Richardson and consultant Falguni Shah discuss the IoT platform landscape and how the space is shaping up. Topics covered in the discussion include the leading IoT platform companies, level of automation they offer, competitiveness and more.

Detailed report with CORE Evaluation and Analysis of the world’s Leading 20 IoT platforms research can be found here. You can also read our report on overall IoT platform landscape and leading edge-focused IoT platforms here.

Hit the play button to listen to the podcast

Also available for listening/download on:


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UK: Six in Ten Surveyed Hearable Users Plan To Buy TWS Within a Year https://www.counterpointresearch.com/uk-six-ten-surveyed-hearable-users-plan-tws/ Wed, 24 Jun 2020 07:26:45 +0000 https://www.counterpointresearch.com/?p=30229 One in two respondents plans on having ANC in their next TWS device. Apple and BOSE are the most preferred […]

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One in two respondents plans on having ANC in their next TWS device.

Apple and BOSE are the most preferred brands for future TWS purchases. 

New Delhi, Mumbai, Hong Kong, Seoul, San Diego, London, Buenos Aires – 24th June 2020


Six out of ten hearable users in the UK plan to buy a True Wireless Stereo (TWS) headset within a year, according to a Counterpoint Research Consumer Lens study. This consumer research study highlights the inclination of consumers towards TWS, with one-third preferring TWS for regular use.  The UK’s TWS market is set to grow at a 64% CAGR to 17 million units in 2022.

Looking at the future potential of TWS hearables, users who currently only have wireless hearables, 70% of them are interested in buying a TWS in the future. Among users who have both wired and wireless hearables, 60% of them are interested in TWS. The interest level is lowest among users who only have wired hearables, where only 44% of them are interested in a TWS purchase in the future. However, this is, at least partially, driven by users simply making use of the headphones supplied with most smartphones.

Commenting on the UK hearables market, Arushi Chawla, Research Associate at Counterpoint Research, said, “In this transitional phase towards a wireless lifestyle, hearables are part of the journey. Advancing technologies lead to smaller form factors and new designs that make hearables comfortable to wear and part of the day to day fashion. Further democratizing the technology is occurring as economies of scale are leading more and more smartphone brands to include TWS as a part of their portfolios.”

Chawla further added, “Tough competition between brands and the fast replacement cycles of hearables are acting as catalysts which will increase the penetration of TWS in the near to mid-term. According to our survey results, more than half of prospective TWS buyers are planning to spend between £50-£150 for their next hearable purchase. This is because many wireless hearable users are moving toward higher ASP TWS devices. Many first-time hearables buyers are also aiming to buy TWS hearables due to their wide availability. This will further push the sweet spot of the overall hearables market from below £50 towards £51-£100 in the next year.”

Exhibit 1: Hearable Purchase Intention by Price Band

Counterpoint Research-Hearable Purchase Intention by Price Band

Source: Counterpoint Research Consumer Lens Survey, May 2020

Analyzing the most sought-after features in future purchases, nearly 90% of our survey respondents expressed interest in active noise cancellation (ANC). One in every two is interested in having ANC in their next TWS purchase and more than half of them are ready to pay up to 20% extra for ANC.

Pavel Naiya, Senior Analyst at Counterpoint Research, highlights, “The interest in ANC over other features like auto volume adjustment, real-time translation, voice search, etc. is due to the multiple use cases for ANC in our daily life. It is helpful to create an uninterrupted environment when listening to music or an audiobook or a more distraction-free environment during work or study. ANC features in TWS are also praised for providing better sound quality, but concern was also expressed about the potential for ANC to drain batteries faster.”

Commenting on the OEM preference, Mr. Naiya added “Apple will continue its dominance of the UK hearable market because of its loyal smartphone user base. Bose is well-known for its wireless headphones and this popularity is translating also to TWS, helped by recent attractive offers. Sony’s high ratings in media reviews have helped it secure the third strongest brand preference – similar to Bose.”

Exhibit 2: UK: Future TWS Brand Preference

Counterpoint Research-UK Consumer Preferences for Future TWS Purchase

Source: Counterpoint Research Consumer Lens Survey, May 2020


A consumer-level survey was conducted with hearable users in the UK during May 2020. The consumer opinion belongs to a heterogeneous group in terms of age, monthly income, gender, and occupation. Data points were selected which abided all the logical checks throughout the analysis section and gave a better representation of the ongoing hearable trend and future opinion in the UK.

Contact Us:

The comprehensive and in-depth report on the UK- Six out of Ten Surveyed Hearables Users Plan for a TWS Purchase Within a Year is available for subscribing clients. Please feel free to contact us at press@counterpointresearch.com for further questions regarding our in-depth latest research, insights, or press inquiries.

Related Posts

Analyst Contacts:

Arushi Chawla


Pavel Naiya

Liz Lee

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Oppo Find X2 Pro: Gorgeous Display and Versatile Cameras, at a Premium https://www.counterpointresearch.com/oppo-find-x2-pro-review-gorgeous-display-versatile-cameras-premium/ Tue, 23 Jun 2020 06:36:54 +0000 https://www.counterpointresearch.com/?p=30213 The Oppo Find X2 Pro features a 6.7-inch QHD+ display with a 120Hz refresh rate. The triple rear camera setup […]

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The Oppo Find X2 Pro features a 6.7-inch QHD+ display with a 120Hz refresh rate.

The triple rear camera setup offers 10X hybrid zoom and 60X digital zoom.

Equipped with 5G connectivity, it supports both SA and NSA bands.

Back in 2018, when smartphone designs were getting boring and notched displays were becoming common, Oppo launched the Find X offering an immersive full-screen display. To achieve this, Oppo added a motorized sliding mechanism that would pop-up to reveal the cameras. It was a unique implementation that made the Oppo Find X stand apart from the rest. But the smartphone had its set of shortcomings, which the company has tried to address with its successor – the Oppo Find X2 Pro.

Oppo took two years between the launch of the Find X and the Find X2-series, but it has focused on some key areas to make the wait worthwhile. There are two models – the Find X2 and Find X2 Pro, with the difference between them being the camera setup and IPXX rating. I have been using the “Pro” model for over a week now, and I can clearly say that the Find X2 Pro is a contender to fight for the best Android smartphone title for 2020.

Ultra-Premium Segment Gets a Worthy Competitor

Oppo has been in the smartphone industry for close to a decade now, but it has mostly been focusing on affordable and mid-range smartphones. With the Reno-series and Find X, the company entered the premium segment. The Reno-series helped Oppo gain some market share in the premium segment. In Q1 2020, Oppo registered a growth of 67% YoY (from a low base), according to Counterpoint’s Monthly Pulse Service.

counterpoint oem share premium

With the Find X2-series, Oppo has debuted in the ultra-premium segment. The Find X2 Pro is offered in two SKUs – 256GB and 512GB models, both having 12GB of RAM. With a starting price of $1,200, the smartphone is even more expensive than the Galaxy S20 Ultra 5G. This clearly shows Oppo’s ambitions to compete with the best ones out there.

Commenting on the premium strategy, research analyst Varun Mishra said, “The premium segment is important for OEMs as it contributes to over half of the industry revenue. However, the segment remains consolidated. Over the last few quarters, we have seen Chinese OEMs trying to crack this segment through various strategies like introducing sub-brands, new product lines, or 5G devices. Oppo, with the Find X2 Pro, has launched a 5G-capable premium device with a unique design, stellar camera and a stunning display. With the increasing adoption of 5G and declining demand for Huawei outside China, there is a gap to be filled in the premium segment, especially in markets like Europe. Oppo can leverage this opportunity. The Find X2 Pro also shows Oppo’s prowess in the design and innovation stakes, which will also help in gaining mind share-across all markets.”

Steep pricing aside, Oppo has focused on display and camera tech, while also offering future-proof 5G connectivity. The spec sheet sounds good on paper, but does the smartphone deliver on its promise? Can Oppo command such high pricing? Here is what I think after putting it through the paces for over a week.

Beautiful Design with Ceramic Back

Over the past two years, we were increasingly seeing the trend of multi-color gradient back designs. But that seems to be dying down in 2020. Be it Samsung or OnePlus or Huawei, and now even Oppo, we are looking at simple elegant designs.

The Find X2 Pro sports a ceramic back with glossy finish and etched circular texture which has two advantages. First, the surface is non-slippery, which offers a good grip when holding the phone. Secondly, the usual smudging problem that we see with the glass back is not present here, and I appreciate this.

“The ceramic back offers a classy look and premium feel to the smartphone.”

There is also a Vegan Leather option that you could go for, and it is a refreshing change from the typical glass back designs. The Asus Zenfone Zoom and Samsung Galaxy Note 4 were some of the other popular phones featuring a leather back.

Stunning Display with Smooth 120Hz Refresh Rate

The display is an important component of a smartphone with which we interact the most. With COVID-19 lockdowns, work-from-home, content consumption and gaming on device, has increased. Having a high-quality display is the need of the hour to enjoy immersive entertainment, and the Oppo Find X2 Pro does not disappoint.

The front is dominated by a 6.7-inch QHD+ Super AMOLED panel with very thin bezels on the top and bottom. The screen is slightly curved on the edges, which gives a premium look and feel. It runs at a resolution of 3168×1440, with a pixel density of 513 PPI and a tall aspect ratio of 19.8:9. Be it text or videos, everything looks crisp and vivid. You can customize the experience by choosing between Vivid, Gentle, and Cinematic modes.

counterpoint oppo find x2 pro review lead

The screen offers a refresh rate of 120Hz and a touch sampling rate of 240Hz, which reduces latency and improves touch response when playing games. Unlike Samsung that locks 120Hz refresh rate at FHD+ resolution, Oppo is letting users experience the same at QHD+ resolution too.

What makes the Find X2 Pro’s display stand out is the Pixelworks Iris 5 chipset which enables HDR10+, HDR Boost, and color accuracy. There is also MEMC technology that upscales 24fps videos to 120fps to reduce motion blur and stuttering, especially when watching action-packed content. You will notice these smooth visuals when watching sports like football or basketball. You can also experience this when watching dance videos on YouTube and other apps. During my usage, I did not notice any choppiness or frame drops in video playback. But people who are not used to the faster frame rate may find it hyper-real, and it will take time getting used to it.

“The Find X2 Pro’s screen is a visual treat and the smooth graphics will encourage you to watch more content on the screen.”

A Versatile Triple Camera Setup

The Find X2 Pro comes with a total of four cameras – three at the back and one on the front. The rear camera setup includes a primary 48MP (Sony IMX689) sensor with f/1.7 aperture and all pixel omni-directional PDAF, which helps with faster focusing. It uses a Quad Pixel Quad Bayer set up to output 12MP photos by default. The camera app also has a mode that lets you capture photos in full 48MP resolution.

The second is a 48MP (Sony IMX586) sensor with an ultra-wide-angle lens (120-degree FoV), which also doubles as a macro lens. I like Oppo’s choice of sensor here, and I was impressed with the colors and sharpness offered by photos shot using the ultra-wide lens. There is also less distortion visible in the photos.

Oppo was the first smartphone maker to propose a periscope-style compact camera system. Though Huawei commercially pioneered it later with the P30 Pro. That brings us to the third sensor, which is of 13MP resolution and features a periscope style telephoto zoom lens. It enables you to take photos with 5X optical zoom, 10X hybrid zoom, and 60X digital zoom. Upfront, there is 32MP snapper for selfies and video calling embedded in hole-punch display cutout.

Camera Samples: Ultra-wide and regular

Below are a couple of shots taken using the ultra-wide and primary camera lens in default 12MP resolution. As you can see in the first ultra-wide photo, the camera has captured all the elements perfectly with fine details and accurate colors. Though the tone is slightly on the cooler side, which could be the AI at work to balance the overall frame.


The second photo is shot using the primary lens, and you can instantly notice the clarity and how well the subjects have been captured. Here the tone is slightly on the warmer side, based on the scene, and I don’t have any complaints about it.


Impressive Zooming Capabilities

Moving on, the next two photos were shot in 2X and 5X zoom levels. As you can see in the photos below, the periscope telephoto camera can capture crisp photos while retaining details. Notice the text on container trucks, the buildings, and the people walking there.



Finally, we come to the real test. The first photo is shot at 10X hybrid zoom level, and you can still clearly see the text on the trucks, the colors are retained and even the windows of the buildings in the back look sharp. The last photo is shot at 60X digital zoom. While not completely sharp, the text on the trucks is seen, and they were roughly 800 meters away from where I was standing.



“The optical, hybrid, and digital zooming capabilities offered by the Find X2 Pro are impressive.”

Portrait and Macro Photography

Capturing photos of moving subjects, especially pets is challenging. The same goes for insects and flies as they quickly move or fly away as you go closer. The quick focusing and zero-shutter-lag help take blur-free shots.

In the first shot with the cat moving its head, I would barely look at the camera for two seconds. With the right timing, I was able to capture a perfect shot. In the second photo, it was a little windy, and the branches were moving, still, the camera managed to capture a good portrait shot. The edge detection is a little off due to windy conditions, but the overall photo has a good background blur with the subject in the focus.



Moving to macros, you can capture close-up shots from a distance close to three centimeters. If shot correctly, the subjects are well in focus, with adequate background blur. The camera also retains colors and other details accurately.



Clearer Photos Even in Low-Light

For the low-light photos, I was looking for a subject where I could test the camera’s capabilities. I found a small spot in the building’s secluded corner where the painting cans were kept. It was dark with very little street-light falling there. With normal mode, the photo looks dull, but the moment I turned on “Ultra Dark Mode” I was able to capture a good shot.

What the mode essentially does is that captures a burst of photos at multiple exposures in about six seconds and then stitches them together. The AI is also at work here to increase brightness, sharpness, and reduce noise. Do note to keep your hands steady to capture blur-free photos.

Selfies Look Bright and Detailed

The 32MP front camera captures photos in full resolution, and they are about 6MB in size. I took a couple of selfies where there was a little harsh sunlight. With HDR on, you can see the grass and trees look a little overexposed, and the colors are punchy too. But if you look at the face, the camera retains details, and the AI smoothens the skin. With AI turned off, and portrait mode on, you see a nice background blur and natural skin tone with details.

Smooth Video Recording and Playback

The Snapdragon 865 SoC allows for up to 8K video capture but, sadly, Oppo has kept the Find X2 Pro restricted to 4K (60fps) video capture. I shot three sets of sample footage to test the quality. At 4K (60fps) the footage was good, but it does not support OIS, which makes the video a little jerky.

There is Ultra Steady mode too, which enables OIS + AIS which reduces the shakiness. The mode works well, and the footage is smooth. Though, the resolution is reduced to 1080p. Oppo has also added Live HDR Video to capture rich footage, and I was impressed with the overall quality. There is also bokeh mode that keeps the subject in focus, while the background is blurred, but it only works when the human subject is present, not when shooting videos of objects, but that is not a deal-breaker for most users.

“You’ll love capturing videos on the Find X2 Pro, especially with Ultra Steady mode.”

Blazing Fast Performance to Keep You on Your Toes

On the performance side, the Oppo Find X2 Pro comes with Qualcomm’s 7nm Snapdragon 865 SoC under the hood. It is paired with 12GB of LPDDR5 RAM and UFS 3.0 storage (256GB/512GB). The hardware, a screen with a 120Hz refresh rate, combined with Android 10 and Color OS 7.1 skin, offers fast performance. You will notice how smooth the UI is, be it scrolling through the app drawer or settings, or running multiple apps in the background.

Gaming performance on the smartphone is good too. I played games like PUBG Mobile with Ultra Settings and HDR on and did not notice any lag or stutter. The experience was the same when playing Asphalt 9: Legends and COD: Mobile. Every evening I play PUBG Mobile for about two hours at a stretch, and even with 120Hz refresh rate and brightness at 50%, the phone barely gets warm. I just wish Oppo had added features like 4D vibrations to make the gaming experience more fun.

Battery drain with Wi-Fi during this time is 70% (went from 100% to 30%). Lowering refresh rate to 60Hz did reduce some battery consumption, and the drain this time was 58%. Personally, in favor of smooth experience, I do not mind keeping the refresh rate at 120Hz all the time.

Oppo has also optimized the software very well. Unlike the previous iterations, this one is more refined and, out of the box, I did not find any questionable apps or app recommendations. Though apps like Netflix, Trip.com, Webnovel, OfficeSuite, Opera, and Facebook are available out of the box, but you can uninstall them if so-inclined.

Another interesting development is where the Oppo Find X2 Pro is also a part of the Android 11 Beta program. This means you will be able to install the preview version of the next Android iteration to try out the upcoming features before its officially released. It is a good move in redefining the premium experience, at least from the software point of view.

Resilient Battery Life and 5G Support

The smartphone is armed with a 4,260mAh battery with Super VOOC 2.0 Flash Charge technology. Oppo has bundled a 65W fast charger in the box, which takes the battery from empty to 100% in about 43 minutes (as opposed to the 38 minutes mentioned in the ads). Though it misses out on wireless charging, which is now common on other flagship smartphones.

In terms of battery life, with regular usage, you could sail through the working day. Unfortunately, with the current work from home scenario, I could not test it fully. But I tried one-hour worth gaming, binge-watching TV shows for an hour, some 20 minutes phone calls, and casual social networking. With all this, I could get close to 4 hours and 42 minutes of screen time, with battery drain to 5% from full. Which is not bad considering 120Hz refresh rate is on all the time.

“The charging is crazy fast offering a quick top-up within minutes.”

In mature markets like China and Europe where 5G networks have been deployed, the Find X2 Pro supports the next-gen network on the Sub-6Ghz band (both SA and NSA). This makes it an ideal choice in European countries where Huawei’s latest flagships lack GMS support. As there is no 5G network here in India, I could not put it to the test.

Security and Extras

For security, the smartphone comes with an in-display fingerprint scanner which is quick in recognizing and unlocking the device. There is also face unlock, which is speedy, but I mostly prefer fingerprint unlock as it is more secure.

Talking about extras, I found an app called Oppo Relax, which offers beautiful nature sounds to lighten up your mood. There is breathing mode, which you can follow to inhale and exhale air, and thus relax. The app also has different sounds to quickly set the ambient mood. You can switch between temple to mountains, to nature, coffee shops, rain, or a seashore among others. It also supports Dolby Atmos, giving you a completely immersive experience.

Concluding Thoughts: Find X2 Pro is Oppo’s Best Smartphone So Far

The Find X2 Pro has a lot of merits going in its favor. It sports one of the best-looking displays on a smartphone, making it ideal for content consumption and gaming. The cameras are capable of taking great photos too. With an overall speedy performance, crazy-fast charging, and ceramic back design, the smartphone is definitely in my recommendation list.

But can Oppo command a high price tag of $1,200? Well, it has everything that you would expect from an ultra-premium smartphone, including IP68 water and dust resistance. The only missing feature is wireless charging. Oppo has done a fantastic job in designing the Find X2 Pro, and with a lot of innovations going inside, it is more like testing the waters in the ultra-premium smartphone segment to win some market share from dominant Android players such as Samsung and Huawei.

Also Read: Strategic Reviews and Insights on The Latest Smartphones

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Apple chip contract would help Taiwan Semiconductor fill a Huawei-shaped hole https://www.counterpointresearch.com/apple-chip-contract-help-taiwan-semiconductor-fill-huawei-shaped-hole/ Mon, 22 Jun 2020 12:11:05 +0000 https://www.counterpointresearch.com/?p=30359 “This is good for Apple. If Apple switches to designing its own chips for MacBooks—like it has done for iPhones—then […]

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“This is good for Apple. If Apple switches to designing its own chips for MacBooks—like it has done for iPhones—then it can design a chip with better and more targeted performance than those provided by Intel,” said Brady Wang, an analyst at Counterpoint Research.

Read more

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Global TV Market Forecast by Region (2020-2025F) https://www.counterpointresearch.com/global-tv-market-forecast-region-2020-2025f/ Mon, 22 Jun 2020 11:33:00 +0000 https://www.counterpointresearch.com/?p=30350 Overview: The latest research from Counterpoint’s TV tracker service reveals that the global smart TV market growth will be more […]

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The latest research from Counterpoint’s TV tracker service reveals that the global smart TV market growth will be more than 9% CAGR from 2020 to 2025. This report contains the global TV market and global smart TV market numbers from 2018-2019 and  forecast numbers from 2020 to 2025, along with a region split. In 2020, the markets will likely be down across all regions due to the COVID-19 pandemic but the market will bounce back once the global economy recovers in the latter part of 2020 or the beginning of 2021.

Table of Contents:

  • Assumptions
  • Global TV Market Forecast by 2020-2025 by Region
  • Global smart TV Market Forecast by 2020-2025 by Region

Author: Debasish Jana

To view more reports from our Research portal, click here.

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One in Every Three Smartphone Users Will Cut Spending by 20% or More on Their Next Smartphone https://www.counterpointresearch.com/smartphone-users-cut-spending-next-smartphone/ Fri, 19 Jun 2020 11:27:14 +0000 https://www.counterpointresearch.com/?p=30058 One in three respondents to our survey is intending to cut spending by 20% when making their next smartphone purchase, […]

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One in three respondents to our survey is intending to cut spending by 20% when making their next smartphone purchase, according to our latest Consumer Lens study. The economic activities of all major countries have been severely impacted by the COVID-19 crisis. With coronavirus cases surpassing 8 million globally in June 2020 and the new confirmed cases continuing to rise, all major markets saw a significant reduction in consumer spending. This will likely lead to negative smartphone sales growth globally in 2020.

To better understand consumer intentions in the smartphone market, we conducted a Global Consumer Lens study across seven major smartphone markets (USA, UK, India, France, Germany, Spain, Italy). According to the results, almost half of the respondents are expecting to delay their next purchase. Respondents planning to wait before buying are the highest in India (61%). We found a similar intention in Spain and Italy where 58% and 56% of respondents, respectively, planned to wait longer before replacing their smartphones. In the USA, the number intending to delay buying was 41%. Germany had the fewest respondents planning to delay purchasing (34%).

Commenting on consumer purchase intentions, Senior Analyst, Pavel Naiya, said, “The coronavirus outbreak and future income uncertainty has affected consumer behaviour with many strictly limiting purchasing to only the essentials. Smartphone consumers from Spain and Italy are the most affected. Consumers intending to cut their future smartphone purchase budget by 20% or more are highest in Spain (27%) and Italy (25%), followed by the USA (24%). Looking at the current circumstances, we expect this trend will continue until mid-2021.”

Exhibit I: Future Spending Intention on Purchasing of Smartphone

Counterpoint Research Consumer Lens Future Spending Intention on Purchasing of Smartphone
Source: Counterpoint Consumer Lens May-June 2020

To maintain social distancing, two-thirds of the respondents in India and more than half the respondents in Italy and the USA are looking for a ‘low touch’ sales channels. This will likely lead to more online ordering with home delivery and online ordering but collecting in-store – also known as online-to-offline (O2O), or click-and-collect.

Commenting on the various approaches being taken by manufacturers, Research Associate, Arushi Chawla said, “We have seen many initiatives taking place in developing countries like India in the early phase of the lockdown period. Xiaomi started the Mi Commerce web app to connect consumers with the nearest retail store. Samsung has strategically partnered with Benow to help retailers register their inventory on its platform. Vivo’s Smart Retail, where customers can send their product related queries to retailers through SMS and reach out to the e-store (shop.vivo.com) or official Facebook page for order placing. Oppo customers can order deliveries or raise service requests on WhatsApp or via SMS.”

Ms. Chawla further added, “All O2O operations come with an overhead cost and additional expenses involved in the awareness-building campaign. It is hard on the bottom-line especially when most of these smartphone manufacturers are already operating on thin margins. Nonetheless, the coronavirus is here to stay, and top brands will look forward to creating long term strategic investments in making their distribution more agile.”

As the Wuhan region of China was the starting point of the COVID-19 pandemic, we explored consumer sentiment about smartphones manufactured in China. The anti-china sentiment is highest among Indian consumers. More than half of the respondents from India have a negative attitude towards Made-in-China products or Chinese smartphone brands. Around four in ten respondents said that they will not buy Made-in-China products or smartphones from Chinese brands. We believe the recent conflict on the India-China Line of Actual Control (LAC) will play a profound role in shaping this behaviour. (Note: this survey was conducted before the India-China faceoff at LAC in Galwan Valley). However, to counter this sentiment, many brands have recently initiated “Made in India” and nationalistic campaigns.

Similarly, about one-fifth of respondents from the USA preferred not to buy Made-in-China products. In the era of globalization, it is difficult to label a product as “Chinese” as its components are sourced across different regions.

Many tech giants including Apple are reported to diversify their manufacturing to other countries, for example, Vietnam, Thailand, India, etc. Though we believe, these manufacturing strategies are more about avoiding an over-dependence on the Chinese ecosystem than anti-China sentiment. Nevertheless, it will be an uphill task to set up similar ecosystems in other countries. It may be easy to diversify the assembling of parts but choosing the right supplier located in a geographical cluster with skilled labour requires long term strategic partnerships and investments.

Country-level Consumer Insights:


  • Online is the fastest-growing channel in the USA. It is more popular among respondents who are not working and who are looking to buy LG, Sony, and is least popular among prospective Apple buyers.
  • As a mature market, most users are already divided between iOS and Android. Brand loyalty for Samsung and Apple users are similar. Apple users are most satisfied with the iPhone camera while Samsung users are most satisfied with the Galaxy display.
  • The importance of selfie camera increases in the last two years, most likely because of new social media AR (Augmented Reality) features that use a selfie camera to create interactive content. More recently, video calls being a major part of daily routines have further accentuated the importance of good front-facing cameras.


  • Two-thirds of UK consumers are considering buying a smartphone according to their usual plan. Only 11% are planning to cut their budget by 20% or more.
  • 43% of the survey respondents are considering replacing their device in the next year. Operator stores continue to be the preferred channel of purchase, followed by mass merchandise electronic stores.
  • Close to 90% of respondents have no hesitation in buying Made-in-China products.


  • Half the respondents are intending to spend between USD135 – USD250 (INR10,000 – INR 20,000)
  • More than half of the respondents intend to replace their devices in the next year.
  • As a big proportion of users will wait for a longer period to replace their smartphone, it will push the average replacement cycle from the current 22 months to around 26 months.
  • Online review articles are the top source of information followed by friends and family and technology-related YouTubers.
  • About seven in ten respondents are interested in buying a separate smartphone for kids to help with their learning.


A Consumer Lens survey was conducted with smartphone users in the seven countries during May-June 2020. The consumer opinions are drawn from a heterogeneous group in terms of age, monthly income, gender, and occupation. Data points were selected which abide to all the logical checks throughout the analysis section and gave a better representation of the ongoing smartphone trend and future purchase intentions.

Analyst Contacts:

Pavel Naiya

Arushi Chawla

Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our latest in-depth research, insights, or press inquiries.

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The Rise of Smartphone Players in the Smart TV Market https://www.counterpointresearch.com/rise-smartphone-players-smart-tv-market/ Thu, 18 Jun 2020 05:47:13 +0000 https://www.counterpointresearch.com/?p=29955 Smartphone makers are now eyeing the smart TV market globally. Smart TV is a natural extension for a lot of […]

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Smartphone makers are now eyeing the smart TV market globally. Smart TV is a natural extension for a lot of device makers as they are quite familiar with the TV supply chain. When the world is moving towards the smart living concept and smart TV can be considered as the first step in that smart home ecosystem. Smartphone makers are leveraging brand recognition that they already have in the market and they have enough technical expertise to develop a product like smart TV. So, the entry barrier in the smart TV market is really low for smartphone companies.

Smartphone makers are specifically going into the smart TV business and targeting mostly the Asian market where the smart TV category is less mature than the North American and European market. In North America and Europe, traditional TV brands like Samsung, LG and Sony enjoy much more brand recognition than the newly-entered Chinese brands, like Xiaomi and OnePlus. Chinese brands are already dominating the smartphone market in China and India while Xiaomi grabbed the no. 1 position in the Indian smart TV market.

Xiaomi is one of the first smartphone companies to foray into the smart TV segment. Xiaomi already has established itself as a value-for-money brand in the smartphone market and it is capitalising on that brand proposition to enter the smart TV market, in a time when smart TV was not affordable for the mass, especially in the Asian market. Nevertheless, Xiaomi got the early mover advantage and grabbed a 7% share in the smart TV market globally.

The Rise of Smartphone Players in the Smart TV Market

After the success of Xiaomi in the Asian market, especially in China and India, other smartphone makers entered the market with a special focus on those two countries. Although Motorola and Nokia have launched the products only in India to exploit the opportunity in the booming India smart TV market – it is unlikely they will expand to other markets soon.  In China, Huawei launched smart TVs running on its Harmony OS under both Huawei and Honor brands.

Most of these brands tapped into a market where consumers are buying a smart TV for the first time. They are offering a tailored and feature-rich product to the consumer at an affordable price point. By contrast, OnePlus is differentiating itself by launching a premium smart TV.

Realme will likely intensify competition in the affordable smart TV segment with its newly launched smart TV range. For these brands focusing on certain specs along with overall value proposition is very important as the life cycle of TV is around 4-5 years which is very different from smartphones (2-3 years).

While Chinese smartphone brands are aggressive in the Asian smart TV market, Indian and Japanese TV brands still have a fair chance to increase the share in Asia, especially in the Indian market. The Indian smart TV market is poised to grow as the Internet is penetrating at a faster pace and OTT consumption is growing. TV is a much more family-involved purchase compared to a smartphone; decision making is done by a group of individuals rather than a single person. Recently, VU is doing well in India with its wide range of smart TVs. Brands like Kodak and Thomson are technically licensed to Indian EMS, Super Plastronics, and are also performing quite well.

Traditional TV brands, such as Samsung, LG and Sony, still have enough brand recognition around the world while new smartphone players are appealing to millennials who are familiar with these brands. So, a lot will depend on the positioning for the brands. Moreover, most of the Chinese brands are playing in the affordable segment; the premium segment contains few brands.

Brands have to connect to their consumers and have to tailor the offerings according to the consumer needs. A well-balanced pricing strategy across the product portfolio is also essential to be successful.

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The NAND flash consumption of mobile devices will be three times larger in 2025 than 2021, with the coming of the 5G era https://www.counterpointresearch.com/nand-flash-consumption-mobile-devices-will-be-three-times-larger-2025-2021-coming-5g-era/ Wed, 17 Jun 2020 11:21:30 +0000 https://www.counterpointresearch.com/?p=29927 Sponsored by Western Digital, Counterpoint has published a white paper that investigates storage demands for different 5G mobile applications. The […]

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Sponsored by Western Digital, Counterpoint has published a white paper that investigates storage demands for different 5G mobile applications. The white paper aims to increase awareness among mobile device manufacturers about the different needs for storage in 5G-driven applications, and clarify the characteristics and differences of various storage types.

5G adds complexity as each mobile device to both generate, as well as consume, several times more data than current devices. Higher 5G throughputs will drive richer content streaming. More advanced AI applications will add further complexity to the choice of storage. Considering storage early in the design phase will help to improve the performance of 5G mobile devices and will potentially be a point of differentiation among competing products.

The key trends for storage in 5G-capable mobile devices:

  • Better performance in sequential reading/writing speed and bandwidth
  • Larger capacity to 256GB, 512GB, and above
  • Lower costs including 3D NAND, TLC, QLC
  • Better controller qualities in architecture, lifetime, wear leveling, over-provisioning
  • Embedded Storage Interfaces including UFS 2.1, UFS 3.x, UFS4.x, and PCIe
  • Better reliability to improve the lifetime of the device

The key mobile devices to be driven by 5G include smartphones, connected PCs, tablets, and standalone eXtended Reality (XR) head-mounted-displays (HMD). All these devices will have different requirements for storage. Many of these devices will also drive new use cases, potentially generating more service revenue as outlined in the diagram:  

Opportunity for storage players

eMMC 5.1 can still meet the demand for some devices migrating initially from 4G to 5G. However, The UFS interface aligns best with most 5G devices because of its high Gbps-level throughputs. Connected PCs will need both UFS storage and PCIe SSDs, while others will prefer UFS as the main storage interface.

From the perspective of the package, MCP solutions are dominant only in the low to mid-range smartphones. While system designers for high-performance mobile devices prefer to use package-on-package (PoP) solution which includes low power DRAM plus discrete UFS or eMMC. PoP solutions can provide better performance than MCP solutions because the application processor (AP) can directly communicate with low power DRAM at high frequencies to reduce the interference of AP and RAM communication signals. 

From the perspective of performance, eMMC has become the mainstream of mobile application data storage for several years. However, the speed of eMMC is reaching a limit because of its parallel 8-bit transmission. As a result, UFS is poised to become the mainstream interface in the 5G era because its serial interface and full-duplex data transfer protocol can offer two to four times the peak bandwidth of eMMC’s parallel 8-bit interface. UFS 2.x and UFS 3.x can reach a maximum speed of 11.6Gbps (1450 MB/s) and 23.2Gbps (2,900 MB/s), respectively. Both are much higher than eMMC 5.1’s 3.2Gbps (400 MB/s). Future UFS 4.x can be even faster.

The UFS interface aligns well with the higher Gbps level throughputs promised in 5G, compared to eMMC which could be a bottleneck for some 5G-driven mobile devices such as connected PCs, XR devices, smartphones, and tablets. Further, the power consumption of UFS in standby mode is like that of eMMC. In the active mode, UFS power consumption is higher than eMMC but UFS can rapidly transmit more data, allowing a return to an idle state faster. So, UFS is significantly lower compared to eMMC in terms of overall power consumption and can enable battery savings for battery-powered IoT applications. Further, UFS also delivers greater overall system performance and user experiences, which makes it the choice of memory storage interface for 5G mobile devices.

Compared to 5G’s 1-10 Gbps, the theoretical transmission rate of 4G LTE can exceed 1Gbps, but the actual speeds in most cases are still below 500Mbps. 5G-powered XR, online game, and 8K video will require speeds of 6 Gbps, so UFS is essential in these applications.

Conclusion & Recommendations

  • UFS is the most suitable interface for 5G-driven mobile devices. Its fast speed and responsiveness can meet the requirements of instant-on, fast-booting, multitasking, and multiprocessing in the 5G era. Also, it consumes less power so it can extend battery life.
  • Mobile game streaming will grow strongly with 5G’s large bandwidth and low latency. Content providers need to know the capability, requirements, and limitations of 5G and design high-quality mobile games with cloud streaming on any device.
  • The price of NAND flash is declining. However, 5G-centric devices will require high-performance storage solutions. Mobile devices manufacturers must understand the characteristics of different types of flash to choose the appropriate memory to meet the performance requirements of their applications.
  • To be successful in the 5G era, flash makers must understand the demand and the impact of these 5G devices on storage and realize the market potential for various applications to provide the right solutions


Download the Whitepaper: The NAND flash consumption of mobile devices will see three times larger in 2025 than 2021, with the coming of the 5G era. (for free)

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Cellular Technology Transitions and Potential for SoC Players https://www.counterpointresearch.com/cellular-technology-transitions-potential-soc-players/ Wed, 17 Jun 2020 07:31:16 +0000 https://www.counterpointresearch.com/?p=29903 Overview:  Each technology shift brings with it opportunities for players across the value chain, and the arrival of 5G highlights […]

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Each technology shift brings with it opportunities for players across the value chain, and the arrival of 5G highlights this in many ways. Operators across key markets are looking to upgrade from 2G/3G to 4G in order to allocate more spectrum to support data services, and the arrival of 5G is unlocking new capabilities and services like Enhanced Mobile Broadband (eMBB), Massive Machine Type Communication (mMTC), and ultra-reliable Low Latency Communication (uRLLC).

This is resulting in a transition between different technologies and the emergence of a new technology order: 2G and 3G networks, which have coexisted for nearly 20 years, are being progressively phased out, while 4G and 5G are set to become the dominant networks over the next decade.

This generational technology shift presents both challenges and opportunities, and the role of ecosystem players including operators, devices OEMs, component makers and software players will be crucial to enable a smooth transition. Baseband players in particular, are well positioned, as the business expands rapidly from mainly mobile phones to the broader universe of cellular connected devices to create a market worth US$38.7bn by 2024.

Table of Contents

  • Executive Summary
  • Global Handset Market Landscape by Cellular Access Technology
  • 4G Feature Phones to Drive 2G Upgraders
  • Why 4G Feature Phones Are Relevant For Operators
  • 4G Network Upgrades
  • The 5G Era: Unlocking New Capabilities
  • Role of SoC Players in Technology Adoption
  • Competition Leading to an End-to-End Solution
  • Future Opportunity for Baseband Players
  • Conclusion and Outlook

Number of Pages: 24
Author: Tarun Pathak
Published Date: June 2020


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Podcast: Rise of Affordable Premium Smartphones in Korea Signals a Trend Change https://www.counterpointresearch.com/podcast-rise-affordable-premium-smartphones-korea-signals-trend-change/ Tue, 16 Jun 2020 14:43:13 +0000 https://www.counterpointresearch.com/?p=29897 The Korean smartphone market is dominated by three major players – Samsung, Apple and LG. Out of the three, Samsung […]

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The Korean smartphone market is dominated by three major players – Samsung, Apple and LG. Out of the three, Samsung has a majority market share of close to 60%, whereas Apple and LG hover close to 20%. Since 2016, except 2017 (due to Galaxy Note 7 fiasco), the Galaxy S and Note series sales have been more than other devices during the first quarter period. But that changed in Q1 2020, with an “affordable premium” Galaxy A90 5G emerging as the best-seller in Korea.

Counterpoint Samsung smartphone sales share by product group, Korea
Source: Counterpoint Model Sales Tracker

A non-ultra-premium smartphone taking a top spot is a significant event that signals changing consumer needs. The COVID-19 impact could be one of the reasons why we are seeing this shift. The “affordable premium” smartphones bring top-of-the-line hardware along with flagship features without creating a hole in your pocket. The Q1 2020 best-seller in Korea, the Galaxy A90 5G, comes equipped with Qualcomm’s flagship Snapdragon 855 SoC, triple cameras and next-gen 5G connectivity with an ASP of $453.

Counterpoint Smartphone average selling prices (ASP), Korea
Source: Counterpoint Model Sales Tracker

In the latest episode, “The Counterpoint Podcast” host Peter Richardson and research analyst Minsoo Kang discuss the rise in popularity of “affordable premium” smartphones in the Korean market. The discussion also touches upon other launches such as the Apple iPhone SE, LG Velvet, and a look at overall best-selling phones in Korea, and more.

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