Analysis: Tech giants’ results hint at mobile trends

Figures released by Apple, Facebook and Microsoft last week suggest consumers are opting for cheaper tablet devices

Apple, Facebook and Microsoft all published financial results last week that gave some insight into where the mobile sector is heading.

Apple’s performance fell short of analyst forecasts, with 13.3 million iPads and 35.2 million iPhones sold in the three months ended 28 June 2014. The company traditionally sells more units during the Christmas period, however the disappointing sales left some debating whether the firm’s flagship devices were beginning to lose momentum.

Of particular worry will be the sales of Apple’s more expensive tablet devices. The 13.3 million figure is down 9% year-on-year and 22% down on figures from two years ago, giving the strongest indication yet that the iPad is struggling to live with the much cheaper competition provided by the vast number of Android tablets on offer.

Apple CEO Tim Cook did, however, say there was “significant innovation” to come for the iPad in the coming months alongside a product pipeline that Cook is “very excited” about. While no details were released during the firm’s results presentation, patents filed by the company reveal snippets of what’s currently in development.

Filings related to the firm’s smartwatch – rumoured to be scheduled for release in October – indicate two versions of the device, one of which comes with a “smartband” consisting of various sensors while the other, more basic version more closely resembling an iPod Nano-sized device that clips onto a band.

Whether or not its smartwatches will reach the scale achieved by its smartphone and tablet predecessors remains to be seen. However given one of the firm’s biggest strengths is encouraging its customers to own several Apple devices at once, it stands as good a chance as anyone in the wearable tech space.

Shaping the future

And fortunately for Apple, one rival doesn’t appear to be challenging for smartphone market share just yet. During its own results disclosure last week Microsoft revealed that sales of its Nokia Lumia series of handsets were below analyst estimates and reached 5.8 million units, or just 4% of the smartphone market.

Microsoft’s purchase of Nokia was driven by a need to gain a solid foothold in the ultra-competitive smartphone sector. Nokia had been flirting with Android over Microsoft’s Windows Phone software, but the takeover has seemingly prevented any chance of a major shift in software from Nokia’s device range.

Around 12,000 jobs were cut as part of a sweeping round of redundancies earlier this month and Microsoft now expect Nokia to break even within two years – a tall ask for a business that recorded losses of $692m in the last quarter.

Microsoft is determined to be a major player in the smartphone sector, but the slow consumer take-up means Windows Phone may simply not be an operating software worth catering for at this moment in time.

A brave Face

Facebook, meanwhile, is a company that has wasted no time in its transition to mobile. Advertising revenue at the social network soared during the last quarter to $2.91bn, almost two-thirds of which was derived from mobile devices.

“What Facebook has done with mobile is one of the most impressive things I’ve seen an internet company do in recent years,” RBC Capital Markets analyst Mark Mahaney said. And the growth is expected to continue to rise as the mobile advertising market continues at a pace.

Facebook is now in a strong position to challenge Google’s mobile advertising network, resulting in an effective duopoly in the mobile advertising sector. Operators have reported to eGR Mobile Intelligence that Facebook has proved an extremely effective platform for driving downloads in the past but it looks as if this is only going to become more competitive as time goes on.

Drawing Conclusions

While the three sets of results didn’t exactly reveal anything ground breaking, disappointing sales from Apple and Microsoft, coupled with Facebook’s rapid stranglehold of the mobile ad space, hint at a maturing market that is evolving at great pace.

An increased push into the smartphone sector from Microsoft will only create greater fragmentation in an environment where Apple appears to be losing ground to Android on a monthly basis on the crucial tablet platform.

Whether the iWatch and a move into the wearables can reignite the consumer love affair for Apple products remains to be seen, but many operators will be crossing their fingers it does.

A more crowded and more expensive Facebook advertising environment coupled with a fragmented Android-dominated tablet sector is a dystopian future nobody will be hoping to see.