Apple will need to address low-end phones, ARM exec says

Antonio Viana, an executive from one of the Apple's partners, says Apple will feel pressure from not selling cheaper devices.

A woman uses a mobile phone as she walks past an Apple store in Beijing on January 17. China Mobile, the country's biggest wireless provider, that day started selling Apple's iPhone to millions of customers nationwide, ending a six-year wait in a crucial market for the US technology giant. Getty Images
Apple needs to do something to address the slowdown in the high-end smartphone market and the rise of cheap phones, an executive from one of the company's partners said.

Antonio Viana, president of commercial and global development and executive vice president at ARM Holdings, said the premium segment of the smartphone market will grow much slower than the other areas -- only about 4 percent each year through 2018 versus 14 percent annual growth for mid-range devices and 17 percent annual growth for low-end phones. The high-end market will grow more in North America, he said, but Apple still will have to cope with the flood of lower priced phones that will hit markets around the globe.

"They are going to feel pressure," Viana told CNET. "They're going to have to do something."

Meanwhile, Viana said that Apple's chief rival, Samsung, "does an exceptional job of really spreading itself pretty widely in terms of the technology it puts into the marketplace."

We've contacted Apple for comment and will update the report when we have more information.

ARM Holdings develops chip technology that's then licensed by companies such as Samsung and Qualcomm. The vast majority of mobile devices use ARM-based chips, and even Apple's line of processors, such as the A7, use ARM architecture.

In developed markets like the US, almost everyone who wants a smartphone has one. And the tablet market is maturing as well. That means Apple, Samsung, and all others in the mobile industry have to look to emerging regions like China for growth. Apple now has a bigger presence in that country with its China Mobile partnership, but it could take some time for sales to really take off on the world's biggest network with three-quarters of a billion subscribers.

And even with that partnership, Apple doesn't make phones that address the vast majority of customers in emerging markets. Customers in the US typically pay a subsidized price for smartphones by buying them on two-year contacts through carriers. Most people in emerging markets and even Europe, however, pay full price for their devices. Shelling out $800 for an iPhone someplace like China limits the device to only the most wealthy or the biggest Apple fans.

Meanwhile, ARM on Tuesday reported it swung to a loss of $10.1 million for the fourth quarter on higher operating costs. Its revenue climbed 15 percent. Shares fell as the company's royalties came in lower than what analysts had been expecting. ARM makes money from licensing its chip technology but then generates a royalty from each device that uses the processor.

 

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