- The headlines are hiding the realities of a pretty good weekend of retail sales in the US.
- Purchasing online using PCs, tablets and smartphones saw very strong growth and as evidenced by the scrums in the shops, the US consumer has spent 12.8% more than he did last year.
- The latest figures show that over the four day weekend 247m on line and real-life shop visits up 9.2% from 2011.
- Total sales have been estimated at $59.1bn up 12.8% from 2011, a good sign for the all-important Q4 selling season.
- This implies that the handset market, tablet market and Apple are set for a solid Q4.
- Who knows, even the much lagging PC market and Windows 8 may see some glimmer of life before the end of the year.
- The actual numbers for Friday (the big day) show a dip compared to last year, but this looks almost certain to have been a result of stores starting their promotions early on Thursday evening.
- The three most important takeaways are:
- A good omen for consumer spending in Q4 despite macro related uncertainties.
- Online continues to grow as a percentage sales and smartphones have been increasingly used in store for price comparisons.
- iOS continued to dominate in terms of its share of weekend thanksgiving shopping data traffic on mobile devices. iOS managed to increase its share of traffic despite being outsold 2 to 1 in terms of devices when compared to Android.
Share of mobile traffic generated as a result of Thankgiving holiday shopping in US (data source: IBM)
- I see this as yet another nail in the coffin of loyalty to Android. (See here for others)
- Android is selling like hotcakes at the moment but crucially, users are not using the devices anything like as much as iPhone and iPad users.
- This sounds an awful lot like the heydays of Symbian when everyone had a Symbian device but no one used them for anything more than voice or text.
- Android is not nearly as bad as that but the parallel is clear.
- Hence there is a risk that when something better comes along at the right price point, users will drop Android with as little hesitation as they did with Symbian.
- At the moment, the front runner to stick the knife into Android is Microsoft, but so far it has had no meaningful impact.
- What is more Microsoft has been labouring for 16 years to make any real headway in mobile and so man doubt that it ever will despite its chances being the best that they have ever been. (see here for details)
- It is much too early to write Android off but the signs for its ability to hang onto its dominant market position are worrying.
Radio Free Mobile presents input from a guest author. Cyrus Mewawalla from CM Research on the Chinese Social Media Sector.
China’s social media: Great potential but there are political risks
CM Research has teamed up with Trusted Sources, an emerging markets macro-economic research house, to provide you an informed view of the future of China’s social media sector. We have married our expertise in the global technology, media and telecom sectors with Trusted Sources’ expertise in China’s macro and political outlook in an effort to guide investors through what could be a difficult time for Chinese internet companies. We expect to publish a series of co-authored reports on emerging market TMT themes on a quarterly basis for our clients.
China’s social media has great potential
- Mobile, Social, Cloud and Big Data are the big investment themes across the global technology sector.
- China’s social networks operate in protected markets – Facebook, Twitter and Google are not allowed in.
- China’s social media industry dynamics are conducive to growth – social network penetration, smartphone penetration and 3G penetration are all at around 30 per cent, the point in the technology cycle at which growth typically accelerates.
- Western social networks generate the bulk of their revenues from internet display advertising. But social media is moving to the mobile internet. Smaller screen sizes and shorter customer attention spans make it difficult to monetise. China’s social networks have a more diversified revenue model, with online games playing an important role. This positions them well for the difficult transition of social media from the PC to the mobile internet.
- But internet statistics released by China’s leading social networks do not face sufficient third party scrutiny. For the time being, investors therefore run the risk of basing investment decisions on highly questionable data.
- China’s internet companies are not as skilled as converting internet traffic into internet advertising revenues as their Western peers
But there are political risks
- Changes to China’s leadership team will be announced over the next two to three weeks.
- China’s leaders are interested in the social media sector for two reasons: it is a high growth sector, whose profits largely flow to the private sector rather than the state-controlled telecom sector; and it potentially represents a challenge to the Communist Party’s monopoly hold on political power and to the authority of the state.
- Social networks profit from information flows, but in China’s case those flows may present a challenge to the existing political order.
- The risk of stronger political repression of social networks – by means of banning, cramping, or undermining certain social media business models – although imponderable, is credible. It will certainly not be shrinking during the present period of relative political fluidity when the authorities will focus on establishing control after getting through the leadership transition.
- Over the next six to nine months, Chinese internet companies whose businesses and cash flows are directly linked to social media activity – such as Renren, Sina and Tencent – appear the most vulnerable. By contrast telecom operators such as China Mobile may offer investors a more hedged exposure to the high-growth Chinese internet sector.
For a copy of the full report please contact Cyrus:
Cyrus Mewawalla, CM Research, +44 203 393 3866 firstname.lastname@example.org www.researchcm.com