Vivek Sood's Blog, page 54

Is Apple’s 5-STAR Business Network losing its shine?

Just one day after Microsoft announced its phone-based voice assistant Cortana, Apple made known its plan to dramatically improve Siri. With 15 acquisitions under its belt in the last fiscal year, Apple’s latest purchase is of Novauris Technologies.

The UK-based speech-recognition software company has a team of former Dragon Systems R&D employees. Some of its clients in the past include Panasonic, Verizon Wireless, BMW and Samsung for speech recognition system integration.

Apple’s acquisition, of undisclosed amount, is said to actually have happened last year. Analysts have pointed out that the tech giant seems to be working on Siri’s offline capabilities. One of the shortcomings of Apple’s signature voice command system is its reliance on an Internet connection to function.

“Given Apple’s recent CarPlay initiative, the importance of having stable voice command functionality while on the road is increasingly apparent.

“Meanwhile, we can expect to see intense competition from rival Microsoft’s Cortana, which is set to become smarter. Apple is quietly swallowing a number of smaller companies, giving it the advantage of fast integration and turnaround,” says Vivek Sood – CEO of Global Supply Chain Group.

Unlike its rivals such as Google and Facebook who routinely spend billions of dollars on high-profile purchases, Apple tends to acquire smaller tech companies along with their technology before launching new products or features.

In fact, Siri came to life after Apple’s purchase of a company of the same name in 2010.

Kristin Huguet, a spokeswoman for Apple, says: “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”

Also recently, Apple is looking to improve product displays and battery life through a potential purchase of a Japan-based company. Renesas SP Drivers, a unit of Renesas Electronics, develops LCD chips for mobile devices and owns about one-third of the global market share.

Investors are expecting a lot of product launches from Apple, who have just rebounded from the worst monthly loss in a year. Among the anticipated products are Apple’s iTV and iWatch.

Not only developing new products, Apple is also trying to protect its patents. The most recent, yet familiar lawsuit against Samsung, has evolved to include Google.

At the same time, Amazon is taking on both Apple and Google on the TV device’s front. The world’s biggest online retailer unveiled Fire TV priced at US$99 on April 3rd.

“One of the biggest challenges in this TV gadget market is setting up a network of partners that lets you fully showcase your product’s functionality.

“Google’s Chromecast has had recent issues persuading British media companies, Apple is negotiating with Time Warner, while Amazon’s Fire TV already includes Netflix and Hulu applications. The winner will be the one with the most extensive reach within its business network,” said Sood, author of the book “The 5-Star Business Network“. “Gone are the days when companies used to create products on their own and market them on a standalone basis. In today’s networked business world, both product creation as well as marketing required strong ties with an A-class business network.”

Related articles

Apple Inc buys speech-recognition service Novauris to bolster Siri
Apple acquires Novauris to improve Siri speech recognition
iOS 8 Siri could rival Cortana thanks to Apple Novauris acquisition
Will Novauris Buy Improve Siri’s Accuracy?
Apple moves against Microsoft’s Cortana, snaps up Novauris

Why crowdsourcing should be part of every supply chain: From NASA space suit to Lego toys

Crowdsourcing is proving its value in boosting innovation. The magic of this idea is that it ties new product launches with customer wants and needs.

NASA recently turned to the public for the design of its latest space suit, allowing people to choose among three prototypes. The Z-2 space suit is an update of the Z-1, which was named one of Time Magazine’s Best Inventions in 2012.

“After the positive response to the Z-1 suit’s visual design we received, we wanted to take the opportunity to provide this new suit with an equally memorable appearance,” NASA says on its website.

Lego‘s Ghostbusters-inspired toys will hit shelves in the US this June at US$49.99. The set is also a product of crowdsourcing. Lego Cuusoo – the crowdsourcing platform run by its Japanese partner – has helped the company with product ideas since 2008.

Lego reviews product ideas that receive at least 10,000 votes and the winner gets 1% of net revenue from the toy.

“While swallowing smaller companies and their readily available technology is one way big corporations refresh their innovation strategies, some decide to turbocharge consumer involvement early through crowdsourcing.

Although the late Steve Jobs may disagree by saying customers do not know what they want, crowdsourcing has its place in many supply chains. With in-house curating, involving customers more intimately in the supply chain can be a powerful combination,” says Vivek Sood – CEO of Global Supply Chain Group.

Recently, Hasbro, the maker of globally popular game Monopoly, ran a crowdsourcing campaign to choose new “House Rules”. The new “House Rules” set, to be released later this year, is an attempt to refresh the game after nearly 80 years.

Just over 10 days of the crowdsourcing initiative on Facebook, several thousand people have given their comments.

“There are a lot of Monopoly purists who want to play by the classic rules and don’t want to change it, but we love the idea of there being some optional rules in there that can mix up the game a little bit,” says Jonathan Berkowitz, vice president of marketing.

A lot of companies have successfully adopted crowdsourcing, such as Samsung’s Open Innovation Program, Dell’s IdeaStorm, and Phillips’s Simplyinnovate. Crowdsourcing can range from simply asking for consumer opinions about existing options, to allowing people to come up with workable ideas.

“In a way, crowdsourcing represents the Fire-Aim-Ready (FAR) model of innovation, as it lets companies test new ideas and then continually fine-tune them, while choosing the right partners to realise consumer wishes in a profitable manner,” says Sood – author of the book “The 5-Star Business Network“.

Traditionally supply chain has never been considered as part of the innovation drive, but the FAR innovation concept flips that model on its head – dramatically reducing the time to market, and effectiveness of innovation. Crowdsourcing is one way to do this.

 

Related articles

Lego Fans Developing New Models Spawns Ghostbusters Car
How Lego fans really get into the game
Crowdsourcing assembles new Lego sets
Crowdsourcing Benefits True FMCG Toy Companies

EBay and Amazon beware, Alibaba’s coming IPO means time to protect home turf

The world’s biggest e-commerce company is set to go public in the world’s biggest retail market, the latter is true at least for now. Alibaba announced its decision to “commence the process of an initial public offering in the United States” on Sunday.

After last year’s failed attempt to persuade Hong Kong, Alibaba turned to the US for what set to be the biggest IPO since Facebook’s 2012 feat.

The Chinese giant will work with Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. in finalising the IPO, which could launch as early as April.

“Alibaba has evolved from a company selling two dozen items back in 1999 to a truly 5-star business network, with a transaction volume bigger than Amazon and eBay combined in 2012.

The essence of Alibaba’s success lies in its super network, connecting millions of consumers, retailers and suppliers. Its value addition strategy has moved beyond synergy and into something known as value synchronicity”, said Vivek Sood – CEO of Global Supply Chain Group.

Analysts expect the e-commerce giant to raise around US$15 billion, making it the top 4 biggest IPOs ever behind Visa, General Motors and Facebook.

The company also signaled its intention to list in China. “Should circumstances permit in the future, we will be constructive toward extending our public status in the China capital market in order to share our growth with the people of China”, Alibaba said in a statement.

Worth as much as US$200 billion, behind Google in the Internet field, Alibaba boasts annual profits five times those of Amazon last year after increasing its revenue by 61% and gross profits by 71%.

Serving more than six million retailers and 300 million consumers worldwide, Alibaba’s empire extends beyond its well-known e-retail operations on Taobao and Tmall sites.

The company also has its affiliate payment system Alipay, comparable to EBay’s PayPal, as well as financial services, logistics, mobile phone operating systems and TV set top boxes.

“China will soon become the world’s biggest retail market and Alibaba’s US IPO will lay a crucial springboard to gain a bigger share of the pie in China, which is currently 5%.

Amazon, whilst still upheld as a prime example of a 5-star business network, should level up or risk being outwitted in the game,” said Sood – the author of widely acclaimed book “The 5-Star Business Network”.

Sheer number of consumers, and their increasing purchasing power provides the fuel to Alibaba machine. Combine these numbers with the fact that in most cases Alibaba is not replacing a traditional business model, but rather creating blue ocean new business models and you can see the immense potential of the company. Now combine that with the access to the producers and understanding of production economics and you can truly see a challenging behemoth emerging.

It remains to be seen whether Amazon’s consumer understanding will trounce the above advantages that Alibaba enjoys.

Retail frontier shifts again, in response to online onslaught – more bargaining power to discount stores

 

As the US economy staggers and consumers remain austerity-oriented, dollar stores or discount stores are presenting a more viable model. So much so that big names such as Walmart has decided to adopt the “bargain” strategy by opening smaller stores.

Shopping centres in North America are witnessing an influx of bargain store chains, prompting a fall in vacancy rates at these shopping complexes to 8.6% in 60 major US markets last year.

The figures came from Cassidy Turley research, who also noted a “seismic shift in retail shopping centers.” Over the past three years, bargain retail brands such as Dollar General, Dollar Tree, and Family Dollar have opened an average 2,000 new stores each.

Meanwhile, big names in US retail such as J.C. Penney, Sears, Staples and RadioShack are in a precarious situation where they draw traffic to smaller stores nearby. The two latter companies even announced earlier in March their plans to close a combined 1,325 stores.

“The challenges of the weak economy are being replaced by the challenges of e-commerce,” said Garrick Brown, director of research at real estate firm Cassidy Turley. “Dollar stores have just had insane, insane levels of new growth.”

“Online retail undoubtedly has snatched some sales away from brick-and-mortar stores but the heat seems to be at the discount store sector.

“However, bargain stores have an opportunistic supply chain with an unstable stocking model. With little supply chain planning and low margins, can they sustain their growth over the giants once the latter figure out how to catch up, or expand?” said Vivek Sood – CEO of Global Supply Chain Group.

Already, Walmart has started to tackle small discount stores by planning to open 300 new Walmart Express and Walmart Neighborhood Market stores by the end of this year.

This came after the US giant posted lacklustre results in the last fiscal year, with a 3% drop in consolidated operating income, a 0.4% drop in sales during holiday shopping months and a 1.7% fall in foot traffic during the period.

It is even more challenging for Walmart as the American Customer Satisfaction Index (ACSI) indicated the lowest score for the giant as both department and discount retailer in 2013. Meanwhile, dollar stores scored very high in the ACSI survey.

“There’s room for manoeuvre as Walmart can utilise its vast business network and supply chain power to further segment its customer base and cater to their needs more efficiently.

With the recent opening of hybrid and smaller store format, Walmart may be able to win customers on their fill-in shopping trips,” said Sood, who also wrote the “5-Star Business Network” book.

They key thing to remember is that the three retail supply chains – for traditional box retail format, for online retail and for discount stores – are widely different.

Online retailers can operate like 5-STAR networks working to secure customer orders on one hand, and the cheapest source of supply on the other hand. Matching supply to demand in the most profitable manner can allow to optimise profitability on every transaction if they know how to handle big data.

Traditional box retailers have a very traditional planning and control based supply chain based on forecasting demand and trying to optimise fulfilment most cost effectively. With eroding pricing power, traditional supply chain model is under intense cost pressure leaving the door open for online retailers as well as the discount retailers.

Discount retailers have an interesting supply chain model. Opportunistic purchases, shifting product mixes, end-of-the-line clearances and one-offs dominate the supply chain model. Lower prices attract customers and impulse purchases enhance the margins. That is driving the growth of this sector.

However, this supply chain model depends on the weaknesses of the traditional retailers and cannot replace them, and therein lies its biggest weakness.

So, what can we expect?

Expect the traditional big-box retail to survive – though in a pared down, more expensive version of the current format. Discount retail will remain a high growth, yet shifting format. And online should continue to grow briskly as per the trend.

It will be interesting to see what actually happens. This is not a clash of businesses – it is a clash of business models.

Big Blue should get their head in the cloud to win big

As the competition heats up in the cloud sphere, IBM has recently acknowledged their performance last year did not meet expectations while acquisition deals.

IBM’s 2013 annual report stated that the company’s cloud business grew 69% in 2013, delivering US$4.4 billion of revenue. However, shrinking demand for hardware and weak sales have caused a tumble in revenue over the last seven quarters.

“With the fact that around 85% of new software is being designed with cloud compatibility in mind, it is of no surprise to see a surge of investments in such platforms.

“IBM has been slow in the cloud game and is trying to catch up now. What they needs is a strong business network that can help them get there and we already see this demonstrated through their recent acquisitions,” said Vivek Sood, CEO of Global Supply Chain Group.

Last year, IBM bought infrastructure-as-a-service provider SoftLayer for $2 billion, before committing another $1.2 billion to building new locations for its SoftLayer public cloud services.

In March this year, IBM also completed an acquisition deal with Cloudant, a startup database-as-a-service (DBaaS) provider.

While there has been a significant focus on cloud as a strategy, IBM, who provides cloud capabilities to eighty percent of Fortune 500 companies, is not quitting hardware.

The company’s CEO – Ginni Rometty – wrote in a letter to investors: “IBM will remain a leader in high-performance and high-end systems, storage and cognitive computing, and we will continue to invest in R&D for advanced semiconductor technology.”

One of IBM’s attempts to revamp its hardware offerings includes selling the majority of its low-end server business to Lenovo for $2.3 billion in January this year.

A Synergy Research report in February 2014 indicates that Amazon still dominates the pure cloud platform market, boasting a 65% growth in Q4, 2013 compared to an overall market growth of 52%.

While Pivotal aims to be the Linux of the cloud, VMware recently launched Horizon desktop-as-a-service and Amazon’s equivalent WorkSpaces is still in Limited Preview phase.

The tech giant Google is also among those serious about competing against Amazon, with the announcement of Google Cloud Platform’s multi-country developer roadshow on Tuesday.

“Just like how big companies used to win big with hardware, they now need to apply a similar growth framework, not necessarily in terms of technicality.

“The idea of advanced product phasing is becoming more important, which is the ability to strategically roll out new products with a profit-innovation balance,” said Sood – also the author of “The 5-Star Business Network”.

 

Related articles

IBM acquires Boston based Cloudant
Why IBM’s Cloudant Acquisition is a Big Deal and Who it Threatens
IBM Closes Purchase Of DBaaS Provider Cloudant
The best hope for a cloud company: Work with Amazon, not against it
IBM bets its future on cloud, data, and a little bit of hardware
Can This Tech Company Expand Further Into the Cloud?
IBM bolsters cloud credentials with Cloudant purchase
IBM makes hiring push in Mass. amid nationwide layoffs
IBM Cloudant buy signals cloud arms race with NoSQL DBaaS
IBM to focus on Big Data + analytics : Not exiting hardware, says Rometty

20 Questions to Ask Yourself About 5-STAR Business Network Before Adding it to Your Business Strategy

We have compiled a list of 20 criteria you should consider before adding a 5-Star Business Network to your business strategy as well as how to evaluate your business network.

20 Questions

Apple’s Foreplay In-Car Lures Powerful Partners into a 5-STAR Business Network

 

Owners of cars made by a range of manufacturers such as Ferrari, Mercedes-Benz and Volvo will be able to voice-command their vehicles using iOS devices this year. Apple will unveil CarPlay, the integrated infotainment system, at the 83rd Geneva Motor Show, which takes place from Mar 6 to 16, 2014.

The first ever Apple integration into cars will be showcased, with vehicles effectively becoming “the second screen for the iPhone”, according to Frank Gillett, an analyst at Forrester Research.

“We’re looking at the coming together of some of the most powerful brands on earth, Apple – the most valuable brand – is leading the change in automobile entertainment by using its attractive installed base and business networks”, says Vivek Sood, CEO of Global Supply Chain Group.

At a glance, the new system will give drivers a familiar iOS interface for maps, music and Siri-based voice controls while incorporating standard knobs, dials and buttons in the car. Other basic phone functions can also be accessed, such as making calls, messaging as well as a host of third-party apps.

“CarPlay lets drivers use their iPhone in the car with minimized distraction,” Greg Joswiak, Apple’s marketing vice president for iPhone and iOS, said in the statement.

Currently, CarPlay will only support the latest generation of the iPhone, which means iPhone 5, iPhone 5S and iPhone 5C, and will be available as an update to iOS 7.

A report by Accenture in December says consumers are increasingly looking at in-car technology as the deal-breaker, even more than power and speed as their first consideration.

“Apple again has seized the spotlight, after signalling its attempt with the iPod and car audio systems a decade ago, and then fine-tuning its product family before finally announcing “We’re ready”", says Sood, who also writes the book “5-Star Business Network”.

Other carmakers expected to follow suit include big names such as BMW, Ford, General Motors, Honda, Hyundai, Jaguar Land Rover, Kia Motors, Mitsubishi, Nissan, PSA Peugeot Citroën, Subaru, Suzuki and Toyota.

In December 2013, Google announced the plan to work with Audi in developing a similar system. However, nothing has been heard since.

Google’s Android OS has also come under intense competition with the upcoming launch of Ubuntu-run smartphones and Samsung’s decision to ditch Android for Tizen in its smartwatches.

FACEBOOK’S $19 BILLION SPLURGE ON WHATSAPP: EASY COME EASY GO

I always start my analysis with a simple disclaimer that no matter how many Ivy League degrees one has, none can predict the future. With my near perfect GMAT score in quants, when it comes to analytical capabilities, I am confident that I am close to the top level. Yet it is necessary to note down this simple caveat at the beginning.

Because no one can predict the future, every acquisition is essentially a leap of faith – just like every marriage is. And, the parallel does not end there – similar to a marriage, probability of success of an acquisition is also rated just below 50%. Thankfully, that scary statistic does not stop people from marrying out of love, and companies from acquiring other companies out of – whatever leads them to get the urge to merge.

The cheer squad is out justifying the deal – rolling out measures such as MAU (monthly active user), revenue per MAU, valuation per MAU and such numbers. It reminds me of the go-go days of the last internet boom where valuations per eyeball led companies such as Webvan, pets.com and others to use similar statistics as the justification of their valuations and shaky business models. As an example, here is one list of top ten dot com flops. Here is another one compiled by CNN. Curiously, both of them missed Myspace.com, the Facebook of 2005, acquired by News Corporation for an astronomical sum of $580 Million.

Here is a snippet from Andrew Beattie:

In the year 1999, there were 457 IPOs, most of which were internet and technology related. Of those 457 IPOs, 117 doubled in price on the first day of trading. In 2001 the number of IPOs dwindled to 76, and none of them doubled on the first day of trading.

Why do I quote these numbers and examples? Only to remind you how short memory can be despite figures and statistics being set in stone. I will not go on and on with digging the graves because I have a couple of very important points to make.

First is this – what are other comparable businesses to WhatsApp? You could say none – but that is not true. Essentially, both Viber and Skype do similar things and have a wide reach. I have been using Skype since 2000 and Viber for at least 3 years before I started using WhatsApp. In addition, there are many other apps, including iMessage that allow online messaging. So what is the source of magic in this deal?

Let’s first compare the number of users, because they are the sole reason for astronomical valuation. Skype has reported more than 300 legitimate users. Many of them pay substantial sums for the privilege of using its services. For example I pay between $50 and $200 every year for its service. Yet Skype was sold to Microsoft for $8.5 Billion in 2011.

Yes, there are nearly 450 Million users of WhatsApp – but what do WhatsApp users pay? Zero, nada, zip – most of them pay the company nothing. In fact that is its biggest attraction! And, also the reason why it is so popular in Africa and parts of Asia. How much revenue can derive from serving ads to populace with limited buying power?

Now this is where the story gets very interesting. Indeed, as pointed out by Prahlad in his book “The Fortune at the Bottom of the Pyramid“, there is indeed a fortune to be made there. WhatsApp’s business model was finely tuned by its careful founders. And they have made a fortune by selling to Facebook at the right time, at a very fortunate price.

The key question is will Facebook be able to make a fortune out of its purchase? The demographics of Facebook users and WhatsApp users are significantly different. As I said in one of my recent posts on Quora “I think social media will start differentiating itself further. Facebook is fast becoming a housewives’ platform while LinkedIn is fast becoming a recruiters’ platform and Twitter is becoming a journalists’/politicians’ platform. I know this is still a gross generalisation, but consider this – many Facebook groups (such as HARO) have now started their own social platforms that are growing very successfully. This phenomenon is only going to accelerate as the technology evolves. Generic social platforming technologies as not yet commercially available easily. But they will be. Similar to what happened with message board technologies, blog technologies and countless other similar plug-ins. Once that happens – potentially every LinkedIn group, Facebook group, Yahoo group and Google+ group could evolve into an independent social platform with its own sub-culture and rules.”

For this reason I think the current deal is yet another case of Easy come, Easy go. In this article, the authors (Andrew McAfee, associate director of the Center for Digital Business at the M.I.T. Sloan School of Management, and Erik Brynjolfsson, professor at the M.I.T. Sloan School of Management, director of the Center for Digital Business) note that WhatsApp is a company of 55 employees and $19 Billion valuation, asking “Are we building a jobless economy?”

My view is different. I think in this case, we are barely building any economy at all. As noted in my Quora post above – when the dust on social media segregation settles, and the users self-select to fall in the right camp for the right activity the valuations will settle down closer to the norm. At the moment, driven by relentless quantitative easing, and lack of real investment opportunities, anything that looks remotely promising is being valued way higher than it should be. In this dot-com bubble on steroids, looking for logic in investment valuations is akin to hang gliding in the eye of a storm – you may think you are safe, but that is just a temporary illusion.

 

 

Why Facebook’s $19 Billion purchase of WhatsApp reminds me of NewsCorp buying MySpace

On the face of it, the two companies could not be more widely apart. One is the paragon the new paradigm, while other is an old dying breed! I am, of course, talking about Facebook and NewsCorp. That is what all the pundits will tell you. They will also explain the logic of why News Corp bought MySpace in those terms.

Admittedly, NewsCorp business model was broken in 2005 and it had hoped that MySpace would provide the much needed fillip. That never happened, as it could not have happened. NewsCorp let MySpace go after 6 years for $35 million, a fraction of the $580 million it had originally paid. People have their own opinions on what MySpace has become by now, and I have nothing to add to that discussion.

However, Facebook is a company of intense interest at the moment. If you have studied the business networks for as long as I have (in fact I wrote the book ‘The 5-STAR Business Networks) you will also start thinking of it as a company more akin to NewsCorp than to MySpace.

Most people think that Facebook has a minor problem that teens are losing interest in the platform. I think the problem runs deeper – its business model is not sustainable. As explained by 2veritasium in this 7-minute video

(great Australian content – original, thought provoking and myth-shattering) which has already had more than 1.3 million views in nearly 6 weeks, the problem with Facebook is that it is already starting to resemble the old-age companies – almost like “The Curious Case of Benjamin Button“.

As the video hints, companies do resort to desperate measures in desperate times. That is the reason why Facebook’s purchase of WhatsApp reminds me of the deal between News Corp and MySpace. Only time will tell whether Facebook’s decision to start a new chapter with WhatsApp will lead to a bitter “divorce” or not.

Will Samsung Use Galaxy S5 to Eat Apple’s Lunch?

 

The world’s biggest smartphone maker has struck again with the announcement of its flagship Galaxy S model to hit stores this April. Samsung Galaxy S5, unveiled at the Mobile World Congress in Barcelona on Monday, features fingerprint technology similar to Apple’s latest iPhone 5S.

Samsung also packs a whole lot of attractive features in its new 5.1-inch full HD screen phone, including a heart rate sensor, near field communications (NFC) sensor, 16-megapixel camera, water and dust resistance, higher capacity (than its last model) battery, and a leather-like back.

“Samsung is in an extremely favourable position with PayPal agreeing to be the first global payments company to support the fingerprint technology in Galaxy S5 phones. This partnership will enable Samsung to prove to consumers the true power of fingerprint security beyond what Apple proposed with its iPhone 5S launch”, said Vivek Sood – CEO of Global Supply Chain Group.

Hill Ferguson, Chief Product Officer, PayPal said in a blog entry: “By working with Samsung to leverage fingerprint authentication technology on their new Samsung Galaxy S5, we are able to demonstrate to consumers don’t need to sacrifice convenience to increase security.”

The announcement came just one day after PayPal said it would be available on Samsung’s new Gear 2 smartwatches. Samsung has segmented its target consumers and delivered three versions of this product line: fashionable, functional and fitness-focussed.

“What’s more notable in terms of strategy is how Samsung has started to lower dependence on Google’s Android OS by adopting Tizen, a Linux-based OS, for its smartwatches. To gain dominance, Samsung is levering its business network strategically, picking and choosing partners that can help the company win on different fronts,” said Sood – author of the book “5-Star Business Network”.

The open-source OS war by smartphone makers is as hot as ever, with Ubuntu, the most popular version of Linux, set to be available on smartphones by the end of this year.

Apart from two technology giants Apple and Google, Samsung also has to go against smaller yet growing smartphone makers, especially in the lucrative Chinese market. Although currently the top vendor in China with 19% of market share, Samsung needs to watch out for Lenovo and Xiaomi, who own 12% and 7% of the market respectively.