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Smartphone Shipments Decline; Apple, Samsung Lead Retreat

Global smartphone shipments declined for the first time ever on a year-over-year basis in the first quarter, two research firms reported Thursday. Juniper Research said that smartphone shipments fell nearly 6% on an annual basis to 320 million units in Q1. Strategy Analytics estimated that smartphone shipments declined 3% to 335 million units last quarter. “It is the first time ever, since the modern smartphone market began in 1996, that global shipments have shrunk on an annualized basis,” Strategy Analytics analyst Linda Sui said in a blog post . “Smartphone growth is slowing due to increasing penetration maturity in major markets like China and consumer caution about the future of the world economy.” Samsung and Apple ( AAPL ), the two largest smartphone vendors, both posted declines in the quarter. Samsung’s smartphone shipments fell 4% to 79 million units in Q1. Apple’s iPhone shipments dipped 16% to 51.2 million units in Q1, Strategy Analytics said. Samsung was the No. 1 vendor, with 23.6% market share, followed by Apple, with 15.3%. Both lost ground to fast-growing Chinese smartphone makers including Huawei, Oppo and Vivo. On Tuesday, Apple reported its first-ever drop in iPhone sales . It said that its iPhone sales fell 16% to 51.19 million units in its fiscal second quarter, which ended March 26. For the current quarter, Apple signaled another decline in iPhone sales. Apple’s smartphone decline is attributed to difficult comparisons with the outsized success of the iPhone 6. The current-generation handsets, the iPhone 6S series, offer only incremental improvements in features. On Wednesday, research firm IDC said that smartphone makers managed to eke out a tiny gain in Q1. IDC estimates that smartphone shipments rose 0.2% to 334.9 million units. IDC said that shipments declined 0.6% for No. 1 vendor Samsung and 16.3% for No. 2 vendor Apple. But the Chinese vendors ranked third, fourth and fifth (Huawei, Oppo and Vivo, respectively) posted big gains in shipments, IDC said. Huawei increased its smartphone shipments by 58.4% year over year in Q1. Oppo and Vivo posted increases of 153.2% and 123.8%, respectively.

Google’s Pichai Sees ‘Move From Mobile-First To An AI-First World’

Apple ( AAPL ), Microsoft ( MSFT ) and other rivals of Alphabet ( GOOGL )-owned Google had better raise their game in artificial intelligence. While Apple, Facebook ( FB ) and Amazon.com ( AMZN ) have AI research projects underway, the field is one where Google aims to set itself apart from rivals. So said Sundar Pichai, Google’s chief executive, Thursday in an open letter. Google founders  Larry Page and Sergey Brin normally write the founder’s letter , in the tradition of Berkshire Hathaway ’s ( BRKA ) Warren Buffett. But Pichai wrote this year’s note. Pichai says that AI is key not only to its core search business and mobile computing, but also to Google’s push into the enterprise (corporate) market and cloud computing. “A key driver behind all of this work has been our long-term investment in machine learning and AI,” Pichai wrote. Google has pushed Android software-based mobile phones into a global power vs. Apple’s iPhone. (The Oracle ( ORCL ) vs. Google copyright battle over the Android OS is slated to resume with a second trial on May 9.) Pichai says that Google’s AI will be a difference maker. “Looking to the future, the next big step will be for the very concept of the ‘device’ to fade away. Over time, the computer itself — whatever its form factor — will be an intelligent assistant helping you through your day. We will move from mobile-first to an AI-first world,” he said. While Apple and Google have dominated in the world of mobile apps, there could be competition down the road. Facebook recently introduced “chatbots,” while Microsoft ( MSFT ) launched its “Bot Framework” software tools for developers. Both rely on AI. Google also aims to capitalize on AI in the enterprise market vs. Microsoft and others. “Google started in the cloud and has been investing in infrastructure, data management, analytics and AI from the very beginning. We now have a broad and growing set of enterprise offerings: Google Cloud Platform (GCP), Google Apps, Chromebooks, Android, image recognition, speech translation, maps, machine learning for customers’ proprietary data sets and more,” Pichai said. “As we look to our long-term investments in our productivity tools supported by our machine learning and artificial intelligence efforts, we see huge opportunities to dramatically improve how people work. Your phone should proactively bring up the right documents, schedule and map your meetings, let people know if you are late, suggest responses to messages, handle your payments and expenses, etc.”

Honeymoon Over For Apple Watch, Version 2 Needed

Apple ( AAPL ) held onto its lead in the nascent smartwatch market in the first quarter, but lost ground to rivals after the holiday season, in the seasonally slower period. Apple shipped 2.2 million units of the Apple Watch in Q1, giving it a 52.4% market share, Strategy Analytics said Thursday. In the fourth quarter, Apple shipped 5.1 million smartwatches and grabbed a 63% market share, the research firm said. Samsung came in second with a 14.3% market share, having shipped 600,000 Gear smartwatches in Q1. In the fourth quarter, Samsung shipped 1.3 million smartwatches, giving it a 16% market share. Other vendors such as LG and Motorola shipped 1.4 million smartwatches in Q1, combining for a 33.3% market share, Strategy Analytics said. On a year-over-year basis, global smartwatch shipments grew 223% to 4.2 million units in Q1. The Apple Watch was not yet available in the year-earlier quarter. It went on sale on April 24, 2015. “Now that many Apple early adopters have their smartwatches and all of the holiday gifts have been unwrapped, it would seem the honeymoon for version 1 of the Apple Watch is over,” Strategy Analytics director Cliff Raskind said in a statement . “Future traction for Apple Watch 2 will be closely linked to compelling apps that better exploit the usability of wearable tech, while offering autonomous 4G connectivity and enhanced battery life — all of which are in rather short supply today.” Apple is widely expected to unveil its second-generation Apple Watch this fall around the time it debuts the iPhone 7. Apple is estimated to have sold 2.3 million Apple Watches in the March quarter and 13.2 million units during its first year of availability.