This Week in Mobile

This Week in Mobile is a weekly podcast available on Apple iTunes or Google Play where I bring you up to speed on the top mobile news stories of the week:

1. Despite what most analysts (except Atherton Research) and "experts" said, the iPhone X is a roaring success. In its last earnings call, Apple confirmed that it sold more iPhone X than any other smartphone during the first 3 months of this year. And the iPhone X was also the world's #1 smartphone - including in China - sold in that same period. The next 2 smartphones are also iPhones, the 8 and the 8 Plus. And as we said last week, we expect Apple to release an update of the current 5.8-inch iPhone X this fall, as well as a larger 6.2-inch iPhone X Plus version.

2. According to Huawei, the P20 Pro - the Chinese company's flagship smartphone - has outsold last year’s top of the line P10 Plus in Western Europe by more than 300%, mostly in Germany, UK, and France. Last March, the CEO of Huawei Mobile said that it hoped to sell 20 million P20s (P20 Pro, P20, and P20 Lite). Just to put this into perspective, Apple sells almost as much iPhone X - about 16 million - in just a quarter.

3. Xiaomi, the 4th largest seller of smartphones in the world and #2 in China filed for an IPO in Hong-Kong and could raise as much as $10 billion, valuing the company at more than $100 billion which would be the biggest since Alibaba's $21 billion IPO, 4 years ago. What we also learned from the filing is that Xiaomi's business model is based on capturing and monetizing the data of their customers using their cheap hardware (smartphones and connected devices/IoT). We're currently investigating this issue and will report back next week with more details.

4. Almost 4 years after abandoning the U.S. market, Nokia is back stateside - in part thanks to the implicit ban of Huawei and ZTE smartphones - with the Nokia 6, a "pure" Android One mid-range smartphone, available unlocked on Amazon and Best Buy for $269.

5. T-mobile and Sprint announced last Sunday their $26.5 billion all-stock merger. The combined company would have 127 million subscribers, close behind Verizon (150 million) and AT&T (144 million). The rationale behind the merger is to accelerate the buildout of a nationwide 5G network that will require billions of dollars of investment. However, in a report to clients, Atherton Research believes that both companies can afford to build a 5G network - which they have already started - and that the merger will actually increase prices for consumers and reduce market competition.

6. App of the Week: Yumlist (for iOS only) uses Tinder-like swipe gestures to find the restaurants that best match your palate. Just swipe right if you like the food that you see in the app, and left if you don't. Then the artificial intelligence-based algorithm (AI) will start recommending you restaurants - right now in San Francisco, New York, and Los Angeles - based on your preferences. To enter the private beta, you can use this special invite code: TWIM.

Joining me this week to discuss these top mobile news stories is tech veteran Eric Leandri, the co-founder and CEO of search-engine Qwant, as well as Bart Menayas, the CEO of Yumlist, our App of the Week.

One last thing before you go, you will find an edited transcript of This Week in Mobile below, and feel free to reach out with mobile news and products (devices, apps, accessories) or if you'd like to be a guest on the show. Enjoy!

Jean Baptiste Su: Hello, everyone, and welcome back to another episode of This Week In Mobile. It is Saturday, May 5th, 2018. And I'm Jean Baptiste Su, Principal Analyst at Atherton Research and your host. Joining me today to discuss the top mobile news stories of the past seven days is tech veteran Eric Leandri, CEO and co-founder of search engine Qwant. Welcome back to the show, Eric.

Eric Leandri: Hello, JB. How are you?

JBS: Good. It's the morning here in Silicon Valley! And for our listeners that are not familiar with what you do, give us a short elevator pitch about Qwant.

EL: Qwant is the first and only search-engine that protects your privacy and then like our good friends at Google we don't track you when you search online and we don't sell your information to anyone because we don't have any kind of information about you. And so you can use our mobile app Qwant Mobile to start browsing the web in the more discreet way. So, let's try it and if you don't like it you know where to contact me.

JBS: Yes, and I'll be happy to give your personal email to everyone! So there are lots to cover on This Week In Mobile. So let's start with the iPhone X, I mean, everybody was announcing the end of the iPhone X, the death of iPhone X, that Apple was going to end the production. At the beginning of this week, Apple announced during their earnings call that the iPhone X was the best-selling iPhone in the world better than any other iPhones. And we got some figures from different analyst firms, IDC, Strategy Analytics saying that actually, the iPhone X was not only the bestselling iPhone but also the bestselling smartphone in the world, period. So it's just like, you know, everybody got wrong except us, of course.

EL: Yes, we were talking about that last week and it seems that we were not so pessimistic about the iPhone X, but what is very interesting is the differentiation between the sales in the area of the world because in Europe, for example, iPhone X is not the first one. iPhone 8 and iPhone 8 Plus are usually what people are choosing and it seems like China has fallen in love with the iPhone X, they love it, they want it. Everybody wants an iPhone X in China today.

JBS: Yes, that’s incredible. They want an iPhone more than a Huawei or Xiaomi or any of the other Chinese brand.

EL: Yes. Sure. And as you have seen it's a maybe the 4th quarter where a Chinese brand doesn't grow as quick as usual. Huawei has 2% growth and just Xiaomi has a very impressive growth in the Chinese market something like 37% but for others, all the others are going down. Right now, iPhone has convinced Chinese people to switch and I think the price of the iPhone X is one of the good reason to switch to iPhone and also because, in China, an expensive price is another good reason to have it and to show it.

JBS: Right, and so that’s the opposite in Europe apparently where iPhone 8 and iPhone 8 Plus are more popular there than the iPhone X.

EL: It was very complicated to get an iPhone X in Europe at the beginning when everybody wanted to have one. And I have seen a lot of people that switched to an iPhone 8 or 8 Plus at the time instead.

JBS: Yes, and that's a great segue because Huawei announced this week that their new P20 Pro has outsold their previous generation, the P10 Plus, in Europe by 300%. So it seems to be a very popular smartphone in Europe. When I was at the at the launch in Paris, a few weeks ago, the CEO of the Huawei mobile division said they wanted to sell 20 million of the Huawei P20s (there are 3 models, the P20 Pro, P20 and P20 Lite). But if you compare that to iPhone X, let's say last quarter Apple sold 16 million of iPhone X in 3 months.

EL: Yes, known for sure. Huawei has done something incredible because in just span of three years, four years maximum now they are brand that is really well known in Europe. So if you go to most of the tech retail shops you will see Huawei cell phones. So right now and especially with the P20, they just arrived at a great level of brand awareness.

JBS: Another Chinese smartphone company that also is quite successful is Xiaomi. They are the 4th smartphone maker in the world and number 2 in China after Huawei. They've announced this week that they're going IPO in Hong Kong and could raise something like $10 billion with a valuation of a $100 billion. That's going to be the largest IPO in 4 years, since Alibaba, another Chinese company. Xiaomi CEO said they're not going to make a lot of money on hardware - 5% net margin per device at the most - and it seems that instead most of their profits will come out of ads, out of their customers' data. Surely, that’s going to be an issue with privacy in the U.S. and GDPR in Europe.

EL: Yes, and also with Xiaomi AI which is a partnership between Xiaomi and Microsoft. And so it seems that they will try to use AI everywhere in the cell phone to talk, to make payment, to make a lot of other things. But now they want even to add ads everywhere and tracking you. I think it's a good business if you're in China. It's maybe a good business in America, because Google and Facebook are already doing that. But in Europe, with GDPR, they will certainly hit some serious problems and will have to implement the tracking in another way. And I will say based on what I have seen the last weeks in America against Huawei and ZTE, I don't think the U.S. government will let a Chinese company track its citizens like that.

JBS: So that's for sure, that's going to be a big issue and then we're actually preparing the report on this. I mean this is not going to be very well accepted as you said. Huawei and ZTE didn't track - although we don't really know - and they still had lots of problems. But Xiaomi is very open about saying that they're tracking everything that you do.

EL: That's interesting to see how U.S. companies, that already track everybody, will react when it's a Chinese company who says that they do it too. What is interesting for me, is that the presentation of their next mobile phone will be on the 11th of September, just one day before the launch event of the next iPhone. Although some people call Xiaomi, the Apple of China, their business models couldn't be more different: Apple doesn't track you or collect data about you all the time. Xiaomi is more like Google. In Europe today, Xiaomi has 4.4% of the market with a limited presence: in Spain, Italy and Poland and soon in France and the UK.

JBS: Another smartphone news: Nokia. Nokia is back in the U.S. now that ZTE and Huawei are out. It's been a long time, it's been since Microsoft shut down Nokia and their wonderful Nokia Windows phones. Now, Nokia's coming back with the Nokia 6, which is a pure Android One smartphone, a mid-range, at $269 that is still more expensive than ZTE though. But, somebody has to fill the void.

EL: Yes, sure. It's a lot more expensive than the ZTE but you know the Nokia 6 is a nicely designed smartphone.

JBS: Another big news this week at least for the U.S. market and that’s the merger of two mobile carriers T-Mobile and Sprint. They announced they are combining their business and it's going to be a $26.5 billion merger but it's all stock so there's no cash. And the total number of subscribers of the combined company is going to be around $130 million. So we're getting close to AT&T, which is about $145 million and Verizon $150. So we're going from 4 wireless companies down to 3 and now three that are pretty much the same size. Maybe not the same revenue but about the same size in terms of subscribers. And the reason why they wanted to merge is so they have enough money to invest in 5G. In France, I think you have 4 mobile operators right now, right?

EL: Yes, sure. But the size of France and the size of the US is not the same. The investment that they have to do in the U.S. for 5G is huge. But when Free Telecom arrived on the market, they changed the prices in the market and were very aggressive because they launched a plan at just 20 euros, when the others were at 100 euros, with a lot of gigabytes and free phone calls and the capability to do several things like that. So I think that in the U.S., Sprint tries the same kind of things to stay in the market because their valuation has been divided by two to arrive around $26 billion, just before but new operation.

JBS: Yes, you're right.

EL: It's a fantastic operation for sure for T-Mobile. But, regarding the prices for consumers, I'm not so sure. U.S. consumers might end paying a lot for 5G connections.

JBS: 5G is going to cost tens of billions of dollars to build here in the U.S. And, we don't think that T-Mobile or Sprint can afford to build a nationwide 5G network as quickly as Verizon or AT&T, but for sure, the merger is going to have a negative effect on consumer prices. I think that just like in France with this 4th operator, prices just go down. So, well to have to wait and see, as this is not yet approved. The Trump Administration has to approve that. That's going to take time.

EL: Yes. Sure. What is very interesting is what you can do in the U.S., let's see, that is totally accepted by the regulator, but what we can do in the US with that kind of big operation who consolidate two big Telcos it's quite impossible in Europe today. Because Orange will be so happy to buy let's say several Telcos around Europe and the Dutch telecom too and together control all of Europe. It's very complicated today.

JBS: Yes, that's the difference. Here we have a free market or so we think. Now, let's move to the last topic of our podcast and that's the App of the Week. And this week, we found a great little app called YumList, which is like Tinder but for food. And I talked to the CEO Bart Menayas earlier today about his app. So, let's listen to what he had to say and if you like it you can use our private invite code TWIM (This Week In Mobile), TWIM, to try it. Let's listen to him.

Bart Menayas: YumList is like Tinder for food. So people post photos of food they like in local restaurants and then other people can look and like in Tinder they can see a stack of photos posted near them. And they're more than photos, they're like little postcards with a bit of text on it that describes what it is and then they can just swipe right if they like it swipe left and they don't. And then everything they swipe right is saved to their YumList which is a fully searchable map of places where they should go eat. But also the more they swipe, we start recommending them specific restaurants that we see they seem to like a lot. And also if some of their friends are on the platform we can match them with their own friends with restaurants that both people both of them like so they can just like to go together. In the age of Facebook, Instagram, Snapchat it's really easy to interact with your friends online but interacting with them in real life is more challenging. And so we felt that food has always been a central part of how people interact offline. We like to say that food is the original social media. And so, we felt that getting people to in a very easy way figure out where this should go have dinner with their friends in a kind of a playful fun way would be a good way to bring people together in real life.

JBS: And what's the business model?

BM: The business model, so right now we're trying to grow. Eventually, it's very difficult for restaurants to market themselves right now. If you're a restaurant owner, you have limited options for marketing. Restaurants can't really advertise because advertising if your restaurant means that you're not a good restaurant. And so right restaurants are hiring PR managers, social media managers, you're trying to get the word out but there's really no recipe for success. What we like to do is to work with them to help get the word out and mostly by amplifying the word, the buzzword of people that are already their fans. So, one thing that YumList does is that it allows people to post photos of their meals at those restaurants when you really like it and then other people can swipe on those cards. If they like it they swipe right if they don't like it they swipe left. We work with restaurants to make sure that certain people get to see certain recommendations from other people. So that's one possible revenue model. The other one is that we actually going to support the delivery and we already support booking through OpenTable and we're going to support delivery. And so they will probably be a referral business there.

JBS: Well, that's it for This Week In Mobile. Thank you again, Eric, for coming.

EL: Thank you.

JBS: And see you all next week.

EL: And I will be very interested to see what food you have chosen in that new application.

JBS: Ramen. For me it's ramen! On that final note, bye bye, everyone.