27 December 2018
Apple will be test as we move into 5G era, tech analyst says
Pelham Smithers, managing director at Pelham Smithers Associates, and Geoffrey Yu, head of the U.K. investment office at UBS Wealth Management, discuss how Apple’s identity may be altered in 2019.
27 December 2018
Nokia will gain from Huawei 5G controversy, tech analyst says
Pelham Smithers, managing director of Pelham Smithers Associates, says 5G will be one of biggest game-changers in society.
4 December 2018
Does cloud computing mean game may over be over for Xbox and PlayStation?
By Leo Lewis
………. “Cloud gaming will come. There is no way around it. There is a broad consensus that this is the future of gaming,” says Mr Toto. “Everything will be streamed and devices will be agnostic. It is just further away than a lot of the commentary makes out.”
Disruption: ‘Assassin’s Creed Odyssey’ is already available on Nintendo’s Switch console via a streaming service — though in Japan only
……. “But in a piece of stunning disruption, says Pelham Smithers, a games and technology analyst, Assassin’s Creed Odyssey is already available on Nintendo’s Switch console via a streaming service — although only in Japan for now.
The processing and memory power required to run the game are devolved to cloud servers and it plays, according to reviews, acceptably well on Nintendo’s relatively underpowered machine. This is, for now, a rarity and far from perfect. Japan has the fastest and most stable broadband among G7 economies. Speeds elsewhere are judged to be too slow to make streaming of triple-A titles viable and some estimates suggest that “peak 5G” is unlikely to be standard in the US and EU much before 2029.
But the streamed version of Assassin’s Creed Odyssey suggests the future has already arrived. “As well as ending the idea that Switch cannot play PS4-level games as it is not powerful enough, it shows the threat streaming can be to the console gaming industry,” says Mr Smithers. “The company that has to be most worried by this is Sony.”
4 September 2018
Electric switch poses existential challenge to carmakers
By Patrick McGee
………. Daimler, which is spending €10bn to launch more than 10 electric models by 2022, is taking a third approach: Like VW, the Mercedes parent is designing purpose-built architecture for its EQ marque of electric cars. However, like BMW, its production plants are being set up to accommodate all types of powertrains, including hydrogen fuel cell cars.
“We have hybrids, plug-in hybrids, electric cars and maybe robo-taxis tomorrow,” says Daimler production chief Markus Schaefer. “It’s hard to predict volumes for the best way in an uncertain world, so this is the most efficient approach to supply the market.”
“I don’t see how they can consolidate traditional platforms, from small hatchbacks to large SUVs, and at the same time try to include EVs into the equation,” says Julie Boote, analyst at Pelham Smithers. “That’s incredibly complicated.”
S&P Global – Market Intelligence
20 September 2018
New iPhones still affordable for many, but trade wars hang over future sales
By Anna Atkins
Apple Inc.’s latest iPhone models emphasize the company’s ability to charge a premium for higher-quality devices, according to analysts. It remains unclear, however, how the price points may change as U.S. and China trade tensions intensify.
At its recent product launch, Apple debuted the iPhone Xs, iPhone Xs Max and the iPhone Xr models that resemble the company’s flagship iPhone X but vary in size and pricing. The iPhone Xs starts at $999 and has a 5.8-inch screen that offers more protection against water damage than any other iPhone. The iPhone Xs Max, which starts at $1,099, has a 6.5-inch display, making it Apple’s largest iPhone to date. Both devices are equipped with more advanced cameras and a longer battery life than their predecessors. The iPhone Xs and iPhone Xs Max are available now for preorder and will begin shipping Sept. 21.
Pelham Smithers, managing director at independent research provider Pelham Smithers Associates, predicted users with older devices, especially those with an iPhone 6 model, will be most likely to upgrade, and that the lower-priced iPhone Xr is a clear option for them.
“The Xr is going to do quite well … people who upgrade from a 6 to an Xr will really notice a massive improvement in performance,” Smithers said in an interview.
While the new iPhones are “slightly overpriced,” Smithers believes that they could still deliver a “record year” for Apple.
Reuters – Breakingviews
6 June 2018
By Quentin Webb
Something doesn’t quite compute about SoftBank’s latest deal. The Japanese technology and telecoms group said outsiders would take control of Arm China, the mainland outpost of its semiconductor-design business, for just $775 million. It may be a victim of Beijing’s increasing paranoia about tech self-sufficiency.
SoftBank paid about $32 billion for Arm two years ago, with boss Masayoshi Son betting the “internet of things” would lead to soaring demand for microchips. The business is thriving in China, where it accounts for a fifth of Arm’s sales and some 95 percent of advanced chip designs used its blueprints last year. Heavy investment has depressed Arm’s EBITDA since the takeover. But it is nonetheless peculiar to hand over 51 percent of the division at a $1.5 billion valuation: all else being equal, $6.5 billion or so would seem fairer.
There may be ways to square this circle – through how Arm charges the standalone unit, for example. Or Arm could even theoretically borrow against the business and pay itself a big dividend before the deal closes. SoftBank will not discuss details, however, saying simply that Arm will retain a significant slice of revenue generated by Arm China.
Another plausible explanation is that SoftBank had little choice – or as analyst Pelham Smithers put it, this “underlines the continued difficulty for firms doing business in China”. Indeed, Arm touts the partnership as a way to “sustain access to the Chinese market”. If anything, Beijing’s desire to reduce reliance on foreign semiconductors and other technology has intensified after the near-collapse of telecoms giant ZTE for U.S. sanctions-busting.
Wall St Journal
5 June 2018
China Gets Hands on Chip Technology in SoftBank Deal
By Mayumi Negishi
SoftBank’s Arm Holdings will sell a majority stake in its Chinese business for $775 million
China wants to have an indigenous and controllable local supply base,” Arm Holdings Executive Vice President Rene Haas said in an interview. “Doing a joint venture of this nature would best position us to be able to capitalize on that growth.”
China accounted for roughly a fifth of Arm Holdings’ $1.83 billion in revenue for its latest fiscal year, with local sales expected to grow further under China’s “Made in China 2025” strategy to develop self-driving vehicles, smart appliances and other next-generation technology. Arm Holdings has the right to technology developed by the Chinese joint venture, Mr. Haas said.
He said the deal doesn’t require approval from the Committee on Foreign Investment in the U.S. and is expected to be completed by the end of June.
Research firm Pelham Smithers Associates questioned whether the price of the China deal was too low, saying in a note to clients that it values the Chinese business at less than 5% of the price SoftBank paid for all of Arm Holdings. “It does seem a low price given (1) the share of ARM’s business currently derived from China and (2) the expected share in the future,” he said in the note, which was posted on the Smartkarma platform, an online forum for independent research analysts.
15 March 2018
SoftBank’s Venezuela-Sized Debt Triggers Angst
By Shuli Ren
There’s a whiff of anxiety in the market as Masayoshi Son keeps borrowing
“On March 9, bond investors got another jolt when Reuters reported that SoftBank is seeking to raise a $5 billion dividend recapitalization loan through its U.K. chip company ARM Holdings Plc. The dollar bonds tumbled further.
Some investors now fret about what SoftBank aims to do with that $5 billion. Will Son rekindle his ambition for Charter Communications Inc.? SoftBank has secretly bought a stake of almost 5 percent in the cable company, the Times reported in London this week.
While there may be good business reasons to go after Charter, the cable provider is a whale. John Malone’s Liberty Broadband Corp. is unlikely to sell for less than a 50 percent premium, implying a target with a market value of $143 billion, Pelham Smithers Associates mused on the SmartKarma site. That would certainly mean more debt.”
8 February 2018
You Can Now Officially Play Esports for Money in Japan
by Yuji Nakamura & Yuki Furukawa
“For the game companies, it’s about the money. Worldwide revenue from competitive gaming — including ticket sales, advertising, broadcast rights and merchandising — will reach $5 billion annually by 2020, according to market researcher Activate. Tournaments outside Japan routinely draw tens of thousands of spectators. In China, the success of multi-player games like League of Legends, an esport sensation, has helped make Tencent Holdings Ltd. one of the world’s ten most valuable companies, worth more than all of Japan’s software publishers combined.
‘The esports market has been closed in Japan and as a consequence Japanese companies have struggled to compete,” said Pelham Smithers, owner of an eponymous London-based firm that researches Asian tech companies. “This weekend was a bit hastily arranged, but the organizers are throwing a lot of money at it. Give it 12-24 months, and I think we could see Japan become one of the main hosts of these tournaments.'”
22 January 2018
Bankers in fight to lure Softbank float to City
by Richard Lloyd-Parry, Robin Pagnamenta
“….Keiichi Yoneshima, of Credit Suisse in Tokyo, said: “The reaction has been very positive. I think it will go ahead . . . Mr Son seems to want to invest more aggressively in future technology and is always thinking about how to raise finance to invest.”
Pelham Smithers, whose firm conducts research on Asian technology companies, said that London was a frontrunner because Softbank already had an asset management operation in Britain. Mizuho Financial Group, of Japan, which co-owns a consumer lender with Softbank and advised it on the Arm deal, and Citigroup, with which Softbank has a long-established relationship, are viewed as strong contenders to act as advisers.
Robey Warshaw and The Raine Group also advised Softbank on the Arm transaction. Its legal advisers included Morrison & Foerster and Freshfields Bruckhaus Deringer. Other large banks likely to seek a role include Deutsche Bank, Goldman Sachs and Morgan Stanley. They advised Softbank on a recent $4.5 billion bond offering.
‘It would make sense to list in the UK,’ Mr Smithers said, adding that a London and Asian listing would ensure a “good 24-hour market” in the shares. He said that plans for the float were likely to be “reasonably well advanced”. He added, however, that Softbank might choose to do the entire deal in Tokyo and avoid a foreign listing….”
15 January 2018
Softbank may split in two to focus on tech bets
“Some investors are concerned that SoftBank’s shares trade too cheaply. Its current market cap is about 10 trillion yen ($90 billion). That’s less than the value of its big stake in Alibaba, which research firm Pelham Smithers Associates estimates is worth a gigantic 14.7 trillion yen ($133 billion).
The reason for this gulf in valuation is that growth at SoftBank’s mobile business — which still contributes a huge part of the company’s annual revenues — has tailed off, giving investors few reasons to get excited about it.
Spinning it off will allow investors to pick and choose between SoftBank, the globe-trotting high-tech investor, and SoftBank, the slow and steady Japanese telco, according to Pelham Smithers….”