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Smartphone records

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The smartphone market continues to set records: In 2017, manufacturers sold of 1.478 billion smartphones with an average price of US$323. In terms of numbers, countries in Emerging Asia and Central and Eastern Europe are driving sales, while customers in North America, Western Europe and Developed Asia are snapping up premium phones – with larger screens, more data storage and processing power, longer battery life, faster charging, and features like better water and shock protection.

However, don’t write off feature phones just yet: in developed markets, feature phones specifically designed for the elderly are hugely popular, while in markets like Russia and India, sales of cheaper smartphones continue to gain importance.

2017 was the year when wearables started to gain traction. Leaders of the pack are Smartwatches, which are beginning to take over from more basic fitness trackers. One category to watch is “earables” – in-ear headphones that also carry sensors and plenty of memory for music, and double up as fitness coaches. Another popular segment is locators with in-built connectivity and GPS, to find children or seniors. That’s especially true for Asia, where every third wearable device sold is a locator. In Europe, demand for wearables is up more than 23% (and 35% in terms of value), with similar growth rates in Asia.

“Smartphones still rule supreme, but 2018 could also be the year of the wearables, as these devices reach the right balance between cost, features and usability,” said Jens Heithecker, Executive Director of IFA Berlin. “The most fascinating aspect of this markets is that so many different industries are offering their take on the category – from mobile phone manufacturers to healthcare specialists to traditional watchmakers and many in-between.”
Dr. Jan Wassmann, Global Analyst New Products at GfK, said: ”In countries like Germany, GfK insights reveal that smartwatches are having a tremendous impact on the sales of traditional wristwatches. For instance, we see that in the Euro300-500 price range, more than every second watch sold so far in 2017 was connected – or smart. It appears smartwatches are a sort of substitution for traditional watches, as the market for the latter is shrinking.”
Have we reached peak tablet?
The rise of the tablet and the decline of PCs were the big tech story of a few years ago, but now we seem to have reached “peak tablet”. During the past year, retail channel sales of media tablets fell by 18% compared to the previous year (January-October). This was particularly driven by a sharp decline in emerging markets, which account for 34% of demand for computers (desktop, laptops and tablet computers).

The fall in the tablet market coincides with a slow recovery for personal computer sales – after years of decline. Notebook channel sales slightly recovered to decrease “only” by 7% compared to the previous year (January-October), but were strongly supported by improved sales for convertible notebooks with touchscreens and ultra-thin devices. Ultra-thin notebooks meanwhile represent 10% of the global retail demand (excluding North America) for computing devices, particularly driven by Western Europe and APAC as key regions.

Make no mistake: tablets are still very popular and for many consumers the go-to device for media consumption and computing on the go, but the rise of the segment seems to have been stopped and even reversed for now.

“Today, computing means mobile computing and, until recently, consumers had to make a choice: devices that were geared either towards media consumption or productivity. Productivity is finally winning out, but new form factors like ultra-thin devices and convertible notebooks are making the choice easier,” said Jens Heithecker, Executive Director of IFA Berlin.

Carolin Weinmann, GfK Global Analyst Computing, said: “With increasing market penetration for media consumption-oriented tablets and subsequent decreased demand for this category, the replacement of productivity-oriented computing devices was re-initiated. Particularly in developed regions, this is currently helping more design-oriented Ultrathin and Convertible Notebooks to grow into the market, ultimately also paving the way for more premium devices. Hybrid Tablets are only partially able to stop the negative trend for tablets worldwide.”

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Personal computing devices sales still decline in MEA

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The Middle East and Africa (MEA) personal computing devices (PCD) market, which is made up of desktops, notebooks, workstations, and tablets, suffered a decline of -7.3% year on year in Q2 2017, according to the latest insights from International Data Corporation (IDC).

The global technology research and consulting firm’s Quarterly PCD Tracker for Q2 2017 shows that PCD shipments fell to around 6 million units for the quarter.

“As forecast, the market followed a similar pattern to recent quarters, with the downturn primarily stemming from a decline in shipments of slate tablets and desktops,” says Fouad Charakla, IDC’s senior research manager for client devices in the Middle East, Turkey, and Africa. “This was the result of desktop users increasingly switching to mobile devices such as notebooks or even refurbished notebooks, while users of slate tablets shifted to smartphones. These trends translated into year-on-year declines of -21.9% for desktops and -15.7% for slate tablets in Q2 2017, while shipments of notebooks and detachable tablets increased 11.0% and 63.3%, respectively over the same period.”

“Market sentiment in the region remained low overall, although an aggressive push from some slate tablet vendors meant the market declined much slower than expected,” continues Charakla. “At the same time, heightened competition has also made it harder for certain players to sustain their slate tablet businesses and generate profits, causing them to lose interest in the slate tablet market altogether. Despite this, slate tablets are still the most popular computing device among home users in the region.”

Looking at the region’s key markets, IDC’s research shows that when compared to Q2 2016 overall PCD shipments were down -11.4% in the UAE, -8.9% in Turkey, and -6.7% in the ‘Rest of Middle East’ sub-region (comprising Iran, Iraq, Syria, Yemen, Palestine, and Afghanistan). South Africa and Saudi Arabia bucked this trend, recording year-on-year increases of 3.5% and 9.6%, respectively.

A massive education delivery in Pakistan acted as a key driver for notebook shipments in the region overall. Similarly, the education sector was the biggest driver of detachable tablet shipments, triggered by a huge delivery in Kenya, as well as two other deliveries in Pakistan and Turkey, which enabled this category to achieve the fastest growth of all the PCD categories.

“While a component shortage prevented market players from reducing their prices too much, the average price of consumer notebooks experienced a considerable year-on-year decline in Q2 2017,” says Charakla. “This played a key role in driving demand from the consumer segment, and was reflected in the growing popularity of lower-priced notebook models.”

Looking at the PC market’s vendor rankings, each of the top five vendors maintained their respective positions compared to the previous quarter, with the top four all gaining share.

Middle East & Africa PC Market Vendor Shares – Q2 2016 vs. Q2 2017

Brand Q2 2016 Q2 2017
HP Inc. 23.7% 27.6%
Lenovo 19.8% 21.5%
Dell 16.3% 16.7%
ASUS 8.7% 9.4%
Acer Group 5.9% 4.1%
Others 25.7% 20.7%

Although Samsung continued to lead the tablet market, the vendor rankings in the space saw quite a few changes, with Huawei catapulting itself to second place. Lenovo also climbed up a position compared to the previous quarter, causing Apple to drop to fourth place.

Middle East & Africa Tablet Market Vendor Shares – Q2 2016 vs. Q2 2017

Brand Q2 2016 Q2 2017
Samsung 20.5% 18.9%
Huawei 11.2% 15.8%
Lenovo 12.7% 9.8%
Apple 9.1% 8.8%
Alcatel 2.9% 5.0%
Others 43.5% 41.7%

“Looking to the future, the MEA PCD market is expected to decline at a faster rate than previously forecast for 2017 as a whole,” says Charakla. “Technological shifts are playing a pivotal role in deciding the future of this market, with demand for certain products shifting to other PCD products and beyond (i.e., smartphones). Accordingly, shipments of slate tablets are expected to continue declining over the coming years as demand is cannibalized by smartphones. Meanwhile, the ongoing shift to mobile computing will see growth in the desktop market remain close to flat throughout IDC’s forecast period ending 2021. Notebook shipments will experience very slow growth beyond 2018, while detachable tablets will remain the fastest growing PCD category, eating away share from other computing devices.”

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Gazer cyber-spies exposed

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ESET has released new research into the activities of the Turla cyberespionage group, and specifically a previously undocumented backdoor that has been used to spy on consulates and embassies worldwide.

ESET’s research team are the first in the world to document the advanced backdoor malware, which they have named “Gazer”, despite evidence that it has been actively deployed in targeted attacks against governments and diplomats since at least 2016.

Gazer’s success can be explained by the advanced methods it uses to spy on its intended targets, and its ability to remain persistent on infected devices, embedding itself out of sight on victim’s computers in an attempt to steal information for a long period of time.

ESET researchers have discovered that Gazer has managed to infect a number of computers around the world, with the most victims being located in Europe. Curiously, ESET’s examination of a variety of different espionage campaigns which used Gazer has identified that the main target appears to have been Southeastern Europe as well as countries in the former Soviet Union Republic.

The attacks show all the hallmarks of past campaigns launched by the Turla hacking group, namely:

  • Targeted organisations are embassies and ministries;
  • Spearphishing delivers a first-stage backdoor such as Skipper;
  • A second stealthier backdoor (Gazer in this instance, but past examples have included Carbon and Kazuar) is put in place;
  • The second-stage backdoor receives encrypted instructions from the gang via C&C servers, using compromised, kegitimate websites as a proxy.

Another notable similarity between Gazer and past creations of the Turla cyberespionage group become obvious when the malware is analysed. Gazer makes extra efforts to evade detection by changing strings within its code, randomizing markers, and wiping files securely.

In the most recent example of the Gazer backdoor malware found by ESET’s research team, clear evidence was seen that someone had modified most of its strings, and inserted phrases related to video games throughout its code.

Don’t be fooled by the sense of humour that the Turla hacking group are showing here, falling foul of computer criminals is no laughing manner.

All organisations, whether governmental, diplomatic, law enforcement, or in traditional business, need to take today’s sophisticated threats serious and adopt a layered defence to reduce the chances of a security breach.

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