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Apple’s Lead in Smartphones Is Not Guaranteed

BARCELONA, Spain — When Ellie Turner decided she wanted an upgrade from her iPhone 3G, she expected to pay more for Apple’s new iPhone 4S than for the other leading smartphones on the market.

Instead, Ms. Turner, a public relations specialist in London, got the fast-selling device free.

She consulted Phones4u, a bulk discounter of cellphones and data packages, which offered her a free iPhone 4S and data plan for £2, or $3.20, more than she had been paying each month. She returned to her operator, O2 U.K., which had been selling the 4S for £99 with the same plan. She told people there about the rival offer.

“They didn’t blink an eye,” Ms. Turner said. “They matched it.”

Apple, the global market leader in smartphones, is enjoying record profits and sales that have transformed it into the world’s most valuable company on any stock market. But the mobile computing industry it has conquered in just five years is changing rapidly, and not even Apple’s trend-setting image appears guaranteed.

Unlike in the United States where competitors find it difficult to price a comparable phone lower than an iPhone, in Britain, the iPhone 4S costs at least £170 more than the Samsung Galaxy S II with a two-year commitment at O2 U.K. At T-Mobile in Germany, the Samsung model costs about 80 euros, or $108, and the 4S 130 euros. But the iPhone retains its enviable image as the phone to which all others are compared.

It is Apple’s reward for being the progenitor of the modern smartphone segment: the sum of its software DNA, intuitive user experience, cash-generating universe of applications, cultivated image of hipness and first-mover advantage.

But Apple’s main rivals — Samsung and other sellers of cellphones using the Google Android operating system, like HTC of Taiwan and Huawei and ZTE of China — are making smartphones for much less, and the iPhone is becoming ubiquitous, threatening its cachet.

For now, said T. Michael Walkley, an analyst at Canaccord Genuity in Minneapolis, the iPhone lineup has momentum and Apple, based in Cupertino, Calif., should be able to pad its lead over rivals this year.

“But I cannot say with certainty that five years on, Apple will still be on top,” Mr. Walkley said, noting that Apple and HTC did not even make smartphones six years ago. “I assume they will be, but it is difficult to predict anything in this dynamic market.”

He estimated that Apple had captured 52 percent of all profits in the smartphone industry in 2011, a share he predicted would increase to 60 percent this year.

Apple, following its tradition of participating only in its own promotional events, has no formal presence or exhibition stand at the Mobile World Congress, the industry’s largest annual convention this week in Barcelona.

Alan Hely, an Apple spokesman in London, said the company had no comment for this article.

Timothy D. Cook, the Apple chief executive, told a Goldman Sachs investment conference this month that Apple would not rest on its laurels after its record fourth quarter, in which it sold 37 million iPhones — 17 million more than it had ever sold in a quarter.

Tongue in cheek, Mr. Cook called the 37 million “pretty good,” drawing laughs, but then put it in stark perspective: “As I see it, that 37 million for last quarter represented 24 percent of the smartphone market. So three out of four people bought something else. And it represented less than 9 percent of the handset market, so nine out of 10 people are buying something else.

“The smartphone market last year was a half billion units,” he continued. “In 2015, it is projected to be a billion units. When you take it in the context of these numbers, the truth is, this is a jaw-dropping industry. It has enormous opportunities to it. Up against those, the numbers don’t seem so large anymore.”

Carrying the iPhone has benefited operators, who use it to attract new customers. Sprint, the No. 3 carrier in the United States after ATT and Verizon, sold 1.8 million iPhone 4S’s in the fourth quarter, its first sales of Apple models. In that period, the operator added 1.6 million customers, the biggest such increase in six years.

Ford plays catch-up in China with new plan, dealerships

By Fang Yan and Ken Wills

CHONGQING (Reuters) – Ford Motor (NYSE:F – News) is on track to double the number of dealerships in China by 2015, its country chief said on Friday, as it launches a half-billion-dollar plant and races to narrow the gap with foreign rivals in the world’s largest auto market.

Ford, which unveiled the new Focus at the opening of a plant in the southwestern municipality of Chongqing, is adding an average of two outlets a week to bring the total to 680 by 2015, said David Schoch, chairman and CEO of Ford’s China operations.

“Obviously, it’s not only important for us to grow the production capacity and get the new products in, but we have to improve the retail distribution network,” Schoch told Reuters.

Ford, which steered clear of a bankruptcy filing and U.S. government bailout in 2009, is a relatively late-comer in China, where General Motors (NYSE:GM – News) and Volkswagen AG (:VOWG.DE) have built a sizeable lead.

It sold 320,658 vehicles in China last year, compared with Volkswagen’s annual tally of 2.26 million and GM’s 2.55 million.

In an effort to narrow the gap, Ford plans to bring 15 new vehicles to China by 2015, starting with the new Focus, which is scheduled to hit showrooms across China in the second quarter.

The introduction of new models, said Will Periam, strategy director for Ford’s Asia Pacific and Africa operations, will enable Ford to compete in about 50 percent of the overall market segments in China, up sharply from 22 percent.

OPTIMISM FOR 2012 DESPITE WEAK START

Schoch said the U.S. automaker also aims to outpace the Chinese market, which he expects will increase between 5 to 10 percent this year despite a steep downturn in January.

He attributed Ford’s 41.9 percent sales decline in January to the timing of the long Lunar New Year holiday period as well as the company’s lower-than-expected inventory in the wake of a strong December when it vastly outpaced the market’s growth.

In December, Ford’s China sales rose 10 percent from the year-ago period, compared with a 1.4 percent industry-wide gain during the same period.

“The combination of those two affected our sales performance last month,” said Schoch, who has been at the helm of Ford China since November 2011. “You almost have to look at January and February together.”

The 15-day Spring Festival marking the Lunar New Year is China’s most important holiday period, and most companies shut down for about a week so workers can return to their hometowns.

The holiday disruption was also blamed for a 23.8 percent drop in China’s passenger car sales in January, the biggest monthly decline in more than three years.

NEW FOCUS

With the opening on Friday of the $490 million Chongqing facility, Ford’s annual capacity in China will rise by 150,000-vehicles to a new total of more than 600,000 vehicles.

Ford’s new Focus, using a shared platform around the world, allows the car to be made in Asia, Europe and North America sharing 80 percent of common parts and 75 percent of the same supply base.

Chief Executive Office Alan Mulally has often said Focus is the best evidence yet of the company’s “One Ford” strategy of radical and sweeping simplification of design, engineering and production systems.

The car will expand Ford’s local product portfolio, which now includes the previous generation Focus as well as Mondeo, S-Max, Fiesta and Transit models.

Ford, meanwhile, is studying the option to sell Lincolns in China where the luxury car segment has been enjoying a bull run, fuelled by rapidly rising incomes, company executives said.

BMW

Ford makes cars in China in a tie-up with Chongqing Changan Automobile Co Ltd (:000625.SZ) and Mazda Motor Corp (:7261.T).

Ford, Changan and Mazda applied to the Chinese government to split up their three-way tie into two 50-50 entities. Approval has been held up because Changan has been unable to get a new car production license for its planned new venture with Mazda.

Schoch said the partners are still waiting for approval but declined to make further comments.

Ford also holds 30 percent of light commercial vehicle producer Jiangling Motors Corp (Shenzhen:000550.SZ – News), which makes Ford Transit vans.

(Editing by Jacqueline Wong)

(Corrects spelling to Ford S-Max not Ford X-Max in 17th paragraph)

Ford Boosts Pay for Directors 25%, Increases Edsel Ford II Fees

February 23, 2012, 12:05 AM EST

By Craig Trudell

Feb. 22 (Bloomberg) — Ford Motor Co. boosted annual compensation for board members by 25 percent and will pay 29 percent more to Edsel Ford II, its founder’s great-grandson, for his work as a director and consultant.

Ford, the second-largest U.S. automaker, will pay its board members an annual retainer of $250,000, up from $200,000, the Dearborn, Michigan-based automaker said yesterday in a regulatory filing. Edsel Ford, a director, also will receive $650,000 a year in cash as a consultant, up from $500,000.

Ford reported $20.2 billion in net income for 2011, the most since 1998. The results were boosted by a noncash gain of $12.4 billion from eliminating a valuation allowance against deferred tax benefits. The company’s shares lost 36 percent last year after gaining 68 percent in 2010 and more than quadrupling in 2009. The shares have climbed 16 percent this year.

“We review all the compensation levels on a regular basis, and in the case of the board, determined this was needed to ensure we continue to attract and retain the talent we have,” Todd Nissen, a Ford spokesman, said in a phone interview.

Ford cut compensation to directors in half to $100,000 in 2006, when the company hired Alan Mulally as its chief executive officer and borrowed $23 billion to restructure its operations, Nissen said.

The board elected to forgo cash payments entirely in 2009, Nissen said. The compensation was re-established to $200,000 in 2010. Sixty percent of director compensation is deferred into Ford common stock units, the filing said.

Edsel Ford Contract

Edsel Ford, 63, has had a consulting contract with Ford Motor since 1999. The increase in Edsel Ford’s consulting compensation is the first he’s received since the arrangement began, Nissen said. The company began paying Edsel Ford’s consulting fee in cash rather than restricted stock during the second half of 2010.

The company realized “substantial benefits” from Edsel Ford’s activities on its behalf, according to the filing. His services include dealer relations and representing the company through education projects, heritage events and motor sports, Nissen said.

The founding Ford family still controls the company through a special class of stock that provides 40 percent voting power. Bill Ford, Edsel’s cousin, is executive chairman of the board. Bill Ford, 54, and Edsel Ford are the only family members on the board.

Ford’s board this month elected former Republican presidential candidate Jon Huntsman to be the 15th member. Huntsman, 51, the former U.S. ambassador to China and governor of Utah, is chairman of the Huntsman Cancer Foundation.

Ford fell 1.7 percent to $12.53 yesterday in New York.

–With assistance from Keith Naughton in Southfield, Michigan. Editors: Bill Koenig, John Lear

To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

Apple defends use of iPad name in Chinese court

SHANGHAI (AP) — Apple defended its right to use the iPad trademark in China in a heated court hearing Wednesday that pitted the electronics giant against a struggling company that denies it sold the mainland China rights to the tablet’s name.

Shenzhen Proview Technology‘s lawyer Xie Xianghui argued that the sale of the iPad trademark to Apple Inc. by Proview‘s Taiwan affiliate in 2009 was invalid.

“Apple has no right to sell iPads under that name,” Xie said. Apple countered that Proview violated the sales contract by failing to transfer the trademark rights in mainland China.

It also contends that the Chinese LCD maker has not marketed or sold its own “IPAD,” or Internet Personal Access Device for years, thus possibly invalidating its claim to the trademark.

The hearing adjourned after a fractious four-hour session which saw the judge repeatedly admonishing both sides to observe proper court protocol as they argued across the courtroom. No date was announced for a judgment or further hearings.

Proview is suing to stop Apple selling the iPad in China under that name. It has also asked commercial authorities in many cities to stop sales of the device. So far, iPads have been pulled from shelves in some Chinese cities but there has been no sign of action at the national level.

Ma Dongxiao, another Proview lawyer, said after the hearing that the company plans to file lawsuits against Apple in more cities.

As evidence in court, Proview presented a flat, thin computer packed in a cardboard box that it said is its “IPAD.”

The company’s lawyers argued the success of the iPad had prevented Proview’s product from succeeding in China. Apple’s side noted that the iPad only began selling in 2010, long after Proview launched its product in 2000.

Apple’s attorneys said that stopping iPad sales in China would cause the company huge losses. The tablet’s popularity has benefited China through tax revenues and jobs created in its manufacturing, they said.

“They have no market, no sales, no customers. They have nothing,” Apple lawyer Qu Miao said of Proview. “The iPad is so popular that it is in short supply. We have to consider the public good.”

That, Xie said, is irrelevant.

“Whether people will go hungry because you can’t sell iPads in China is not the issue,” he said. “The court must rule according to the law. Do you absolutely have to sell the product? Can’t you sell it using a different name?”

The trademark case is highlighting mixed attitudes toward Apple in China. Chinese are just as crazy about iPads and iPhones as consumers anywhere else and the devices are manufactured in China, employing hundreds of thousands of people.

But public awareness has been growing of criticism over the labor and environmental practices of huge factories that assemble the devices. Taiwan’s Foxconn Technology Group, which makes iPads in China, has been under intense scrutiny after a spate of worker suicides. It recently raised wages by up to 25 percent in the second major salary hike in less than two years.

Apple has appealed an earlier ruling in favor of Proview in a court in Shenzhen, a city in southern China’s Guangdong province. The Guangdong High Court is due to hear that case on Feb. 29.

Xie on Tuesday said that since no final decisions have been reached in various legal disputes over the issue, both sides were “still able to sit together and reach an out-of-court settlement.” Apple has shown no indication of willingness to settle.

The current trademark battle is unlikely to have much effect on sales of the iPad 2 but could affect future iterations of the device, said Xu Jia, chief editor of the Chinese magazine PC Home.

“It could affect a future iPad 3,” Xu said. “If the official products are banned from being sold in China, we will see how the products in the black market start to have very good sales.”

Apple, based in Cupertino, California, insists it holds the trademark rights to the iPad in China, having purchased them from Proview for 35,000 British pounds ($55,000) through a company set up for that purpose.

A court in Hong Kong, which has a separate legal system from mainland China, ruled in July that Proview had acted with the intention of “injuring Apple.” Proview’s lawyers argued Wednesday that any rulings in Hong Kong were not admissible in Chinese courts.

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Researcher Fu Ting contributed to this report.

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Follow Elaine Kurtenbach on Twitter: http://twitter.com/ekurtenbachsh

Henry Ford Physician Appointed to Presidential Advisory Group

DETROIT, Feb. 20, 2012 /PRNewswire/ — Henry Ford Health System physician Kimberlydawn Wisdom, M.D., has been appointed by President Barack Obama to serve as a Member of the Advisory Group on Prevention, Health Promotion, and Integrative and Public Health.

(Photo:  http://photos.prnewswire.com/prnh/20120220/DE56178 )

Dr. Wisdom currently serves as Senior Vice President of Community Health Equity and the Chief Wellness officer at Henry Ford Health System.

As a member of the Advisory Group, Dr. Wisdom will advise the President’s Cabinet on policy and provide program recommendations. The Advisory Group also advises the National Prevention Council on lifestyle-based chronic disease prevention and management, integrative health care practices, and health promotion.

The Advisory group was established in June of 2010 by the U.S. Department of Health and Human Services and reports to the U.S. Surgeon General.

“I am extremely proud that Dr. Wisdom has been chosen to share her expertise and passion for preventive health in a way that will now meaningfully impact the well-being of all Americans,” says Nancy Schlichting, CEO of Henry Ford Health System.

“As a caring physician and innovative executive leader who is leading the way in addressing health care disparities, as well as the health and wellness needs, Dr. Wisdom is a role model for creating change within the health care industry.”

Dr. Wisdom’s 30-year career in health care includes developing innovative partnerships to improve community health. As the founding director of the Institute of Multicultural Health at Henry Ford Health System she developed AIMHI (African American Initiative for Male Health Improvement), a nationally recognized initiative that recently received the Michigan Association of Health Plans Pinnacle Award for Community Collaboration.

Dr. Wisdom is the recipient of the Gail and Lois Warden Endowed Chair on Multicultural Health for Henry Ford Health System and co-chairs the Henry Ford Healthcare Equity Campaign, which strives to address and eliminate health care disparities. The campaign goal is to increase awareness, cultural competency, and opportunities to ensure health care equity is practiced by Henry Ford providers, staff, researchers and the community at large – and to link health care equity as a key, measurable aspect of clinical quality.

From 2003 to 2010, Dr. Wisdom served as the first Surgeon General in Michigan and was instrumental in rebuilding the state’s public health system. 

In response to Detroit’s infant mortality rate, among the nation’s highest, the Detroit Regional Infant Mortality Reduction Task Force, chaired by Dr. Wisdom, is developing ground-breaking strategies to “sew up the safety net” as competing health systems and public health agencies collaborate to reduce infant mortality. The approach will create a sustainable template for future regional collaborations to close health disparities gaps and create a healthier community. Funding for the project is provided by the Robert Wood Johnson Foundation Local Funding Partnerships, The Kresge Foundation and other local partners.

Dr. Wisdom currently serves on the Satcher Health Leadership Board: the National Campaign to Prevent Teen and Unplanned Pregnancy Board; the Public Health Institute Board, and is the Honorary Chair of the Governor’s Council (MI) on Physical Fitness, Health and Sports.

She is a board-certified Emergency Medicine physician at Henry Ford and serves as an assistant professor in the Department of Medical Education at the University of Michigan Medical School. 

Dr. Wisdom earned her medical degree from the University of Michigan Medical School, her master’s of science degree from the University of Michigan School of Public Health, and her bachelor’s degree from the University of Pennsylvania.