TIME Smartphones

This Is the Best Wireless Carrier for You

2012 International Consumer Electronics Show
The Verizon Communications Inc. logo is seen at the International Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S., on Thursday, Jan. 12, 2012. Bloomberg—Bloomberg via Getty Images

Big Red beats out the competition

This post was done in partnership with The Wirecutter, a list of the best technology to buy. Read the full article below at TheWirecutter.com

If you’re in the United States and looking for a carrier with good coverage, fast bandwidth and—this may surprise you—affordable single-line plans, you should consider Verizon Wireless. We found it has the widest coverage map, the fastest network and the lowest costs for individuals. But it’s not the only answer for everyone: Some situations call for other carriers, and we discuss that below.

How We Decided

We reached that conclusion after a good 70 hours poring over the large and small print of wireless plans, checking coverage maps and calculating the cost of smartphone service: 500MB of data per month, 2GB and 4GB. We did the math for all those scenarios with expensive and affordable phones, ran the numbers for two and four phones on the same plan and recalculated again for those who want to use their own device not purchased through the carrier.

Finally, we inspected prior research and testing from a host of reputable sources and publications and consulted experts from around the industry.

Why Verizon is best for most people on an individual plan

Our endorsement rides on some assumptions: wireless coverage where you need it trumps all else; the lowest total cost of owning your smartphone or device, based on your typical usage; and that a lack of tethering or a wide choice of Android phones aren’t necessarily deal-breakers. (Though we have other recommendations if they are deal-breakers.)

Verizon has the widest coverage map, the fastest network, and the lowest costs for the medium solo-usage scenario—analysts estimate this ranges between 1.2GB and less than 1.5GB a month. Its “Single Line Smartphone” plans limit the two-year total cost of a new iPhone with 2GB of data a month to $1,640, versus $1,680 at Sprint (that’s an iPhone 6/iPhone 6 Plus exclusive lease deal, while non-Apple high-end phones cost $2,090), $1,730 at T-Mobile, and $2,120 at AT&T.

Those numbers, except for T-Mobile’s, assume a standard two-year contract in which higher monthly rates recoup a lower initial phone price. That deal traditionally entails getting gouged on international roaming (hi, AT&T!), but Verizon’s numerous “world phones” with internationally compatible devices all come unlocked, allowing you to pop in cheap prepaid SIM (Subscriber Identity Module) cards while overseas.

Back in the U.S., Verizon’s deployment of “XLTE” LTE service sped it ahead of AT&T in PCMag.com’s latest tests, with LTE downloads across the country averaging 19.6 megabits per second. RootMetrics’s tests over the first half of 2014 also favored Verizon in overall performance and speed.

Flaws (but not dealbreakers)

Reading this on a laptop away from home? Verizon’s Single Line plans exclude “tethering,” or sharing a smartphone’s bandwidth over Wi-Fi. Adding tethering with a “More Everything” plan balloons two-year costs to $2,360 in a 2GB/month iPhone scenario, above comparable costs at T-Mobile ($1,730) and AT&T ($2,120).

Want an Android phone? Subsidized or not, Verizon’s Android phones come loaded with apps you can’t remove, and then you must wait for Verizon to deliver system updates. And as with Sprint, its use of CDMA wireless technology instead of the more open GSM standard relied on by AT&T and T-Mobile obstructs customers from buying a new phone from somebody besides the carrier, like a manufacturer or Google.

The best selection of Android phones

For the widest choice in Android phones, look to T-Mobile. By pricing service separate from hardware, it frees you to buy hardware directly, with less unwanted software and faster updates. Even its subsidized, locked phones come with free international low-speed data and cheap overseas calling and texting—and if you need faster service, its roaming rates still mop the floor with the competition. And its Wi-Fi-calling-capable phones can get free in-flight texting and voicemail reception on planes with Gogo Wi-Fi.

What if I want a wider selection, but need coverage in a less populated area?

T-Mobile’s coverage often fades in rural areas. If that’s an issue, and you also want unlocked phones or devices that aren’t available through Verizon, consider AT&T: It provides coverage that our sources saw as about as good as Verizon’s and offers a wider selection of phones. But while you can buy a compatible phone from another place, AT&T’s pricing favors getting a subsidized-phone contract—and then accepting its control-freak locking policy that prevents using other carriers on your phone until your contract concludes.

Both AT&T and T-Mo support simultaneous voice and data on any phone (though some Android phones at Sprint and Verizon provide that with an extra antenna).

Why we don’t recommend Sprint

Sorry, but Sprint’s LTE coverage still suffers from earlier detours with the failed 4G standard “WiMax” and its acquisition of Nextel. Most of its plans don’t include tethering, you have to wait 90 days into a contract to get a world phone’s SIM card unlocked. If you’re set on a new iPhone, you may want to consider its “iPhone for Life” option: Unlimited data for $70 a month with an iPhone 6 or $75 for an iPhone 6 Plus, with a replacement every two years. But bear in mind that other smartphones don’t allow this deal and that Sprint’s subsidized-phone deals quickly change from its cheapest to its priciest option as your data appetite increases.

No clear winner among family plans

Sprint and T-Mobile offer the best deals for most multiple-line plans, but the coverage for each can be a deal-breaker. And mastering how discounts for extra data can intersect with those for buying an unsubsidized phone can be a brain-breaker.

  • In a 500MB-per-line scenario, AT&T’s unsubsidized deal is the cheapest way to get two lines, while T-Mobile is your lowest-cost option for four lines.
  • With 2GB of data per line, Sprint unsubsidized is the cheapest route to two lines (although Apple users will do better by pairing two “iPhone for Life” leases), T-Mobile for four.
  • At 4GB per line, Sprint’s unsubsidized options take the lead all around—but if you need two but not four iPhones, get two “iPhone for Life” leases, while for two other high-end devices, take its handset subsidy.

If you can’t deal with either Sprint or T-Mobile’s coverage, Verizon’s multiple-line pricing isn’t bad but requires a spreadsheet to grasp (as in, it’s cheaper to share 10GB of data among four unsubsidized phones than to buy less data). If you wanted shopping for wireless service to feel more like confronting the tax code, this is the corner of the market for you.

In Closing

Verizon is not the “best carrier” for every single person–your location, your travel habits, and your taste in phones can make it a poor choice. But for most people needing only one line, it’s the safest recommendation we can make, and it doesn’t hurt that it’s the cheapest either.

This guide may have been updated since publication. To see the current recommendation, please go to TheWirecutter.com.

TIME Gadgets

Android 5.0 Lollipop: What’s New and When Can You Get It?

The next sweeping overhaul of Android — Android 5.0 Lollipop — is just around the bend. Here’s a look at some of its most notable additions, along with some insight as to when you might be able to get your hands on it.

What’s New?

Android 5 Lollipop
Google

The most noticeable difference is the overall look and feel of the operating system. Google’s using what it calls “Material Design,” making extensive use of animations and layered elements to deliver what the company promises is a more intuitive experience.

In layman’s terms, let’s just say there’s more swooping and sliding. And you’ll notice a more uniform design across Android devices in general — phones, tablets, watches, TV gadgets, car audio systems and more. If you have multiple Android gadgets, they’ll work together more harmoniously than before.

You can see a bit of how Material Design looks up until about the 30-second mark of this video:

Battery life should be an improvement. Developers will be able to better fine-tune their apps so they don’t use as much juice, and there’s a new power-saving mode that lets you squeeze up to 90 extra minutes out of your phone if you can’t find an outlet. When you get around to charging your phone, it’ll tell you how long it’ll be until it’s at 100%.

Security gets beefed up as well, with encryption turned on by default to prevent data from being accessed on lost or stolen devices. (Authorities aren’t too happy about this.) Note that you can turn encryption on yourself if you’re running an earlier version of Android. Here’s how (follow up until the part about resetting your phone). For an extra layer of security, you’ll be able to unlock your phone or tablet only when it’s in proximity to your Android smartwatch.

There are also some cool new multi-user features, like being able to use a friend’s phone in guest mode. And if you log in with your Google credentials, you’ll be able to make calls and access your messages, photos and other data as though you were using your own phone.

Notifications also get a much-needed overhaul. They’ll now be ranked and presented based on priority. Ideally, messages from people you want to hear from will be most prominent, while some obscure app telling you it’s been updated won’t get as much screen time. You’ll be able to finesse how often you’re notified with a new “priority” mode that’ll only let certain people contact you or will let you turn off notifications altogether between certain hours.

On newer phones, you’ll enjoy fewer button presses. If the hardware supports it, you’ll be able to say “Okay, Google” to wake the phone up to help you search for something or set reminders without touching it. Some phones will simply wake up when you pick them up or double-tap the screen.

You can see a more complete list of features here; scroll down to the bottom and click the “See All Features” link.

When Can I Get It?

It depends on your device and your carrier. Google’s “Nexus”-branded devices (Nexus 4, 5, 6, 7, 9 and 10) will have access to Android 5.0 sometime in November. Certain “Google Play edition” devices (the HTC One M8 and the Moto G, almost certainly) should see the update around the same time. The new Nexus 9 tablet is the only device with a firm date — November 3; the big-screen Nexus 6 smartphone is due “in stores in November,” says Google.

The official word is as follows:

Android 5.0 Lollipop, which comes on Nexus 6, Nexus 9 and Nexus Player, will also be available on Nexus 4, 5, 7, 10 and Google Play edition devices in the coming weeks.

After that, things get even murkier. Dan Graziano over at CNET has a roundup of moving-targets HTC, Samsung, Motorola, LG and Sony, so keep an eye on that post as it’s to be updated as things progress.

As for whether or not your device is eligible to get Android 5.0, there’s a loose 18-month window for certain Android devices. Google’s official word: “Devices may not receive the latest version of Android if they fall outside of the update window, traditionally around 18 months after a device release.” And that’s only for Nexus and Google Play devices; check with your carrier to see if they can shed any light on your situation. If you’ve had your phone for more than a year, you might be on the fence depending when the phone was initially released.

TIME legal

Why U.S. Sanctions Mean Some Countries Don’t Get Any iPhones

Apple iPhone Technology Embargo Sanctions
An attendee displays the new Apple Inc. iPhone 6, left, and iPhone 6 Plus for a photograph after a product announcement at Flint Center in Cupertino, California, U.S., on Tuesday, Sept. 9, 2014. Bloomberg via Getty Images

A sanction a day keeps Apple away

Some 36 additional countries will receive shipments of Apple’s iPhone 6 this month, with over 115 countries on track to get the big-screen smartphones by the end of the year. But a handful of countries won’t be receiving any Apple products at all.

Among the Apple-less countries are Syria, North Korea, Sudan and Cuba, which face trade sanctions from the United States. That means the “exportation, reexportation, sale or supply” of any Apple goods from the U.S. or an American anywhere is prohibited in those countries, according to Apple’s global trade compliance. Add to those Apple-less countries several African and Middle Eastern nations, among other countries, which Apple’s sales locator indicates have neither Apple Stores nor authorized Apple product resellers.

Apple did not respond for comment on whether authorized distribution channels exist in countries that aren’t sanctioned by the U.S. but still present a difficult business climate, like Ethiopia, Afghanistan and Yemen. Technology and trade experts were reluctant to speculate why Apple may not penetrate these markets, but some pointed to a lack of demand or infrastructure.

In the map below, Apple-less countries appear unshaded:

The world recently bore witness to what happened when China, not subject to U.S. sanctions, was deprived of the iPhone 6’s initial release: a gray market exploded while rumors swirled that the “Chinese mafia” was storming Apple Stores around the world to collect iPhones for resell to high-income buyers.

That same grey market boom is happening in countries that do face U.S. sanctions, though for different reasons. While Chinese buyers were simply unwilling to wait for the iPhone 6’s official release in their home country, high-income buyers in sanctioned states are creating demand for a product that will likely never be sold in their country. That demand is being met by unofficial providers like the “Apple Syria Store” and “Tehran Apple Store,” two unofficial Apple distribution channels in the Middle East, for example.

A lack of iPhones in some countries, however, is only a problem for those countries’ wealthiest residents. Indeed, the iPhone craze overshadows a higher-stake battle: Access to less-hyped but important American technology in countries where such technology continues to be restricted.

The U.S. has put in place sanctions against Syria, North Korea, Sudan, Cuba and Iran to discourage those countries from abusing human rights, sponsoring terrorism or launching nuclear programs. While the sanctions were largely intended as economic embargoes, they also disrupted the free flow of information by severely limiting residents’ access to communication technology, advocates say. That technology includes not only electronics like Apple’s iPhone, but also American software and websites like Apple’s App Store, Adobe Flash, Yahoo e-mail and educational platforms like Khan Academy and Coursera. In many sanctioned countries, attempts to access those sites result in a “blocked” page. In certain countries it’s also prohibited to update whatever American software is available, leaving in place security vulnerabilities in countries where surveillance and censorship are commonplace.

“It’s still a fairly new issue, because it wasn’t really until the Arab Spring that people started to realize communication technology as a tools of free expression,” said Danielle Kehl, a tech policy analyst at the New America Foundation’s Open Technology Institute.

Observers first began to note the impact of U.S. sanctions on communication technology during Iran’s Green Movement in 2009, when protesters demanding the president’s removal used the Internet as an activist tool, according to independent tech policy researcher Collin Anderson. Within years, activists won over U.S. officials, who exempted certain technologies from American sanctions on Iran to empower protestors. That hasn’t yet been replicated in other sanctioned countries.

Anderson also said that pressure from the Iranian diaspora contributed to a decision by U.S. officials to issue a sanction exemption that allowed the export or re-export of “certain services, software, and hardware incident to personal communications” to Iranians. Apple then “quietly updated its compliance policy” to match the change, Anderson said.

“Apple is in an under-appreciated way one of the most responsive adopters of U.S. policies [that lift sanctions on technology],” said Anderson.

Apple had some market incentive to comply quickly with the change. Most of these sanctioned countries have significant amounts of mobile phone subscribers buying devices purchased from non-U.S. countries or companies, according to Anderson and data from the International Telecommunications Union.

Despite all those potential customers for Apple and other tech firms, tech policy analysts agreed the onus is on U.S. officials to invoke change. But that Apple and several other companies chose to engage with complex, high-risk sanctions in Iran shows that when the policies change, companies tend follow suit.

Still, Kehl said the other, risk-averse option for companies is to “over-comply” with Iranian sanctions, or to treat the laws as if they were complete embargoes in order to reduce their liability. That’s what happened in 2009 when LinkedIn blocked Syrian accounts and when Google blocked its code.google.com developer’s tool in Sudan.

Even Apple appeared to over-comply in 2012 when a Apple Store employee in Alpharetta, Georgia refused to sell an iPad to Iranian-American woman after he heard the woman speaking Persian, according to Jamal Abdi, policy director at the National Iranian American Council. “If [Apple] had reason to believe you were going to take an Apple product to Iran, or if you were going to resell it, [Apple] had to take action to stop people,” explained Abdi, who slammed the practice as discriminatory in a New York Times op-ed. The woman later received an apology from an Apple customer service employee, as NPR noted at the time.

The greatest pressure for change, however, is coming from within the sanctioned countries. Iranian bloggers have discussed banned technologies at risking of criminal charges, Sudanese computer science students have demanded more educational tools, and Syrians have called for U.S. imports of basic technological needs. Several non-profits have reported that sanctioning U.S. technology is highly detrimental to affected countries’ growth, while Abdi added that sanctions have prevented the electronic delivery of humanitarian aid or day-to-day monetary transactions because many banks are affected.

Still, tech companies have in recent years shown more willingness to engage government officials on matter of policy, particularly after former NSA contractor Edward Snowden’s surveillance leaks. Twitter sued the U.S. Justice Department earlier this month to disclose government requests for user data, while popular websites like Netflix, Mozilla and Reddit joined an online protest against the Federal Communications Commission’s proposed rules they said could divide the Internet into “fast lanes” and “slow lanes.” In the most visible tech-backed activism to date, Wikipedia and Reddit “blacked out” their webpages and Google censored its logo to protest the Stop Online Piracy Act, which was later shelved by its author.

Analysts are not expecting Apple to be at the forefront of the battle to lift U.S. sanctions. But as several organizations and advocates pressed for changes to American trade policy towards Iran, it would be hard to believe they would turn away Apple’s support.

“[Apple] is very quiet about these things—like either Apple is the best, or maybe the worst. But it seems like it’s the best,” Anderson said. “[Apple's] recognition of [the policy changes regarding Iran] was the first moral victory for everyone who had worked so hard on this.”

TIME Google

This Is Google’s Massive New Nexus 6 Android Phone

Bigger than an iPhone 6 Plus and a Samsung Galaxy Note 4

Google unveiled its latest phone, the Nexus 6, Oct. 15. It’s big. Very big.

The first device to run Android 5.0, codenamed Lollipop, features a massive 6-inch display, larger than Samsung’s Galaxy Note 4 and Apple’s iPhone 6 Plus. The device packs a Snapdragon 805 processor, 13-megapixel rear camera, 2-megapixel front camera, and two front-facing speakers. It will be available in 32GB and 64GB versions, in either white or blue. An unlocked Nexus 6 will cost $649.

The new phone will go on sale in November. Google says the Nexus 6 will be available through AT&T, T-Mobile, Verizon Wireless, US Cellular, and Sprint.

[Google]

TIME Smartphones

This Is Not the BlackBerry You’re Looking For

BlackBerry Passport Launched In India
The Blackberry Passport Hindustan Times—Hindustan Times via Getty Images

The 4.5-inch square screen on BlackBerry’s new Passport is certainly novel. But the smartphone seems to lack that crucial “Aha!” moment

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

“Why should I care?”

That’s the phrase I uttered to myself when I first unboxed BlackBerry’s latest smartphone, the Passport.

Why should I care about the device’s odd 4.5-inch square screen? Why should I care that the device is the same size and shape as its namesake? Why should I care that Amazon’s App Store is preinstalled on the Passport?

Okay, okay, forgive my skepticism. There’s a lot to love about the Passport. It’s the first product launch under BlackBerry CEO John Chen, who took over the struggling company last November. In an effort to turn it around,Chen said he wanted to return to the Canadian company’s roots by providing devices and services that appeal to large companies, a.k.a. the enterprise.

A travel document-shaped phone fit for business travel? Sure. Why not?

BlackBerry BBRY 1.80% positions its oddly shaped device—which certainly succeeds at drawing attention to the company—as the ultimate productivity tool for those who want to get work done. If the marketing sounds familiar, it is: In recent years, BlackBerry has let out a business-focused battle cry with every major product release. It’s as if the company is saying, “Please, forgive us for the pink BlackBerry Pearl Flip.” Or perhaps, “Here is a phone that won’t run Flappy Bird.”

In truth, the Passport’s screen lends itself to displaying more information without forcing you to rotate the device, as you will often do with a phone of more conventional proportions. I found the screen quality to be on par with, if not slightly better than, Apple’s iPhone and most high-end Android devices on the market.

For the rest of the story, please go to Fortune.com.

TIME Apple

Here’s Why People in China Are Going Crazy Over the iPhone 6

iPhone 6 and iPhone 6 Plus retail sales begin in Spain
Anadolu Agency—Getty Images

Twice as many as Apple sold the first weekend in 10 countries last month

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

A reporter who has been tracking iPhone 6 and 6 Plus reservations in China for the past week estimated on Tencent QQ Monday that more than 20 million units were pre-ordered last weekend. His report is being picked up by DigiTimes and other Asian tech sites.

If the 20-million figure is accurate — a big if — it would mean that five times as many iPhone 6s were pre-ordered in three days in one country as were the first weekend in 10 countries, including the U.S., U.K. and Hong Kong.

Apple reported last month that took more than 4 million pre-orders in one day and sold more than 10 million units the the first weekend.

It’s not easy to get comparable numbers in China, where customers register their orders not just with Apple and the three major Chinese carriers, but also with thousands of authorized Apple resellers.

The Tencent estimate seems to be based largely on the same JingDong reservation counter we’ve been tracking. As of 8:00 p.m. Monday, Beijing time, JingDong‘s total stood at more than 9.5 million, split nearly evenly between the two models:

  • iPhone 6: 4,672,082
  • iPhone 6 Plus: 4,831,091

The long lines of ethnic Chinese buyers camped out in front of Apple retail outlets last month suggested that the large-screen iPhones would be a big hit in China. What we don’t know is exactly how big.

Sales on the mainland are scheduled to begin Friday, Oct. 17. On Apple’s Chinese online store, most models are already sold out.

For the rest of the story, please go to Fortune.com.

TIME Smartphones

This Website Will Tell You Which Stores Have the iPhone 6 in Stock

iPhone 6 and iPhone 6 Plus retail sales begin in Spain
Anadolu Agency—Getty Images

Across 27 countries and 8530 shops

Sick of not being able to find an iPhone 6? There’s a website for that.

iStockNow monitors iPhone 6 and iPhone 6 Plus availability in real-time across 27 countries and 8,530 shops as of Tuesday, according to the site. The service lets you know if Apple Stores, Best Buy, Target or Radioshack have smartphones for your carrier or unlocked models.

If you’re hoping to score an iPhone 6 Plus for Christmas, you’re in luck: while demand is high, iStockNow says the 5.5-inch screen smartphone “should be OK for Christmas.” There’s also “a new hope” for would-be iPhone 6 owners as more of the 4.7-inch devices become available.

The service has expanded its iPhone monitoring from last year, when it tracked iPhone 5S stock in 52 shops across 29 countries.

Read next: 50 Best iPhone Apps, 2014 Edition

TIME Transportation

Flight Attendants Sue to Bring Back Electronic Device Ban

Two flight attendants walk in the luggag
Two flight attendants walk in the luggage claim area of the US Customs and Immigration at Dulles International Airport on Dec. 21, 2011 near Washington, DC. Paul J. Richards—AFP/Getty Images

Want tablets and smartphones to be stowed for landing and takeoff

The nation’s largest union of flight attendants took the Federal Aviation Administration to court on Friday, arguing that the agency should have upheld a ban on the use of smartphones and tablets during takeoff and landing.

Lawyers for the Association of Flight Attendants-CWA argued that the devices distracted passengers from safety instructions and could fly out of their hands, becoming dangerous projectiles, the Wall Street Journal reports.

The FAA relaxed its ban on personal devices in 2013, enabling passengers to use devices such as iPhones and Kindles at all times of the flight so long as they were switched to “airplane mode.”

“Essentially we want to set the reset button to the way personal electronic devices were handled prior to October 2013,” said attorney Amanda Duré.

Lawyers for the union argue that the FAA violated an existing regulation to stow away all luggage during takeoff and landing. The defense team argues that the regulation only applies to larger items, such as laptops, and never was intended for handheld devices.

[WSJ]

TIME Big Picture

The Force Disrupting Samsung and Other Tech Giants

Shenzhen
Shenzhen is an ultra-modern city of 14 million people located in southern China approximately 30 miles from Hong Kong. Getty Images

Over the past five years, Samsung has become one of the big tech giants, enjoying a lot of success with its smartphones and tablets. It became a dominant player in China, Korea and other parts of Asia, and became Apple’s biggest competitor in the U.S., Europe and other parts of the world.

However, over the last two quarters, Samsung’s profits have declined substantially, with its executives recently warning that profits could be off as much as 60% in the most recent quarter. So in such a short time, how did a tech giant go from the top of the mountain to a place where it’s looking like the next BlackBerry?

The High-Tech Flea Market

This came about because of the Shenzhen ecosystem effect. Shenzhen is a large town about 30 miles north of Hong Kong and an important part of the China manufacturing area. What makes this area interesting is that it has emerged as a kind of technology parts depot that provides off-the-shelf components that can be used to create everything from smartphones, tablets, PCs or any other type of tech device, which can then be sold as no-name — or what we call white-box — products.

During my first visit to Shenzhen many years ago, I was taken to a six-story building that was affectionately called the flea market for cell phones. On every floor were dozens of vendors with glass showcases peddling cell phones and early smartphones by the hundreds. In Asia and many other parts of the world, users actually buy their cell phone of choice first and then go to a store to buy a SIM card that provides voice and data services.

In this part of China, the Shenzhen flea market was a hotbed for locals to come and buy their phones, providing all types of sizes and models to choose from. Most of the cell phones were of this white-box nature, carrying no known brand name and having been manufactured cheaply from readily available components. They were sold all over China and parts of Asia, and up until around 2007 when Apple introduced the iPhone, these types of phones dominated these markets.

Upstarts Aplenty

Over the last seven years, the Shenzhen ecosystem of component makers has become much more sophisticated, supplying high-quality components to vendors of all types, which are then used to make smartphones and tablets that can rival products from Apple, Samsung and anyone else making top of the line devices. And vendors from all over the world are making the trek to Shenzhen to buy these components, get them manufactured in quantity and take them back to their regions of the world to sell against established brands.

The best example of this comes from a company called Xiaomi, which didn’t even release its first smartphone until a few years ago but is now the number one smartphone provider in the region. It did this by leveraging the Shenzhen ecosystem to create well-designed smartphones. Until early 2013, Samsung was a top player in China, but big brand Lenovo jumped into the China market with smartphones and gave Samsung some serious competition. Apple also entered China in a big way. Between these three companies making aggressive moves in China, Samsung began to lose market share dramatically.

Micromax has done something similar in India, coming from nowhere to own 40% of that market today. Cherry Mobile did the same thing in the Philippines, and this similar pattern is being replicated in Brazil, South Africa, Eastern Europe and elsewhere – all markets that Samsung had leads in but where it’s now coming under major competitive threats.

Big Apple

Samsung has a double whammy going on here, too. One of the reasons the company has been so profitable in the mobile business is because of the Galaxy S4 and Galaxy S5 smartphones and the Galaxy Note 3 phablet. These smartphones are in the premium category and Samsung dominated the five-inches-and-up smartphone space for almost three years.

However, research is showing that Samsung benefited from a lack of a similar products from Apple, but now Apple has the new 4.7-inch iPhone 6 and the 5.5-inch 6 Plus. These products take direct aim at Samsung’s similar models and demand for these new iPhones has been very strong, so Samsung is impacted by this Apple move as well.

Hardware Headaches

What makes this even more problematic for Samsung is that its business model is to make money from the hardware. These white-box vendors can take these phones to their local regions and sell them pretty much at cost because they make their money on apps and local services that they provide their customers. Samsung and many of the other big vendors aside from Apple make most of their money on hardware, while Apple makes money on hardware, software and services.

When it comes to PCs, we have always had white-box products in the market. In fact, no-name white boxes represent about 40% of all PCs shipped. However, companies like HP, Dell, Lenovo, Acer, Asus and others have had solid brands and offered things like warranties and service agreements. Even though brand-name PCs are priced much higher than white-box PCs, the big players have been able to compete around the world based on brand, distribution and customer services.

This has been especially true in the U.S., Europe and most of the developed markets. However, if you look at what’s going on with laptops now and see how products like Chromebooks and low-end laptops and desktops are dominating consumer markets, even these major vendors are being squeezed when it comes to trying to actually make money just on hardware.

We are starting to see new PC players go to the Shenzhen components market in order to create PCs to sell in their home markets. Once there, they add local apps and services while pricing these laptops and PCs almost at cost. If they gain more ground in these local markets, this could have real impact on traditional PC vendors who are still trying to compete in these markets but have to make profits from hardware alone in most cases.

For Samsung, the Shenzhen effect is a serious problem — one that will be very difficult to counter while still maintaining profitability. Even with new hardware products, Samsung’s lack of software and services for local markets will continue to make it difficult to compete with Xiaomi, Huawei and others, especially in markets like China and other parts of Asia.

Even worse for Samsung are rumors that companies like Alibaba and Tencent may jump into these markets with smartphones of their own in the next year. Both of these Chinese companies have strong local services they can tie to these smartphones, allowing them to almost give these devices away since they are assured an ongoing stream of revenue from preloaded apps and services.

The Shenzhen ecosystem will continue to be a disruptive force as hardware becomes commoditized and real money is made from apps and services. Companies just selling hardware will continue to be challenged by these upstarts, who can buy components cheaply and get them manufactured cheaply. This can leave even the big tech players hurting, as we’re seeing now with what’s happening to Samsung.

To get a better understanding of the Shenzhen ecosystem and Xiaomi in particular, check out Ben Bajarin’s short presentation on this topic.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every week on TIME Tech.

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