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Opinion: Smartphone market challenges raise major questions

By Julio Franco · 21 replies
Jan 30, 2018
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  1. As dynamic and exciting as the smartphone market has been for many years, it’s hard to imagine a time when it just won’t matter that much to most people. Kind of like how many people now feel about the PC market.

    Don’t get me wrong, the smartphone market will still be very large and extremely important to some people for quite a while (just as the PC market still is for many—myself included). But the truth is, we’re rapidly approaching the era of smartphone market maturation, and quite possibly, the end of smartphone market growth. Along with those changes are likely to come a shift in attention and focus away from smartphones, and towards other more “interesting” product categories—in the press, on people’s minds, and, most importantly, in critical industry technologies and developments.

    The signs of this impending change are all around. In fact, you could argue that this is already starting to occur. While total 2017 worldwide smartphone shipment data may end up showing a modest increase over 2016 (final numbers have yet to be released), the fact that China—the world’s largest smartphone market—showed a 4% decline in Q4 2017 is a very telling and concerning indication of where the market is headed.

    Essentially, what that data point tells us is that even in rapidly-growing markets, we’ve started to hit saturation. In other words, pretty much everyone who wants a smartphone now has one, and future market growth will be nearly completely dependent on the length of replacement cycles. Adding insult to injury, we’ve also started to see the extension of smartphone lifetimes from around 2 years to around 3 years in many parts of the world.

    The reasons for these extended lifetimes are several, but there can be little doubt that many people are simply content with their current phones and don’t feel a pressing need to upgrade as frequently as they used to. Now that most people have large-screen smartphones, it’s easy to understand why.

    But the implications from this shift are dramatic. Individual vendors who have been benefiting from overall industry growth are starting to see a much more challenging competitive environment in many regions around the world. From India to China to the US and beyond, major smartphone vendors are finding it much harder to enjoy the kind of comfortable growth to which they’ve become accustomed.

    ... even in rapidly-growing markets, we’ve started to hit saturation. In other words, pretty much everyone who wants a smartphone now has one, and future market growth will be nearly completely dependent on the length of replacement cycles

    More specifically, for a company like Apple, the widely discussed topic of another “super cycle,” where a large group of existing customers upgrade to the newest phones, may prove to be a phantom phenomenon. It’s not inconceivable to think that the previous iPhone 6-driven growth spurt was really just a single point in history inspired by the initial transition to large screen phones. Recent reports of 50% reductions in iPhone X production certainly suggest that could be the case. (To be fair, many supply chain-related rumors turn out to be nothing more than that—rumors, with little connection to reality. So, we’ll need to wait until at least the calendar Q1 and maybe even Q2 shipments are released to know for sure.)

    Challenges for the iPhone X and other high-end smartphones go well beyond just the appearance (or not) of a replacement “super cycle.” Smartphone maturation has also extended to product design and innovation, with new models from almost all vendors offering little more than incremental changes versus previous generations. Plus, even with new phones that have designs or capabilities that do take an arguably larger leap versus previous generations—such as with the iPhone X—it’s not clear everyone really wants those changes. Again, it seems many consumers are relatively content with their phones as they are.

    Even more concerning longer term is the question of more advanced innovations. While there is no doubt that smartphone companies will keep working to improve their products—just as PC makers continue to do, even in an era of declining sales—as product categories mature, those advancements do tend to slow down. Most of the really exciting core technology developments tend to show up in newer product categories that are perceived as having a greater opportunity for future growth.

    Smartphones are obviously not going away anytime soon—just as PCs continue to play a critical role for many. But whether it’s some futuristic AR glasses, nearly invisible “ambient” computing wearables, or some other types of devices we’ve yet to even imagine—there’s no doubt that at some point in the relatively near future, smartphones maturity and stability will make them seem like “old technology.” It isn’t a question of if, but only a question of when.

    Bob O’Donnell is the founder and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm. You can follow him on Twitter . This article was originally published on Tech.pinions.

    Permalink to story.

     
  2. dirtyferret

    dirtyferret TS Evangelist Posts: 494   +519

    Very few people want to buy a $800+ phone every two years. The smartphone market will become like the laptop market with most people updating due to poor hardware performance rather then the need to carry the latest and greatest.
     
  3. Nobina

    Nobina TS Evangelist Posts: 1,760   +1,268

    top kek
     
  4. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,719   +1,135

    I think @dirtyferret has mentioned part of the obvious issue, as new phones are marginally better the price is hugely increased for something that most of the times is not worth to upgrade. You can see as well that some cheaper competitors that offer good quality phones are getting themselves in the spotlight just because they don't charge the premium.

    If I need to choose whether I need to upgrade my phone, or my laptop, or purchase a new component for my pc. The phone is not winning.
     
    poohbear and p51d007 like this.
  5. TomSEA

    TomSEA TechSpot Chancellor Posts: 3,035   +1,444

    "But whether it’s some futuristic AR glasses, nearly invisible “ambient” computing wearables, or some other types of devices we’ve yet to even imagine—there’s no doubt that at some point in the relatively near future, smartphones maturity and stability will make them seem like “old technology.” It isn’t a question of if, but only a question of when."

    Not sure I buy that, especially the "relatively near future" part. We already saw the reaction to Google Glass, and it wasn't good. One restaurant here in Seattle openly publicized that "we encourage our customers to beat the hell out of anyone showing up wearing Google Glass." It's a privacy thing.

    Phones are small, convenient and powerful. I really don't see much of an alternative in the near future. However, I do see cell phone manufacturing over-saturation. You still have new companies trying to jump on the bandwagon and there are more than enough players already.
     
  6. Jeff Re

    Jeff Re TS Addict Posts: 131   +100

    I know exactly one person who has ever had a smartphone work for three or four years. I baby my phones and have never had one make it even two years satisfactorily. For this reason and of course horrible customer service there is hardly a phone manufacturer I will even buy from anymore.
     
  7. p51d007

    p51d007 TS Evangelist Posts: 1,828   +1,112

    Consumer electronics, for the most part, gets IMPROVED, but less expensive over time. CD's, TV's, Laptops etc have come down in price, and have become better. Smartphones have been able to buck the trend, receiving marginal updates over the past 3-4 years, but getting more and more expensive. Couple that with market saturation, software updates (Google Project Treble) and people "should" be able to update their devices, without having to purchase a new one all the time. Plus, who in their right mind, other than a trendy hipster, or geek type, wants to spend upwards of 800-1000 dollars or more every couple of years for a smartphone.
     
  8. Danny101

    Danny101 TS Guru Posts: 640   +240

    I've had 4 phones in the last three years and that's only because of they broke for various reasons. Partly my fault and partly because of shotty workmanship. For my last purchase, I chose a less powerful phone in favor of better battery life. The part that universally breaks first is the data/charge port and the less I have to plug up the longer my phone will last. Other than that, the phones continue to work. The next major upgrade that everyone is waiting for is 5G. When that is up and running phone sales will rise again. I can only hope my phone holds out until then. In the meantime, gamers and businesses looking for more power will make up most of the sales.
     
  9. fktech

    fktech TS Maniac Posts: 463   +124

    Just like in Real Estate Location, Location, Location but what sells is Price, Condition, Standard in that order.

    Cell Phones like Real Estate in a crowed market need to consider Price, Condition, Standard.

    A $1,000 CP, really! What's it worth 2 years from now and how is I better than 2 year old technology in a rigid ecosystem with lots of community rules...
     
  10. waterytowers

    waterytowers TS Booster Posts: 114   +17

    I know one person who until a couple of months ago had been using the same phone for at least as long as I have known him, which is 8 years. My last 2 phones have lasted 5 years each surviving at least one battery change each. Current phone is at the start of year 4. Not sure what you are doing, maybe it is your environment? I only buy Google phones but have used Nokia prior to Google phones appearing.
     
    Deevo324 and JaredTheDragon like this.
  11. poohbear

    poohbear TS Maniac Posts: 245   +147

    U never had a phone last 2 years?! What are u doing to them? I upgrade my Samsung Galaxy phones every 3 years, never had a problem with any of em.
     
    Deevo324 and dirtyferret like this.
  12. dirtyferret

    dirtyferret TS Evangelist Posts: 494   +519

    I give my old phones to my parents. My dad has my original htc one and my mom has my Moto x 2014 so both phones are working well past two years. My wife just recently upgraded from a Samsung S5 only because they would do an equal trade in for a S8 while staying with the provider.
     
  13. Shadowboxer

    Shadowboxer TS Booster Posts: 127   +46

    Currently many working professionals are often given a company smartphone and a company laptop. I can definitely see a future where professionals are given just a smartphone and a laptop style dock for when at home (or on site, when commuting etc). If they can offer full access to the systems they require then to have access to. This could save a lot of money and give a lot more flexibility for a given companies workforce. And this would require significant development on the smartphone side of things.
     
  14. Wizwill

    Wizwill TS Enthusiast Posts: 97   +45

    I used to upgrade every 18 months to 2 years, until the era of the glass phone arrived. I simply refuse to carry such a fragile device, certainly not one that costs $800 to &1000! I may just buy a basic flip phone and carry a small tablet with wireless and G4/5 connectivity.

    Also, with so much streaming activity (70% to 80% of total bandwidth being gobbled up by movies and music) server-based speech recognition and other more-basic uses suffer unacceptably. The smart phone has unfortunately become avictim of its own usability.
     
    Jeff Re likes this.
  15. Axiarus

    Axiarus TS Evangelist Posts: 388   +218

    Eh, im a delivery driver for one of the big companies. I have a Pixel 2 in a slim case with a glass screen protector. It has help up quite nicely in not such a nice environment and has survived quite a few drops. All my basic uses work quite well.
     
  16. Here's an idea. Try offering .. less. Go simpler. Why go with a handheld computer when all you really need is something to make a call and send/receive a text message with?
     
  17. poohbear

    poohbear TS Maniac Posts: 245   +147

    Who the hell uses their phone for phonecalls anymore??? Its a computer with a phone, not a phone with a computer.
     
  18. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 11,208   +4,873

    I do. If I need a PC I will use my PC.
     
    Deevo324 and mailpup like this.
  19. Deevo324

    Deevo324 TS Rookie Posts: 16   +6

    Exactly. It appears that a lot of people have forgotten the enormous advantages of using a PC. Speed, huge screen, proper keyboard, easy multitasking and so on and so on. Sure a phone is portable, but really that's its only advantage.
     
    cliffordcooley likes this.
  20. Deevo324

    Deevo324 TS Rookie Posts: 16   +6

    The glass phone. What sort of ***** or sociopath would design and manufacture a phone made of glass? Oh yeah, Apple.
    And who would be dumb enough to buy one? Oh yeah, I just remembered the saying - there's a sucker born every minute.
     
  21. Wizwill

    Wizwill TS Enthusiast Posts: 97   +45

    "future market growth will be nearly completely dependent on the length of replacement cycles" as well as 'hackers' rendering vast swaths of perfectly good phones and soft ware obsolete via:
    1 making current encryption worthless
    2 not supporting existing apps that work perfectly
    3 manufacturing devices that do not allow battery replacement (glass-backed phones)after about 2 years

    Use your imagination for other instances of planned obsolesce requiring phone replacement
     
  22. jobeard

    jobeard TS Ambassador Posts: 12,562   +1,441

    Meet # 2. My old Nokia Flip phone ran for years and was replace ONLY because it was dropped and split open like a ripe tomato. Its replacement was a iphone 4s and it was updated to a 5se only to get better GPS. I'll upgrade it IF/ONLY IF it fails.
     

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