Has the Smartphone Boom Peaked?

http://www.forbes.com/sites/roberthof/2013/07/07/has-the-smartphone-boom-peaked-ominous-signs-pile-up/?partner=yahootix

by ytNumbers • 13 years ago

24 42 13 years ago

While iPhone peaked in US/EU, Android peaked in Japanese/Korean markets. There's plenty of space for both markets to expand.

We can see more value in iPhone app/music/content market, but to Android close the gap at US/EU they need to expand and refine to the quality of Apple products.

w1ntermute3• 13 years ago

I can see a valid argument for this in the tablet space, but in the phone market, Android has been on par with the iPhone (and indeed surpassed it in many ways) for at least one year.

fpgeek5• 13 years ago

Sigh. No. The expensive smartphone book may have peaked, but that's not the important one.

contingencies3• 13 years ago

Right. As cheaper smartphones penetrate the developing world as the new globally dominant internet access and personal media consumption devices, they will provide huge potential for many people who have formerly been educationally marginalized to seek and impart information freely. That will also have some market changing potential, particularly in certain ubiquitous services.

vyrotek• 13 years ago

I think a lot of people are getting to the point of having a smartphone that is "good enough" and can last them a while. Just like what happened with PC & laptop sales.

All the hardware has reached the point of letting people use Facebook, Email, Take HD photos, and use GPS navigation. A huge number of consumers don't have a reason to upgrade.

Personally, I have a S3 and I will stick with this thing for a while well beyond my contract ending. If I do switch, it will only be because Sprint finally released a decent Windows Phone. I'm only willing to switch to try a completely new phone experience. It's hard to get excited about getting a new phone but staying with the same OS you're on now.

psbp2• 13 years ago

I'm still happy with my iPhone 4. It's not as snappy as it use to be, and I had to replace the battery last year, but it's still good enough for my needs.

I'll see what the iPhone 6 or the Nexus 5 have to offer, but if they won't radically change my day to day use, why bother upgrading?

maxjus• 13 years ago

I had an iPhone 4 until a few weeks ago, much in the same mindset as yourself. Though it can do 99% of what the 5 does, the speed difference really makes it feel like a completely different experience. Also the new screen has a much better aspect ratio for watching videos. It sounds silly, but that was my experience. If you're due for an upgrade I would highly recommend it. I promise I don't work for Apple :)

contingencies3• 13 years ago

S2 with modified firmware here. Unless expecting a call, I leave it off most of the time, with the battery out. Since giving up commuting to an office, I don't really need it for music playback either. The power even in these three generation old devices is absolutely amazing... especially when you consider their GPUs. Unfortunately, it's totally underutilized by today's software.

It is perhaps interesting to note that the ubiquity of both USB charging devices (standardization) and after-market Chinese clone batteries (free market competition) has sort of encouraged this obsolescence resistance by allowing devices to last longer.

marquis• 13 years ago

I'll switch for a good phone like the Nexus 4, about 2/3 of the size and the battery life of the iPhone 5. Otherwise I fall in the 'good enough' camp that unless some incredible new app or technology comes out that needs a new phone, I'm sticking with my N4 for a good while to come.

hayksaakian• 13 years ago

Until we get to macbook air levels of battery life (all day, heavy use) expect people to continue upgrades.

We may be hitting the power ceiling, but we're far off the battery life ceiling. (Ceiling as in consumer needs)

Remember, not too long ago, a cell phone that lasted all week was normal.

lttlrck• 13 years ago

If it has it happened remarkably quickly...

venomsnake4• 13 years ago

Well not at all ... half the world cannot afford device with BOM of 100$. And when you ship 600 million devices per year you get the low hanging fruit of 3.5 billion very fast.

ctdonath• 13 years ago

When software becomes the more important factor in a technology product, you know the hardware is likely to take more of a back seat in years to come.

No, high demand for software drives hardware demand. So long as real innovation and advancement continues we will need more processing power & storage to keep up. Market saturation may be reached, but giving people a reason to upgrade ASAP keeps demand up.

It's when the apps settle down into stable patterns that the hardware will suffer. The PC market is stagnating because email, web, word processing, and casual games are not demanding more over time (save for what bells and whistles can be forced in), leaving us with a market where a $200 notebook is good enough for most users ... And tablets are eating into that.

Zigurd2• 13 years ago

There are significant improvements in battery life, display technology, glass, and packaging yet to come. plus 4G radios and BLE. Let's talk in 4 or 5 years.

Plus, tablets, which are really just handsets with bigger displays, are going to eat a majority of the PC business.

programminggeek• 13 years ago

Um, the smartphone has one advantage over the PC or laptop or server - it will get broke and replaced every 2 years (or less) like clockwork.

Phones are small, easy to drop, and you carry them with you everywhere. Also, with contracts they have a built in 2 year replacement plan. They are the disposable tech.

So, in terms of pure growth, maybe that is slowing or will slow down, but that doesn't mean people will stop buying smartphones, it just means that they will be a large, sustainable, profitable product worth selling for a good long time.

That might get boring to write about, but there will be a lot of successful companies making a lot of money selling phones for a long time.

w1ntermute3• 13 years ago

Without the contract model, I think that the rate of phone replacement will drastically decrease. Although some people do break their phones, I know plenty of people who don't.

pekk• 13 years ago

The contract model isn't going anywhere.

xixixao• 13 years ago

And those contracts aren't as prevalent outside of the U.S.

r-s• 13 years ago

In Canada most people have contracts as well.

jemeshsu• 13 years ago

I think its peak for certain markets such as US, Japan. But it is not so for markets such as China, India, and these requires a lower priced models. That's why Apple is likely to introduce cheaper models in September to sustain its growth, largely targeting these markets.

contingencies3• 13 years ago

Are you kidding? China has more cash than anyone right now.

nivla2• 13 years ago

I feel phones don't correlate well with affordability. People tend to invest more into commodities that have a sense of usability, social status and a statement of fashion. I remember reading somewhere that India has more mobile phones than toilets. Even taking your own example, Apple's Iphone has about 3% market share in India [1]. 3% of the total handset market not just the smart phone market. It relates to about 26.79 million subscribers, and at a cost of $600 each (which is way more than an average middle class Indian could afford), that is pretty unbelievable.

[1] http://www.zdnet.com/iphone-takes-3-percent-handset-market-s...

sliverstorm• 13 years ago

Quick! Smartphone developers, start adopting more lazy coding, and maybe we can double the CPU cycles and RAM size required to run Facebook in the next couple years!

nivla2• 13 years ago

It astonishes me as to how certain apps are laggy on phones that are twice or more powerful than an average netbook. Smartphone don't even support true multiprocessing so where are all the resources sucked up to?

yareally• 13 years ago

Megaflop wise, phones like the Galaxy S3 or the Galaxy Nexus when I checked last, were only at around Pentium 3 or so levels. Not that Megaflops is the only indicator of performance.

Edit: For anyone that wants to try out their devices and compare, Linpack for Android[1] is what I used. Finding out the MFlops of older PCs, I just looked up on the web.

[1] https://play.google.com/store/apps/details?id=com.greenecomp...

venomsnake4• 13 years ago

Well the model to not run code directly on the phone but in vm has laginess built-in and you can only mask it. I never understood the point of Dalvik.

Zigurd2• 13 years ago

Android is true multiprocessing and multithreading. But writing multithreaded code, beyond trivial cases, is not trivial.

Also, too many mobile apps are still CRUD-over-the-wire.

adventured• 13 years ago

The boom has peaked, the initial explosion. This is somewhere between 1988 and 1994 in PC terms however. The market will still double in size globally over the next decade, reaching deeper into the bottom 50% of consumers that have a hard time affording an Internet connected smart phone today.

There are also a vast array of innovations yet to be uncovered, as we connect our lives in a mobile way. In that regard it goes far beyond the innovation limits of the desktop computer (for example). Indeed, having max distribution will facilitate an innovation boom for mobile.

So while 75% of American adults might have a smart phone, that says nothing about the pace of innovation for either the hardware or software, and that's far more important than the sales growth rate in my opinion.

As you get closer to max distribution, the profit center will shift to the software and away from the hardware.

georgeoliver• 13 years ago

I think a more interesting question that the article just briefly hints at is what will replace the smartphone, and when? If the phone is a PC, what's the laptop?

hkmurakami• 13 years ago

Not till the developing markets have been penetrated.

I'm shocked that this article doesn't even non first world markets. If current smartphones have surpassed user needs, then clearly we're in a classic innovator's dilemma situation where there are opportunities abound for new entrants at the bottom of the market. This shift to low cost smartphones is still in its early stages. Let's see how that spectrum develops.

habosa• 13 years ago

We've passed the adoption peak, but a truly good smartphone is still somewhat rare. If you look at where we are with laptops, you can walk into Best Buy and pick up a 15", Core i5, 4GB RAM, 250GB HDD laptop for ~$500. For smartphones, the equivalent would be a Tegra 3 device with a 720p screen and 1-2GB RAM for $100. We're not there yet, and when we are there the potential to harness the collective mobile power will be incredible.

Edit: And all of that is just focusing on the US perspective. The adoption of smartphones in less developed countries is a whole different topic.

fpgeek5• 13 years ago

Ugh, not Tegra 3 - dual-core Snapdragon S4/400 or better, please. And LTE (HSPA+ and lesser standards are and 802.11b equivalent, at best).

But, thematically, you're absolutely right. We're very close to actually good $99 smartphones and tablets. And when that hits, we're going to see a phase transition.

venomsnake4• 13 years ago

I wonder if the trend has something to do with the fact nowadays you just don't "need" the phone in smartphone.

I have been reducing the total minutes talked per month for years now and more and more of my voice communication is on skype/viber etc. And that is not uncommon trend.

zw123456• 13 years ago

The overall penetration of smart phones is around 50% as stated in the article, to take the last half, the price will need to come way down and they need to be much simpler to use. The second half of the users will always be less sophisticated and hence the incremental benefit they perceive from a new device will be far less than the techie market and they will be far less willing to spend time learning how to use it. Even though the wireless carriers currently subsidize more than half the cost of most devices, they make that up by charging extra for a "data plan". All that will need to go away and the overall price differential, both up front and per month will need to be much less significant that it is now between a basic phone and a smart phone before that second half can be captured.

Ologn• 13 years ago

If you look at the smartphone:handset chart, North America was above everyone else for years, then Western Europe began catching up. Of course, the US has an oligopoly running the wireless market: Verizon, who also controls the local loop in much of the country has the most advanced network. Then AT&T has the next best data network, although their voice and other service leaves something to be desired. Sprint is next, and has very little LTE rolled out, even in major markets - even their 4G can be spotty. Then T-Mobile, which has barely been surviving.

This oligopoly funded a lot of the high-end smartphone development. Companies wanted people signed up to those two-year $100 a month or more plans, and with numbers like that, the cost of the phone is relatively low. It makes sense for the oligopoly to subsidize a high-end phone people will like, so they'll be more willing to take that two-year, $100+ a month plan. Smartphone models get better and better - I have a Galaxy S and sometimes use a Galaxy S4 - the improvement in the three years from the S to the S4 has been very dramatic. My Galaxy S feels so slow as molasses and dated in comparison. Even the GPS uplink seems to take forever on the S, relative to the S4.

Android activates 1.5 million devices a day. That daily activation rate has only been accelerating over the past few years. So far 900 million Android devices have been activated. Obviously the acceleration of the daily activation rate has to slow sooner or later.

Android is not yet mature by any means. Google's implementation of staged rollouts for Android is less than two months old. And they are very welcome from my end - I beta-test but was terrified of releasing an update to popular apps for a variety of reasons. Now I can roll it out to a small percentage - if there's a problem I can rollback the update, if it looks OK I can keep rolling out to more people until the update is all out. Google's app translation coordination service trial just kicked in on Friday.

While it's mentioned times are still good for app developers, one reason for that is tablets. Even if the smartphone market gets saturated, tablets still have room to grow. And tablets are just one of the possible Android form factors.

Has the Smartphone Boom Peaked?

Related Stories