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Sun Dec 9, 2018, 12:42 PM

Were No Longer in Smartphone Plateau. Were in the Smartphone Decline.

From roughly 2007 until 2013, the smartphone market grew at an astonishing pace, posting double-digit growth year after year, even during a global recession. They were the good years, the type that would inspire a Scorsese montage: millions and then billions of smartphones going out; billions and then trillions of dollars in rising company valuations; every year new models of phones hitting the market, held up triumphantly at events that were part sales pitch, part tent revival. (To nail the Scorsese effect, imagine “Jumpin’ Jack Flash” playing while you think about it.)

But just like every Scorsese movie, the party ends. Smartphone growth began to slow starting in 2013 or 2014. In 2016, it was suddenly in the single digits, and in 2017 global smartphone shipments, for the first time, actually declined — fewer smartphones were sold than in 2017 than in 2016.

Every smartphone manufacturer is now facing a world where, at best, they can hope for single-digit growth in smartphone sales — and many seem to be preparing for a world where they face declines.

The Smartphone Plateau
The idea of a “smartphone plateau” has been floating around since at least 2012, with the phrase entering common usage in the middle of this decade. It has a twofold meaning. One is the slowdown in smartphone innovation, which was once progressing at that same breakneck pace as smartphone sales. If you bought a new iPhone 3G in 2008, and then a new iPhone 4 in 2010, you were buying markedly different machines, with the iPhone 4 sporting a Retina display, a much better battery, a faster processor, and a sleek, sharp-edged design. If you bought an iPhone 6 in 2014 and then an iPhone 7 in 2016, that expected improvement was much harder to mark (except, perhaps for that fact the the iPhone 7 didn’t have a 3.5mm headphone jack). The other meaning is the flattening of smartphone sales.

We’re already fairly far along this plateau — from 2015 to 2017, global smartphone shipments have held firm at about 1.4 billion per year — but talking to analysts and reading the tea leaves of what the major manufacturers are doing, it’s looking like we’re reaching the end. Not because sales are picking up again, but because we’re heading toward the downslope. “I think we’re well over the plateau,” says Ben Stanton, senior analyst at Canalys. “We’ll see little pockets of growth in the global market, but on the whole it’s a declining picture.”

In 2017, per the International Data Corporation, global shipments of smartphones declined year-over-year for the first time in history. In 2018, IDC says the same thing happened in the U.S. market. “We are at market saturation rates of 90 to 100 percent in many developed markets,” says Ryan Reith, program vice-president at IDC.

https://nymag.com/intelligencer/2018/12/global-u-s-growth-in-smartphone-growth-starts-to-decline.html

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Response to Troll2 (Original post)

Sun Dec 9, 2018, 12:49 PM

1. Interesting.

This is why Tim Cook has been such a disappointment. So much potential for Apple, so few new products.

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Response to Troll2 (Original post)

Sun Dec 9, 2018, 12:55 PM

2. Doesn't bode well for China, does it.

Rhetorical question.

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Response to JaimeBondoJr (Reply #2)

Sun Dec 9, 2018, 04:11 PM

3. China becomes the last man standing as smartphones become

The next paragraph of the article --

Some manufacturers and analysts may hope that flat sales in the developed world could be offset by strong sales in other markets. Fat chance. The markets where smartphone saturation hasn’t set in yet — such as India, Southeast Asia, pockets of Latin America, and Africa — are different than the markets that fueled the first decade of smartphone growth. “In those markets, there are extremely competitive devices down near the equivalent of $200,” says Stanton. “It’s becoming a real battlefield, but it’s a low-margin business and consumers down at the those price points tend to be not very brand-centric. That really plays into hands of a few really hyperaggressive brands of smartphones, most of which are coming from China.”

And further on -

These brands may be unfamiliar to American consumers — Xiaomi, Oppo, Vivo, and Transsion are all major players — but if there are countries where double-digit growth is still possible, it will likely be these companies that enjoy it.

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Response to Troll2 (Reply #3)

Sun Dec 9, 2018, 04:59 PM

4. LOL!! Yeah, there's SO much disposable income in places like Latin America, India, and Africa...

Almost EVERYONE in those places has $200 or more to throw away on a communication device none of them need. GPS isn't necessary when your ancestors have walked the same dirt paths and roads for a thousand years. Are the Chinese going to build the infrastructure as well? I know! SELFIES! They can trade SELFIES!

Like I said... doesn't bode well.

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Response to JaimeBondoJr (Reply #4)

Sun Dec 9, 2018, 05:05 PM

5. In those places smartphones replace a variety of other things

like books, newspapers, magazines, personal computers, telephones, credit cards, wallets, cameras, etc.

Small businessmen use smartphones as their entire information infrastructure for running a business. They can find out market prices, talk to buyers or customers, place and pay for orders, keep their accounts, etc. all on their smartphones.

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Response to Troll2 (Reply #5)

Sun Dec 9, 2018, 05:17 PM

6. Yeah. Lots of disposable income and small businessmen in Africa.

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Response to JaimeBondoJr (Reply #6)

Sun Dec 9, 2018, 05:20 PM

7. Who do you suppose has bought the 5.6 billion smartphones produced in the last 4 years?

The US would account for only a small percentage of them.

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Response to Troll2 (Reply #7)

Sun Dec 9, 2018, 07:48 PM

8. Do you know anything about this market?

It doesn't seem like it.

The major flagship phones like iPhone's, Galaxy's, and Stylo's by the biggies (Samsung, Apple, and LG) are sold only in 1st world developed markets.

Everywhere else you find hundreds of cheap, knock-off brands that are basically throw-aways after a year and cost less than $100.00.

This market has reached saturation point and maturity. There is no new innovation. Cheaper and cheaper knock-offs to flagship products now dominate much of the world's poorer markets and are slowly encroaching on the more robust markets. Hell walk into Target or Walmart and check out the trash phones on their pay as you go plans!

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Response to TM999 (Reply #8)

Sun Dec 9, 2018, 07:58 PM

9. Your last paragraph is dead on, but your second is oversimplified

First, it not really a country by country issue. The flagship phones are sold everywhere to people who can afford them. So there are people in Nigeria or Brazil who buy flagship phones, even though a smaller portion of the population can afford them and a greater proportion in those countries use low-end smartphones.

But a smartphone is a commodity, and there is less and less functionality difference between the flagship and el cheapo versions. They all can run the same software, although the el cheapos are slower.

The real selling point for flagship smartphones is that they confer status as fashion accessories. However, like all status fads, their effectiveness in fulfilling that role is diminishing as the functional difference is diminishing.

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