If there is one thing we learned from Samsung's soft sales of the Galaxy S9 to 2018, and Apple's dramatically reduced forecast for iPhone revenue at the end of that year, most people who want a good smartphone already have one. In yesterday's letter to investors, Apple CEO Tim Cook explained the reasons why the company sold (many) fewer iPhones than it had expected in the quarter of 2018, and a great deal of them can be summed up as "many good phones already out there. "This statement from the chief of the iPhone firm is just the chronic punctuation of a market stagnation that has been evident to telephone manufacturers for well over a year.
This was the first year in five that I didn't upgrade my iPhone. Two reasons:
– iPhone X was very good and battery life is still good
– 2018 models were functionally identical to iPhone X
So: not just China
https: // t.co/ e2dB1PfLTu
– Casey Newton (@CaseyNewton) January 2, 2019
In July, market analysts at IDC said "the combination of market saturation, increased smartphone penetration and climbing [average selling prices] continue to curb growth in the overall market. Consumers are Still willing to pay more for premium offerings in many markets, and now they expect the device to exceed and exceed previous generations of the unit that cost significantly less a few years ago. "
Phone innovation has hit a plateau – one of them Best quality and maturity in most aspects of performance and design – and until we get a new groundbreaking, must-have upgrade, we're set to see a smartphone market without meaningful extra growth. Before 2018, successive waves of major upgrades were worth having: from 4G and the annual increase in screen size and battery power to the addition of secondary zoom cameras, biometric ID systems, wireless charging and waterproofing. But now that all the keenest graduates have the whole set of discrete features on the device, the research shows that people are on their phones longer. Just because they are most satisfied with what they already have.
The two premium brands, Apple and Samsung, have attempted to compensate for the reduction in units sold each year by increasing unit cost, but it has only compounded its problem. Yes, Apple can sell a $ 1,000 + iPhone, but the owner of that iPhone would be far less likely to rush to replace the way someone who had previously spent a fraction of the price could have done. Tim Cook said that cheap replacement of iPhone batteries in 2018 was tending to rehabilitate existing phones rather than buying new ones.
The biggest innovation in the mobile world over the past year was Google's Night Sight camera mode. A piece of software. Google distributed the Night Sight as an update to all Google Pixel models, and dilutes the most compelling reason to buy a new phone. This is a trend that seems to be just getting started: The smartphone user experience grows better through software enhancements in larger steps than through hardware enhancements. Apple's motion-based interface on iPhone X is another example where the new software design was more instrumental in perceiving an upgrade than the hardware updates.
There is, after all, a limit to how color-responsive a Samsung OLED display can get, or how many modules of RAM a chipmaker can stack in a phone, but as Google has shown, these physical limitations do not limit the possibilities of what can be done with the smart application of machine learning and computing.
As the world's largest smartphone market, China is designated for special attention in Cook's investor letter. He claims that China's wider economic downturn is the cause of Apple's underperformance, and it is certainly an element of truth to it. The original iPhone was released in 2007, and after the market market for 2008, Apple and its competitors have sold their units to a world economy that has been steadily improving – so that their performance has so far been raised by macroeconomic growth, just as the competition and the efforts of radical Differentiation will only increase
But Samsung and Apple have deeper problems in China than just the parent market, with both global companies struggling to establish themselves as the dominant players that they are in other countries. WeChat is actually the operating system in China, so Apple's iOS and App Store lock-in is not something, while Samsung is generally out on its own special breed of nimbler local rivals.
The Chinese consumer is well served by companies such as Huawei, Oppo and Vivo, each of which gives a great special value to a shopper's yuan. As China's appetite for the latest smartphone is also being reduced, the same companies surpass India, the last remaining bastion of rapid growth in smartphone sales, and revert to its market share strategy through aggressive pricing.
It is fascinating to observe how, even though the parent smartphone market has been in weak decline for a couple of years, the proportion of what is held by each company and the geographies dominated by different brands continues to change and change. Over the last decade, we have discovered Nokia and BlackBerry replaced by Apple and Samsung, and now we see how Huawei and Xiaomi go up to offer a new challenge. The competition will probably only intensify in the coming years, as all manufacturers are competing for a bit of a finch.
About what can bring smart phone sales Back to growth Qualcomm will tell you that 5G will trigger a new wave of upgrades, IDC expects Latin America and Africa shows greater demand, and Samsung, Huawei and others are working on zany foldable devices. Every avenue for hardware differentiation and leadership will be explored, which from a consumer perspective provides a future for entities that are at least more interesting than today's crops we have today.
Smartphone markets are largely lowering because they have served their purpose. We wanted phones with great displays, fast connectivity, all-day battery life, and some extra conveniences, and now we have them in abundance. The system works. When the next truly convincing upgrade appears on the horizon, consumers will once again throw money on the latest and the best products. But until then, all this competition makes an uneven trip for any business venture enough to be in the phone sales industry, including the very best.