Behind Apple\u2019s disconcerting news of weak iPhone sales lies a more sobering truth: the tech industry has hit ‘peak smartphone’, a tipping point when everyone who can afford one already owns one and no breakthroughs are compelling them to upgrade as frequently as they once did.<\/p>\n
Some manufacturers have boosted prices to keep up profit. But Apple\u2019s shortfall highlights the limits of that strategy. The company said demand for iPhones is waning and revenue for the last quarter of 2018 will fall well below projections, a decrease traced mainly to China.<\/p>\n
Apple\u2019s shares dropped 10 percent on Thursday on the news \u2014 its worst loss since 2013. The company shed $74.6 billion in market value, amid a broader sell-off among technology companies, which suffered their worst loss in seven years.<\/p>\n
Apple\u2019s news is a \u201cwakeup call for the industry\u201d, said analyst Dan Ives of research firm Wedbush Securities.<\/p>\n
And it\u2019s not just Apple. Demand has been lackluster across the board, Ives said. Samsung, long the leading seller of smartphones, has been hit even harder, as its phone shipments dropped 8 percent during the 12 months ending in September.<\/p>\n
\u201cThe smartphone industry is going through significant headwinds,” Ives said. \u201cSmartphone makers used to be like teenagers, and the industry was on fire. Now it feels like they\u2019re more like senior citizens in terms of maturity.\u201d<\/p>\n
Tech innovations in phones grew in leaps and bounds earlier in the 2010s, with dramatic improvements in screen size, screen resolution, battery life, cameras and processor speed every year.<\/p>\n
But the industry is a victim of its own success. Innovation began to slow down around 2014, once Apple boosted the screen size with the iPhone 6 and 6 Plus models. While phones kept improving, new features tended to be incremental, such as a new flash technique to already excellent phone cameras. It\u2019s the stuff consumers won\u2019t typically notice \u2014 or want to shell out for.<\/p>\n
\u201cSince the iPhone 6, you\u2019ve seen it has been tough to innovate to continue to raise the bar,\u201d Ives said.<\/p>\n
Apple customers now upgrade every 33 months on average, longer than the 24 or 25 months three years ago, he said.<\/p>\n
Apple\u2019s diminished growth projections, fueled by plummeting sales in China, have reinforced fears the world\u2019s second-largest economy is losing steam. Its $1,000 iPhone is a tough sell to Chinese consumers unnerved by an economic slump and the trade war with the US. They also have a slew of cheaper smartphones from homegrown competitors such as Huawei, Xiaomi and Oppo to choose from.<\/p>\n
The fact that even Apple\u2019s iPhone juggernaut is suffering cements a larger trend for all major smartphone makers. After a steady rise for a decade, worldwide smartphone shipments fell 3 percent to 1.42 billion in 2018, the first annual drop, according to International Data Corp., which tracks such movements. IDC estimates that shipments will rebound 3 percent in 2019 to 1.46 billion, but that still falls short of 2017 levels.<\/p>\n
It doesn\u2019t help that top phones come with four-digit price tags \u2014 $1,100 for the iPhone XS Max and $1,000 for Samsung\u2019a Galaxy Note 9. The top-end Max model sells for $1,450 in the US.<\/p>\n
Read: The rise of the $1,000 smartphone<\/p>\n
\u201cThey\u2019re getting more and more expensive while offering fewer and fewer new, innovative features that I\u2019ll actually use,\u201d said Zachary Pardes, a tech-savvy 31-year-old in Fairfield, Connecticut. \u201cI\u2019ll upgrade when the battery stops working. When I\u2019m forced to buy a new phone, I\u2019ll buy a new phone.\u201d<\/p>\n
Vivian Yang, a manager at a Beijing technology company, also balked at the price. \u201cNobody needs such a phone,\u201d she said.<\/p>\n
IDC analyst Ramon Llamas said the cycle might bottom out and start growing again in 2021 or 2022, when people\u2019s current phones start reaching the end of their useful life. \u201cPeople will still replace their phones. It\u2019s going to happen eventually,\u201d he said.<\/p>\n
But there\u2019s no \u201csilver bullet\u201d that will spur growth to levels seen in the past when the industry was less mature.<\/p>\n
Foldable smartphones, with screens that unfold like a wallet to increase display size, are one thing that could spur excitement, but they\u2019re expensive and not due out until at least the end of the year.<\/p>\n
Another thing that might spur growth: 5G, the next-generation that telecom companies are currently in the process of building, expected to be faster and more reliable than the current 4G network. The first 5G compatible phones are due out this year.<\/p>\n
\u201cThere\u2019s more pressure on 5G as the next-wave smartphone,\u201d since sales are so lackluster, said Ives. \u201cThere will be a battle royale for 5G phones.\u201d<\/p>\n
But 5G will take years for broad, nationwide deployment, so the new 5G smartphones coming out this year are not likely to make much of a splash immediately either.<\/p>\n
Analysts say smartphone makers need to push into under-saturated areas like Africa and elsewhere, and also sell more services like cloud storage, streaming music and phone software. But the glory days of untrammeled growth appear to be over.<\/p>\n
\u201cIt\u2019s going to be a slow slog,\u201d Llamas said. \u201cBy no means is this the end of the smartphone market. But this is an indication that the smartphone market can be a victim of its own success.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Behind Apple\u2019s disconcerting news of weak iPhone sales lies a more sobering truth: the tech industry has hit ‘peak smartphone’, a tipping point when everyone who can afford one already owns one and no breakthroughs are compelling them to upgrade as frequently as they once did. Some manufacturers have boosted prices to keep up profit. […]<\/p>\n","protected":false},"author":2,"featured_media":1132,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-1130","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/posts\/1130","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/comments?post=1130"}],"version-history":[{"count":0,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/posts\/1130\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/media\/1132"}],"wp:attachment":[{"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/media?parent=1130"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/categories?post=1130"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dailyausaf.com\/en\/wp-json\/wp\/v2\/tags?post=1130"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}