Smartphone Growth Sags for Want of Wow
The average smartphone user could tell you what ails the industry. People are holding onto their phones longer, on average, because what they’re being offered in the new models just isn’t compelling enough.
What the industry can do about that problem is less obvious. Smartphone sales topped 1.5 billion units in 2017, a meager 2.7% rise, and that was capped off by an unprecedented 5.6% drop in sales in the December quarter, the first year-on-year quarterly decline since research firm Gartner started tracking the market in 2004. Research firm Strategy Analytics pegged the drop at 9% and called it the worst ever.
Gartner projects a jump in growth this year, to almost 5%, but that seems overly optimistic. One longtime mobile analyst, Mike Walkley of Canaccord Genuity, predicts sales will be roughly flat this year before picking up in 2019.
None of this bodes well for traditional makers of chips for smartphones, including Skyworks Solutions , Qorvo, Qualcomm, and Synaptics. Investors may turn their attention to more exotic companies whose role in the phone is relatively new. These include Universal Display , whose technology can enhance phone screens. The company’s shares are currently on sale after the stock fell 43% this year. Computer memory, after being skimpy in phones for years, is set to surge, which should be very good for memory-chip maker Micron Technology.
You could say the market has matured, or been saturated, but the fact that consumers are holding onto their phones longer betrays the underlying problem. Experts say there’s no “wow” in new models, despite prices creeping to around $1,000 with the debut of Apple’s iPhone X.
In short, smartphones seem to have stopped conquering bold new vistas, the kinds of marvels that propelled the industry for a decade. The BlackBerry mastered email, and turned white-collar professionals into obsessives constantly checking their phones. Standalone pagers went the way of the dodo. The iPhone showed you could do almost any computing task on a phone. Everyone became those obsessive professionals, engrossed in their phones. Sales of personal computers began to dive in 2012, and have never recovered. Along the way, smartphones decimated digital cameras and made selfies popular.
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