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Is the smartphone bubble ready to pop?

Posted: , by Alan F.

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Is the smartphone bubble ready to pop?
Smartphone sales have grown sharply over the last few years to the point where over 50% of U.S. cellphone owners now are sporting a smartphone. What will it take to get the remaining half to make the switch? With smartphone penetration already above 50%, some feel that there is nowhere for smartphones to go but down in the U.S. Even globally, smartphones now account for more than half of cellphone shipments.

Penetration of smartphones has exceeded 50% globally

Penetration of smartphones has exceeded 50% globally

Besides the possibility of smartphone sales peaking in the U.S., European smartphone sales are currently growing at a 9 year low of 12%, according to IDC. And the market has become so mature, according to Bill Whyman, senior managing director at researcher ISI Group, that even a new version of the Apple iPhone won't be enough to give a boost to the market.

With Samsung's shares dropping 17% since June, and speculation that the company has reduced orders with vendors for components related to the Samsung Galaxy S4, there is a feeling that even flagship models won't be able to help smartphone growth get back on track. And with all signs pointing to a low-priced Apple iPhone for emerging markets, it would seem to be a clue from Apple that the low hanging fruit has all been picked.

"The higher-end portion of the smartphone market has hit a wall due to high penetration rates and high price points."-Brian White, analyst, Topeka Capital Markets

Most of the excitement these days is related to the next big thing, which looks to be wearable gadgets. Google Glass and the rumored Apple iWatch have many early adopters licking their lips in anticipation. But don't misunderstand what these analysts are saying. With smartphone specs constantly on the rise, the combination of hardware upgrades and adding more converts from featurephones is sure to keep smartphone growth on the rise. But while more smartphones could be sold in the years ahead, the percentage growth in such sales seems to have entered the declining stage. 

source: Forbes

11 Comments
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posted on 07 Jul 2013, 21:58 12

1. fistigons (Posts: 263; Member since: 11 Feb 2012)


I'm hoping we see an increase in unlocked, low priced, high quality smartphones. If that trend continues maybe we'll see phone contract prices lowering.

posted on 07 Jul 2013, 22:20 2

3. Mxyzptlk (limited) (Posts: 3510; Member since: 21 Apr 2012)


That won't be happening.

posted on 08 Jul 2013, 00:19 4

8. hms2407 (Posts: 94; Member since: 25 Apr 2013)


that is happening sir...sony,nokia, and lg are making buget friendly smartphones that pack in some good specs

posted on 07 Jul 2013, 22:24 2

4. Droid_X_Doug (Posts: 5729; Member since: 22 Dec 2010)


Meh. Carriers aren't manufacturers. With only 4 major carriers in the U.S., there isn't exactly much competitive pressure being exerted. You have basically got an oligopoly. Everyone goes along by getting along. AT&T & VZW have staked out the high end, with Sprint and T-Mo/MetroPCS working on the low end.

HTC tried to go direct by selling the One in an unlocked edition that would work on either AT&T or T-Mo/MetroPCS. Even with a $100 rebate for early adopters, I haven't heard where they burned up the sales charts with the unlocked One. $474 (after $100 rebate to the early adopters) still loses out to $200 subsidized.

Net-net, carriers (while they are providing subsidized pricing) are controlling the pace of smartphone adoption. One year contracts would probably do more to increase turn-over. But that ship sailed about 2 years ago. I got my Droid X on a 1-year contract. When the contract was up, the only option was to renew for 2 years or pay full retail for no contract. Which remains the circumstance to this day.

posted on 07 Jul 2013, 21:59 5

2. Kal-el (Posts: 91; Member since: 14 Dec 2012)


Well if companies weren't busy suing one another and actually collaborated with technologies and truly innovated to push further probably no gonna see a drop in the market but that being said population growth is occurring at still a steady rate so sales may be lower than expected but its far from over.....there still has to have a plateau effect to occur in tech...b4 that can truly drop

posted on 07 Jul 2013, 22:24 2

5. pwnarena (Posts: 879; Member since: 15 Feb 2013)


well if samsung wasn't sued, it would have continued with its old ways. we wouldn't have seen the galaxy s3, which has become relatively impossible for apple to have banned. you can't really say lawsuits prevent innovation. i say they even help competing companies in coming up with new ideas.

posted on 07 Jul 2013, 22:43 4

6. tedkord (Posts: 4701; Member since: 17 Jun 2009)


And yet, Apple are trying to have it banned.

Lawsuits very much harm innovation, from resources drained, to spending time trying to find a work around, to keeping smaller players of the field for fear of being sued into oblivion.

When the lawsuit is used as a competitive weapon, innovation always suffers.

posted on 08 Jul 2013, 09:33

11. applesauce (banned) (Posts: 165; Member since: 26 Aug 2012)


I wouldn't say that all lawsuits harm innovation, as some are legitimately trying to protect IP and such (the Nokia vs. apple battle comes to mind), but frivolous ones like apple suing over rounded corners are highly wasteful and quixotic. As you said, it should not be used as a competitive weapon.

posted on 07 Jul 2013, 22:47 1

7. quakan (Posts: 1177; Member since: 02 Mar 2011)


Companies have always sued each other, we have just been given this false sense of newness to it because it's much more publicized. Also, we're techies and we look for stuff like that about the products and companies we buy from and support.

posted on 08 Jul 2013, 05:58

9. byazatt (Posts: 159; Member since: 26 Oct 2012)


And all this will force Every OEM to up their game to the jubilation of the consumers. I really wanna see what 2014 will bring considering the long leap OEMs have made this year.

posted on 08 Jul 2013, 06:58

10. Jeradiah3 (Posts: 1002; Member since: 11 Feb 2010)


I think the biggest issues with the other half of those who dont want smartphones could be the need for them as well as their demographics. my grandfather is in his 70s and he told me that he has no use for a smartphone. Im not mad at him for that because I can understand why. he has lived this long without a smartphone so it'll be hard for him to get one

The "need" for a smartphone is the other issue. with the evolution of social media and what it can do to help or hinder your life, some people choose not to be in the mix. most people that have cellphones are those who like mobile games and social media. Convincing the other 50% to buy a smartphone is easier said than done.

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