The death of Smartphones and the birth of Smart systems
The fall in sales of smartphones could not come at a worse time, or perhaps, at a better time. That depends on whom you ask.
On January 2, Apple CEO, Tim Cook, announced a decrease in sales in the last quarter of 2018.
Approximately 10 billion dollars less than expected. A few days later, Samsung also revised its revenue forecasts for the last part of the year to an 11% drop.
This trend has little to do with commercial struggles, and much to do with the stagnation of innovation. Both Apple and Samsung have run out of ideas. The smartphone as such has reached its peak, as it happened to the printing press.
There is very little that folding screens and ecosystem bonding can do to save the fact that consumers cannot see much further ahead when it comes to what smartphones can do for them.
These are different situations, but both reflect a general crisis in the smartphone sector, where competition between Apple and Samsung is no longer at the heart of the system.
Other manufacturers, especially Chinese companies such as Xiaomi, Huawei and Oppo, offer good products at very favorable prices, renouncing higher profits. They can do so thanks to more agile structures, tax incentives, and low production and personnel costs.
According to Cook, the main reason for the decline would be in the so-called ‘Greater China’, mainland China in which the colossus of California based part of its sales and that has significantly reduced their purchases of new devices.
The sanctions imposed by the government of President Trump are noticeable in the Chinese economy, so much so that Apple has decided to reduce iPhone production by almost 10% in the first three months of the year that has just begun, but that is not the root cause of the death of smartphones as the stars of technological revolution
In addition to the Sino-US trade war, smartphone sales seem to suffer another more general problem: the market is saturated.
Between 2007 and 2013, sales increased enormously, even during the most difficult years of the economic crisis.
Its growth year after year seemed unstoppable, with a frenzy in the search for the latest and most powerful models.
From 2015 to 2017, around 1.4 billion new devices sold around the world each year. In 2017, sales fell for the first time compared to the previous year.
The 2018 data are not yet definitive, but the signals are negative. Many markets, from the United States, have reached the saturation level, with most users happy with their old mobile and with no intention of changing it.
The same seems to be the case in emerging markets. India, Southeast Asia, parts of Africa and South America have not yet reached saturation, but prices are falling due to the entry of producers who, for less than $200, offer good phones, with enough capacity for the needs of the buyers.
Throughout 2018, Apple allowed owners of older iPhone models to replace their battery at a, particularly advantageous price.
Thus, consumers chose to pay $29 to resuscitate their old and beloved mobile, instead of spending a thousand on a new one.
Doing smart things, not owning smartphones
We have gone from the concept of the smartphone to small computers that do many smart things. Up to a point, a small drop in sales is normal but they will be replaced quickly by other devices with higher benefits.
The problem is that, in many cases, even when new smartphone models objectively do more and better, these innovations are no longer considered so relevant by consumers.
For many years, especially in the United States and part of Europe, the sales cycles of smartphones has been two years.
This trend was fueled by the telephone companies that every two years offered the possibility of buying very expensive models with terms of 24 months.
Today things have changed. In the new models, the novelties are not so exciting as to justify the change every two years.
In the United States, the frequency of renewal of smartphones has gone from 20.6 to 24.1 months.
In Europe, many markets have slowed down even more, with users keeping the same phone for more years, until they finally break down.
In terms of technological innovation continuous cycles have replaced closed cycles: it is true that the devices last longer and the companies will launch new business models, but it will not be such an abrupt change.
The sector will become similar to that of the automobile. If someone breaks your side mirror, do not throw away your car to buy a new one; instead, you replace or repair the mirror.
If you break the screen of your smartphone, do not buy a new one, have it repaired.
Services and software utility will be more important than the device itself
Samsung relies on an improvement of the sector thanks to the introduction of new models compatible with 5G networks or with long-awaited features, such as folding screens. But, beyond smartphones, there is something big on the horizon.
As Tim Cook himself pointed out at the beginning of the year, other sectors of the company such as Mac, iPad, wearables, Home and Accessories had a combined growth of 19% in a year.
Apple Watch is a bigger business than the iPod ever was. This is the real revolution, the slow decline of smartphones and the rise of everything else. Speakers, robots, voice assistants, screens, watches, clothes and so on.
Users will need devices capable of learning with machine learning, that are ubiquitous thanks to mobile networks and that allow immersions in the environment thanks to the extended realities.
We will stop talking about smartphones, to talk about universal purpose devices, super-light flexible computers that can be embedded in clothes.
We need something that frees our hands, because now when you use your mobile you cannot do anything else. Now the important thing is what is inside the device, the services, beyond the device.