Smartphone fatigue may become the new normal

Summary:When software updates come regularly, the need for new smartphone hardware diminishes. Have smartphones lost their juice?

The smartphone market may be entering the valley of commoditization, me-too devices, and lack of anything enticing to inspire gadget lust among customers. Welcome to the smartphone hardware lull.

Apple on Monday will outline its latest iOS and a flatter design at its WWDC powwow. As for the next iPhone, most analysts are targeting a September launch. But in reality, iOS 7 will work just fine on the iPhone 4S and up. Jefferies analyst Peter Misek said in a research note about Apple:

Inventory grew 1M to 2M last quarter instead of shrinking, new sell-through rates mean inventory draw of 2M to 4M required to normalize so June Q is tracking 26M to 28M iPhone shipments. Our survey suggests significantly less optimism on smartphone volumes, prices will continue to decline, and Samsung eclipsed Apple for the first time in all of our regions.

Here's the issue: When software updates come regularly, the need for new smartphone hardware diminishes. There's no reason for an out-of-contract upgrade, or even any rush.

samsungS4060713
Growing tired of smartphone launches?

 

 

Among the signs of fatigue in smartphone land:

  • Sales of Samsung's Galaxy S4 appear to be tailing off already . Perhaps it's the fact that the S4's screen is the size of a paperback book. Or maybe it's just that the S3 serves most folks' needs. In any case, Samsung was supposed to get more longevity out of the S4 launch.
  • There are concerns that sales of the iPhone 5 are tailing off, as Misek noted. That slowing growth isn't too surprising, but clearly there's a waiting game. Even when the wait is over, it's unclear whether or not the next iPhone can spur the installed base to trade up.
  • HTC appears to be on track with better sales, but analysts expect the HTC One to be a one-month wonder .
  • BlackBerry's Z10 sales have tailed off, but it has a winner with the Qwerty Q10 , according to Jefferies analyst Peter Misek.
  • Nokia is having a tough time standing out from the crowd with new Lumias, with a launch that lined up with every competitor.

In each of those aforementioned cases, no vendor is really adding to share. Many of them are catering to an installed base. That reality smells like saturation to me.

What's going on? For starters, smartphones are poised to pass feature phones in shipments in 2013, according to IDC. Smartphones are no longer unique . These devices are for the masses and that ultimately means lower prices , mystique, and commodity purchases in the future. The trademark characteristics of the dumb phone market will soon belong to the smartphone industry too. 

screen-shot-2013-06-05-at-07-00-48-518x280

 

And then there's the lack of wonderful features. NFC was supposed to be a hit. NFC is now a hurry up and wait for killer app item. Last year's hardware is just as good as this year's. Smartphone makers are running out of new tricks. The Galaxy S4 is all about the software. The hardware isn't that different than the S3 beyond the screen size.

Just like PCs, smartphones can't differentiate on hardware. You've seen one small screen, you've just about seen them all. And that lack of differentiation is going to make for one cut-throat smartphone market in the quarters ahead.

Topics: Mobility, Android, Apple, BlackBerry, iOS, Samsung, Smartphones

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.