Smartphone fatigue may become the new normal

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?

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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. 

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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, iOS, BlackBerry, Samsung, Smartphones

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3 comments
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  • Implied Promices

    I obviously cannot speak for everyone, but I think that (at least for my generation) the promise of a real smartphone was that it was going to become the central device of our lives. A device that housed our programs and user data, and could be connected to larger hardware to enable more usability and features. The idea is that x86 computers essentially become terminals or docking stations for the phone to plug into (wired or wireless) and supply at least the UI and user programs and data for the device. Then any computer you plug into is yours while in use, and you do not need to worry about needing software licences per machine anymore as 'your machine' is simply the phone.

    Interestingly enough, I do not feel that Apple has ever really implied this promise. But android devices have tip-toed around the idea, Microsoft has all but said that this is the direction they want to go, and the new Ubuntu phone/tablet OS is overtly promising it. It will be a hard feature to pull off, but one that many of us are waiting patitntly for.

    Another feature that is ignored across the board is that of storage. I personally love cloud storage as a backup and sync agent for my files across several PCs, but I do not want to use cloud storage to extend storage for any device. 16-32GB of storage on high end devices is not going to cut it in the future. We need to see 128-512GB storage options come sooner rather than later on our phones, and while they do not need to be running at the blazing fast 550MB/s of modern SSDs, I think that most of us would appreciate something faster than the 10-20MB/s found on our phones currently.

    Faster/larger storage. More interoperability with our desktop environment. That is all we are asking for. All of the other features of better native software and ever better cameras is just icing on the cake.
    CaedenV
    • Performance comes with a price

      A lot can be done right now to boost performance. However, the price is decreased battery life. That's the current conundrum. Until battery life catches up and/or phones can be made more powerful while maintaining current power consumption levels we will not see big jumps in smartphone performance.
      MajorlyCool
  • don't blame us

    My contract doesn't end until 2014, version quietly canned early renewal perks so I might cancel my account and go somewhere else as a result, and without the lower-price-with-commitment, nobody will shell out $700 for a piddling phone regardless of brand, especially when tablets cost $400 and are faster.

    /Realitycheck
    HypnoToad72