If iPhone sales are bad, Android sales are going to be much worse

Apple's first profits warning of the smartphone era signals what is likely to be tough times ahead for Android handset makers.

If things are bad for Apple and the iPhone, things are going to be a lot worse for the premium Android brands. I've seen it before. With some tech – the iPod and iPad spring to mind – it's easy to see when the peak came and went. With other things – take the desktop PC for example – things can be much more subtle, and the peak might not be as noticeable.

I remember the rise and fall of the iPod quite well. Here was a device that felt like it came from nowhere and, given the price, many thought wouldn't go anywhere, and yet became iconic within its market sector.

It seemed like the iPod would never die. But die it did. And it now only lives on as the iPod touch – a device that hasn't seen a hardware refresh since 2015 – and whatever old devices are still in use (I still have several iPod nano players in good working order!).

I used to joke that what killed the iPod was that everyone who wanted one already had three. It was a joke, but there was more than a grain of truth to it. Like the iPhone, the iPod was a high-end product (yes, there were more budget options available, especially later on in the product's lifecycle) that had to compete in a sea of cheap products. And yet compete it did.

And it won.

But where does a product go from there? Higher-priced products can more readily saturate their market, especially if they're quality products with a decent life expectancy, and doubly so when those feelings of newness and cutting-edge wear off.

And this is where smartphones are.

All signs seem to suggest that we are post-peak smartphone. We've had months of rumors and reports from analysts and suppliers that the industry is slowing down, and Apple's profits warning seemed to be the tip of the iceberg, with the likes of Samsung and LG following suit.  

The problem isn't that smartphones are going to vanish, and the market collapse into a black hole as happened with the iPod. The smartphone replaced the portable music player, but there's nothing coming along to replace the smartphone, so the market will continue because we're going to still want smartphones.

The problem isn't a market collapse. It's that growth has come to an end. And that will be painful for some of the players. Apple's commanded healthy profit margins for the iPhone, but that's not the case for most of the Android smartphone makers who have been scrabbling with razor-thin margins.

Apple also has other avenues that are pulling in lots of cash. Other products such as the Mac, iPad, and Apple Watch are all huge businesses in their own right, not to mention a growing services sector.

The iPhone may be Apple's biggest cash cow, but it's not its only one. On top of that, Apple's got the money to make moves into new markets.

Also: The 10 best smartphones of 2018

If the end of growth – or a contraction – of the smartphone market is going to be bad for Apple (and it would seem that this first profits warning is just the beginning, despite the brave face that Apple execs are trying to put on it), then it's going to be brutal for those who haven't been banking billions of dollars for many years.

2019 looks set to be a tough year for smartphone makers, and I predict there will be significant fallout, especially in the cutthroat Android market.

It's a year where investors need to get into their heads that never-ending growth is not possible, but that the smartphone isn't going anywhere.

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