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.
Among the signs of fatigue in smartphone land:
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.
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.