Smartphone revolution is over -nine years after iPhone’s debut
But cheaper sets will boost growth in Africa, say analysts
IT’S been less than a decade since Apple shook the mobile telecommunications industry to its foundations with the original iPhone. The handset helped turn Apple into the world’s most valuable company ($620-billion this week — about R8.8-trillion) and inflicted huge damage on early smartphone pioneers such as Microsoft and Nokia, which failed, despite concerted efforts, to keep pace.
Yet the revolution the iPhone sparked is probably already over, according to industry experts. Earlier this year, iPhone sales growth went into reverse, and Apple posted its first quarterly revenue decline in 13 years.
The pace of innovation has slowed, not only at Apple but across the industry, prompting buyers to take longer to upgrade their phones. In the developed world, growth has petered out. There’s still strong growth in the developing world, especially in sub-Saharan Africa, but the demand is for low-cost smartphones, not the high-end devices that have been the industry’s main profit driver.
Is the industry fast running out of steam — similar to the PC industry in the 2000s?
“Absolutely,” said George Kalebaila, senior research manager at market research company International Data Corporation in Johannesburg. “The smartphone is reaching maturity; incremental innovation is slowing down.
“There isn’t much of a surprise in new phones any more. No one is leaping ahead of the curve. The products have become standardised, as it were.”
The excitement that used to surround smartphone launches, when every new product was packed with new features, had largely dissipated, he said. And older phones generally receive the latest software, further reducing the need for constant hardware upgrades.
Brian Neilson, research director at Johannesburg-based BMI-TechKnowledge, which concentrates on ICT research and consulting, said the world’s “peak smartphone” limit was fast approaching. Global analyst firms were predicting almost flat growth in shipments from next year.
The decline in iPhone sales was probably a “harbinger” of what was to come, Neilson said.
“Incremental functional improvements have taken the place of the revolutionary features and design innovation of the past. Many more people are hanging on to their old phones for three years rather than replacing them every second year, and the smartwatch has not proved to be the next big thing,” he said.
But, Kalebaila said, thanks to more affordable Chinese brands and whitelabel smartphones from telecoms operators such as MTN, Vodacom and Kenya’s Safaricom, rapid growth would continue in sub-Saharan Africa.
However, South Africa is a much more mature smartphone market than the rest of the continent.
International Data Corporation researchers have predicted that smartphones will make up 57% of device shipments in 2016, with this figure rising to 82% by 2020. In the next five years, shipments of phones with older features will decline by 15% a year in South Africa, while smartphone shipments will rise by 9% a year. Most of the smartphone shipment growth will come from lower-end devices.
Kalebaila said other smart devices — especially health and fitness trackers — were likely to provide a significant new revenue stream for manufacturers. Cutting-edge technologies like virtual-reality goggles were, however, likely to remain luxury items for the foreseeable future.
US research and advisory firm Gartner is also quite bullish about the potential of smartwatches and other smart devices. It forecasts that 292.8 million wearable electronic devices will be sold worldwide this year, generating $28.7-billion in revenue. Of that, $11.5-billion will be from smartwatches. This market is led by Apple, but there are plenty of challengers.
Smartwatch adoption will grow by 48% between 2015 and 2017, going from 4% adoption by smartphone users to 8%, Gartner said.