Las Vegas Review-Journal (Sunday)
Mature market hurts smartphones
Sales slumping as innovation rate slows down
NEW YORK — Behind Apple Inc.’s disconcerting news of weak iPhone sales lies a sobering truth: The technology industry has hit Peak Smartphone, a tipping point when everyone who can afford one already owns one and no breakthroughs are compelling them to upgrade as frequently as they once did.
Some manufacturers have boosted prices to maintain profit. But Apple’s shortfall highlights the limits of that strategy. The company said demand for iPhones is waning, and revenue for the last quarter of 2018 will fall well below projections.
The decrease can be traced mainly to China. The $1,000 iPhone is a tough sell to Chinese consumers unnerved by an economic slump and the trade war with the U.S. They also have access to a slew of cheaper smartphones from homegrown competitors such as Huawei, Xiaomi and Oppo.
Apple shares dropped 9 percent Thursday on the sales forecast as the company lost about $71 billion in market value. The news also reinforced investors’ fears that the world’s second-biggest economy is losing steam.
The fact that the iPhone juggernaut is suffering cements a larger trend for smartphone makers. After rising for a decade, worldwide smartphone shipments dropped for the first time last year, falling 3 percent to 1.42 billion, according to International Data Corp. It predicts that shipments will rebound 3 percent in 2019 to 1.46 billion, but that falls short of 2017 levels.
Apple’s news is a “wakeup call for the industry,” said analyst Dan Ives of research firm Wedbush Securities.
Demand has been lackluster across the board, Ives said. Samsung, long the leading seller of smartphones, has been hit even harder, as its phone shipments dropped 8 percent during the 12 months ending in September.
“The smartphone industry is going through significant headwinds,” Ives said. “Smartphone makers used to be like teenagers, and the industry was on fire. Now it feels like they’re more like senior citizens in terms of maturity.”
Phone innovations grew by leaps and bounds earlier in the 2010s, with dramatic improvements in screen size, screen resolution, battery life, cameras and processor speed every year.
But the industry is a victim of its own success. Innovation began to slow down around 2014, once Apple boosted the screen size with the iPhone 6 and 6 Plus models. While phones kept improving, new features tended to be incremental, such as a new flash technique for already excellent phone cameras.
Apple customers now upgrade every 33 months on average, versus 24 or 25 months three years ago, Ives said.
It doesn’t help that top phones come with four-digit price tags, such as $1,100 for the iPhone XS Max and $1,000 for Samsung’s Galaxy Note 9.
“They’re getting more and more expensive while offering fewer and fewer new, innovative features that I’ll actually use,” said Zachary Pardes, a tech-savvy 31-year-old in Fairfield, Connecticut. “I’ll upgrade when the battery stops working. When I’m forced to buy a new phone, I’ll buy a new phone.”
IDC analyst Ramon Llamas said the cycle might bottom out and start growing again in 2021 or 2022, when people’s current phones start reaching the end of their useful life.
“People will still replace their phones. It’s going to happen eventually,” he said.
RAMPART Casino has a new VIP casino host. Greg Schachtel started his casino life working on the Strip as a casino cashier. Through the years he moved throughout the city’s finest hotels on and off the Strip, where he held positions from cage cashier and slot host to slot club attendant and dual rate supervisor. Schachtel received the Gold AchievementCustomer Service of Excellence from the Las Vegas Convention and Visitors Authority and the Las Vegas Metro Chamber of Commerce from 2015 to 2017.
“We’re thrilled to welcome Greg as part of our casino team,” said Rampart Casino General Manager Michael Gaughan. “His experience in the industry, and specifically with locals, is a great fit for us to continue bringing memorable moments to our guests as we move into our 20th year as Summerlin’s first casino.”
The Kline Veterans Fund formally announced Stephanie Helms has been named executive director of the growing nonprofit devoted to combating veteran homelessness in Southern Nevada.
The Southern Nevada Home Builders Association has hired Taylor Booth as an administrative assistant. She will be assisting the association in all day-to-day operations.
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