The demise of the smartphone is inevitable, and necessary
Smartphones coupled with mobile services and apps (mobile ecosystems) have been the protagonists of the latest disruption tide for well over a decade. The smartphone industry accounted for more than $380 billion in revenue last year and more than 1.2 billion devices sold. IDC expects the market to grow to $451 billion annually by 2018.
Yet despite these extraordinary numbers, and despite the fact that there are an estimated 8 billion smartphones still to hit the market in the next 5 years, this industry is technically over.
The smartphone market has reached maturity, and year-over-year growth is declining gradually, with manufacturers working with cut-throat margins and one single player monopolizing gains, seizing an estimated 93 percent of industry profits, according to investment firm Cannacord Genuity.
No need to guess—just look around you. Most likely, you have one or more Apple devices on your desk or in your pockets. When a technology goes over 50 percent penetration, the remaining audience is composed of a late majority of followers and laggards. This is the technology version of the bell curve.
In other words, with smartphone penetration well over 70 percent in more developed countries like the U.S., the saturation point was exceeded a long time ago, and the 8 billion in shipments to happen in the next 5 years are driven by emerging markets. The move to less penetrated explains why Chinese smartphone giant Xiaomi is now valued at $45 billion and expected to pursue an IPO. It also explains shorter product life cycles with little incremental innovation, and that implies less profit. If you wondered why Apple is moving quickly into wearables with the Apple Watch, this should help explain that move.
What Apple and Blackberry have in common I've been myself involved in the mobile industry for nearly two decades (with Nokia and BlackBerry). This is what has happened:
From a software perspective, operating systems turned competition into a mobile ecosystems war, which ended in a duopoly—Google's Android capturing a majority of the volume, and Apple's iOS taking the profits....MORE
The End of the Smartphone: What It Means for Investment Professionals
The next global extinction event is on the horizon . . . and it will dramatically change how the wealth management industry conducts day-to-day business, including how it connects with clients.
The day that your iPhone or Android grows as obsolete as the rotary phone might seem far away — especially if you’re reading this article on one of those devices right now. But the smartphone’s rampant success is already leading to its demise. As a recent CNBC article explains, “the smartphone market has reached maturity, and year-over-year growth is declining gradually.”
The time is ripe for a disruption — when money flows en masse from existing businesses and business models to new ones. Think of the shift from pagers to BlackBerry devices, or from the BlackBerry to the iPhone and Android.
So what is the next evolutionary step up from smartphones? It’s something that I’ve been noticing take hold for a while now in the more tech-savvy environs of Southeast Asia. Just take a look at my recent blog post, “Your Clothes Are Still Made in China but Now They Are Wearables.”
Yes, I’m talking about wearables — devices like the Google Glass and Apple Watch that have all the “smart” capabilities of your iPhone or Android coupled with the constant usability of a clothing accessory. Let’s say you’re walking through the city and you want to check a stock quote. Using a smartphone, you have to take the time to pull it out and look down at it. We’ve all felt the inconvenience and potential danger of walking with that distraction, especially in busy cities like New York, Boston, or Chicago.
Now imagine for a second that you can make that stock quote appear in your field of vision. Actually, you don’t have to imagine it because this online concept video for Fidelity Market Monitor for Glass demonstrates exactly what it would look like to wear the Google Glass equipped with Fidelity’s investment app. In the video, a man walks through his daily routine while logging on to his online account, hearing news articles read aloud, and checking stock quotes and the markets — all completely hands free.
A word of caution, however: A wave of Google Glass sales hasn’t happened yet and it may be some time before one does. On 15 January, Google announced that it was ending sales of the Glass prototype but is still committed to working on a newer version of it. This move came amid criticisms of the product in the media and privacy concerns that led some restaurants, bars, and movie theaters to ban the use of smartglasses.
Still, even with those temporary setbacks, the fact is that the times they are a-changin': smartphones are becoming outdated technology and wearables are the next big thing.
With that in mind, it’s no surprise that Fidelity is an early innovator in developing a wearable investment app. As we industry veterans know all to well, Wall Street was an early adopter of smartphone technology, grasping the benefits of instant access to e-mail and real-time information before many other industries.
Remember when you were one of the few people on your morning commute using a BlackBerry?...MORE
