In the smartphone market, we've seen a few critical data (and possible tipping) points in the past few months alone.
This was followed by a host of downgrades on Samsung last week. The word
on the street now is that the high-end smartphone segment is slowing
down. Financial analysts are acknowledging that they made hopelessly
optimistic forecasts for smartphone sales, according to a Reuters’
report on Sunday (June 16).
Meanwhile, last Wednesday (June 12),
Spreadtrum Communications Inc., a China fabless, raised its revenue
estimates for the current quarter due to higher demand from low-cost
smartphone makers, sending its shares up 23 percent in extended trading.
Connect all these data points together, and you begin to perceive a shift in the power dynamics of the mobile industry.
1. The high-end smartphone market is saturated.
2. The good old days of believing that Samsung and Apple can do no wrong in advancing the smartphone market are over.
3. Low-end smartphones are the new norm on the global cellphone market, effectively replacing feature phones.
4. Winners of the low-end smartphone segment are nobody who previously won with feature phones or high-end smartphones.
Differentiating one high-end smartphone from another is hard enough.
Distinguishing one low-end smartphone from another is like telling ants
As if to downplay a massive wave of downgrades on its
company, Samsung announced today (June 17) that it will start selling
the LTE-Advanced 4G version of its Galaxy S4 smartphones in Korea as
early as this month.
While higher-speed data transmission should
be welcomed by many consumers, let’s not forget that the network
infrastructure to support the new data transmission standard isn’t
broadly available. Counting on LTE-Advanced penetration to increase the
Galaxy S4 sales is a stretch by any measure.
totally new emerges (i.e. screen technologies, longer battery life,
etc.), winners in mainstream smartphones (read: low-end smartphones) are
likely to be companies who can differentiate mostly on price and on
lower margins (read: Chinese OEMs).
You are not alone feeling as though you’ve been tipped over.
Obviously its saturation point that Junko meant. "tipping point" is normally used to refer to start of a high growth phase.
"Financial analysts are acknowledging that they made hopelessly optimistic forecasts for smartphone sales"
We already know, these guys arent the smartest. Dont we?
Are we talking about a tipping point or hitting a saturation/feature curve?
Remember when we paid $6000 for a desk top or laptop of somewhat high performance? Now for $1000 we can get a PC that is pretty close to the tops in terms of performance, crazy gamer PCs aside (and no offense intended). There has always been lots of money to be made in the PC space though because as prices declined, unit shipment increased.
The phone market is different. There is already fairly high penetration albeit the highest end phones still have quite a way to go for penetration.
However, just like the PC, we will hit a point with phones where there are really no more features to pay for or at least to demand high end prices. There are limits to what a phone in a given form factor can or that you would want it to do, even with an augmented reality user interface. Given that situation, and hitting saturation, it is only to be expected that total smart phone sales (in dollars, not units) will eventually decline. Such is the world of tech where things get cheaper to make.
Given Nokia dominated the feature phone market in the past decades, they must have effectively managed the cost to gain a substantial market share. Will Nokia come back as a dominate player in the next phrase of smartphone market?
On the other hands, will Apple change their strategy to build a low end smartphone, giving up their position of prestige in the electronic market?