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?
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.
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?
I used to buy Nokia phone after Nokia phone, then I started getting lemon after lemon. In my opinion that's what filled Nokia. Even before smart phones I switched to LG just to get a reliable phone that I knew I could make a call with and not have it drop out.
FWIW, according to wikipedia's wiktionary document:
(catastrophe theory) The point at which a slow, reversible change becomes irreversible, often with dramatic consequences.
The point in time at which some new technology becomes mainstream.
For some reason I always associate it with the point when a canoeist approaching rapids feels his boat physically tip forward and accelerate dramatically. I guess you just have to hope it's a wild ride ahead, not a vertical drop onto the rocks.
Tipping point or inflection point... I think we all get what Junko is trying to say here! The point she is trying to make is that the market is really in low-end smart phones where majority of the developing countries are the playing field. That needs radical re-engineering of both the handset and the subscription model (which is largely pay-as-you-go) innovations.
This doesn't really come as a surprise.
I've been speculating for a while that in the not too distant future all phones will be smartphones because they *can* be. Hardware has gotten steadily smaller, faster, and cheaper, and today's low end phone was top of the line hardware not that long ago.
The distinction between smartphone and feature phone was hardware and price, with feature phones less expensive because they were based on less powerful hardware and cost less to make. The hardware distinctions are fading fast, as things like dual-core 32 bit CPUs, DRAM, and other components steadily drop, and the price distinction fades in consequence.
The differentiation now is in software, and precisely what the phones can do.
I concur the high end is saturated. I don't see a lot of growth for Apple in new iPhone sales, for example, because everyone who wants (and can afford) an iPhone likely has one, so the market will be replacements and upgrades.
There is a lot of growth in the low end possible, but that has the challenge of making actual money on commodity products with commodity pricing.
Speaking personally, my cell phone is the smallest, cheapest, least capable phone Samsung makes. All it does is calls and SMS, and that's all I want it to do. Everything else is something else's job. (Among other things, I simply want a bigger screen for the "everything else" than a practical phone will have.)
But I'm in a distinct minority. For an increasing number of people, a smartphone is their main computing device.
Apple will sell more Iphones, they just will cost less than the current Iphone and there will be less profit. Will they be as cheap as commodity Google products .... unlikely, just like the Mac and PC. Dedicated following who just wants something that works without hassle. I am not MAC person, but can appreciate that sentiment at times. It actually works for the vast majority of consumers.
I am not buying completely into the smartphone being the primary computing device for an increasing number of people. For those who cannot afford anything else, yes, but for those that can, the form factor just does not work for far too many tasks including something as simple as reading and surfing. Sure you can do it, but if you had a tablet in one hand and a phone in the other, which will you pick? Same with a tablet and a laptop if you have to write a letter.
I think the tablet and laptop will meld for 80% of the market, with geeks like us always wanting or needing more power.
There is also the concept of the transportable computing platform (Phone) that plugs into user interfaces (displays, keyboards) as needed. They could even run in higher performance/processing modes when docked. This I see, but then what about the impact of cloud computing?
"... transportable computing platform"
That would be my ideal device, as I alternate between a home-office and an office-office. A phablet sized device with real grunt and terabyte storage, capable of docking into multiple large screens, keyboard and mouse.
I don't see the cloud as useful, because it will always be slower than local storage, and I work with large files.
You need to shop around, and ignore at&t/verizon/sprint/t-mobile. I pay $45/mo (that's the total price) for virgin mobile for a very capable smartphone. When I hear what people pay at&t and verizon (like I used to) I think (quietly to myself) s u c k e r ...
@Jack L. "Apple will sell more Iphones, they just will cost less than the current Iphone and there will be less profit."
The question is whether Apple will accept less profit. Historically, they've valued revenue and profitability over market share. What would the price need need to be to make a non-Apple user "trade up" to an iPhone? It gets complicated because most sales get made through carriers and are subsidized as pat of a multi-year contract.
"I am not buying completely into the smartphone being the primary computing device for an increasing number of people."
The issue is indeed form factor. I wouldn't try to use a smartphone for many tasks for the reasons you state. But you can't carry a tablet in your pocket. When you are at home, you may use a desktop, laptop, or tablet. When you are out and about, what do you want to carry? For many, the answer is "Nothing that won't fit in a pocket." I was just corresponding elsewhere with a woman who sometimes SSHes from her phone into servers to do admin chores because she's out, because she really doesn't like to carry a bag or purse large enough to hold a tablet or other device.
"There is also the concept of the transportable computing platform (Phone) that plugs into user interfaces (displays, keyboards) as needed."
I've been expecting that, too. The hardware is fast enough and small enough that you could have a main computing device in a phone form factor.
"This I see, but then what about the impact of cloud computing?"
What about it? If anything, it enhances the probability. If the real work is done on a server off in the cloud and your data lives there too, what you need to have is reduced to something that can access those resources.
What do most users actually *do* with a computing device"? The main use cases are web browsing and email, and you can do both with a phone.
Nokia was a "victim" 2 years ago when Stephen Elop went all in on Windows Phone way to early. He could have commited some resources to Windows Phone and let it and Symbian compete for a couple of years. Windows Phone has proven to be a marginal product and Nokia lost quite a bit of money (although Microsoft did pay them some) on lost Symbian sales. Eventually Symbian would have been replaced with Meego/Android/Etc.. but having gone all in, Nokia is stuck with what Microsoft is giving them for business and the "all important" platform.
Thank you for the reply DMcCunney.
I believe Apple will adapt their price to where they maximize overall profit. I believe that price point will be lower than it is today though, just like their computers are cheaper than they were X years ago. They will still carry a premium of course.
Another thought on cloud computing. When adequate processing power for cloud computing interfacing is dirt cheap, then it will just be built into the user I/F and there will be no need for a carry-all processor unit. That was what I was trying to get at.
I do use my phone when I am out for tasks that would traditionally be done on a bigger screen. I don't like it, but it is better than the alternative (being home) and/or there is just no alternative as you pointed out to carry anything bigger. It is not very productive though. Things take a lot longer, even with mobile s/w.
"I believe Apple will adapt their price to where they maximize overall profit."
And the question is what that price may be. I've seen suggestions elsewhere that they would bring out cheaper models to increase market share, but I'm skeptical.
Part of the problem is that Apple is a victim of its own success. The market rewards growth with high stock prices, and Apple's is in the ionosphere. But it's looking like the high end of the market is saturated. There is still a substantial iPhone market, but that's more replacements and upgrades than new sales. Everyone is waiting for Apple's next blockbuster category creating product, like the iPad, and if it doesn't have one, the stock will be hammered.
"When adequate processing power for cloud computing interfacing is dirt cheap, then it will just be built into the user I/F and there will be no need for a carry-all processor unit."
And what will the user I/F be? Something like Google's Chromebook seems to be the direction such things will go. But cloud access is not universal. What happens if you don't have it? What if you are someplace where there isn't a wifi hotspot, and maybe you can't use a smartphone as a modem? Speaking personally, I'd want at least some processing and storage capacity. I might not be able to use if for everything I did, but I could use it. The device won't need to be really powerful, but will need to be more than a thin client.
Agreed on the disadvantages of mobile devices for may sorts of taks, and it's why I prefer not to do such things with them. But we're systems guys who do that sort of thing. What does the average smartphone user do with a computer? Largely, things you *can* do on a phone, and increasingly, users are.
Smartphone is quickly becoming a commodity, just like semiconductor. Samsung and LG will continue grow because they also make the key components of smartphones, like MPU and display, they just won't get the same level of profit as they have now. The market share of Chinese companies, like Huawei and ZTE, will continue to grow. They will repeat Lenovo's story in handheld market.