Are people "over" smartphones?
(MoneyWatch) When it comes to smartphones, Americans are increasingly "been there, done that, got the handset," according to a new UBS study as reported by the Wall Street Journal. People just aren't upgrading their phones as often as they once did. The upgrade rates to newer models dropped by 9 percent between 2011 and 2012. And the number is likely to fall even more.
Analytical firm IHS, on the other hand, says that smartphone shipments will double from 2012 to 2017 because of increased choices of devices. So, are people excited or nodding off? Maybe a little of both.
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Modern smartphone sales in the United States have ramped up enormously since Apple (AAPL) introduced the first iPhone in 2007. Generational changes were at first enormous, as you might expect with any new type of consumer electronics product.
But the pace of innovation has slowed. Many have noted an apparent slowing of innovation in Apple's main product lines, including the iPhone. But then, some critics also said that the Samsung Galaxy S4 wasn't that enormous a change over the previous S3.
There are only so many times companies can jump over their own knees. Although it may be that someone comes up with a compelling new hardware design or software feature, the basic (and not-so-basic) features that most people want seem to be in place. Some portion of the populace may feel the need to frequently upgrade what they have to the latest and greatest, but many simply don't need to and might be happy to keep the money in their pockets.
So how did IHS arrive at its conclusions? The analyst firm is looking at global smartphone shipments, which it expects will hit 1.5 billion a year by 2017, up from 712 million in 2012. Even there, the projected pattern seems to be slowing: 1.1 billion in 2014, 1.2 billion in 2015, and 1.4 billion in 2016.
More people around the world are adopting smartphones, because of increased screen size and longer-lasting batteries, IHS said. A little thought, though, suggests that the big area for future innovation will probably be in driving down costs, as the regions most open to adoption have largely cost-sensitive populations. In other words, drop the price and they will come.