Department of Duh: Wall Street Realizes Smartphones Are Mainstream
It seems that JP Morgan is bullish on smartphones. This morning, analyst Rod Hall declared that 2010 will finally be the year that smartphones see "true mass market adoption." There's just one problem: this already happened last year and, again, we see Wall Street missing reality:
In a major call on the handset and telecom equipment sectors, J.P. Morgan analyst Rod Hall this morning declared that 2010 is the first year for "true mass-market adoption" of smart phones. While pricing is likely to drop, he says that price elasticity is high, which "bodes well for industry health." In particular, he is bullish on "competitors that integrate hardware and software."A nice call, but consider for a moment what mainstream might be. Wouldn't you consider better than one out of seven -- more than 15 percent -- of all sold handsets being a smartphone pretty mainstream? Heck, Macs are considered mainstream, and they don't even get ten percent of personal computer sales.
I don't know how to break it to Mr. Hall, but 2009 already saw that level of sales as I noted on February 9.
Smartphones seem all the rages in press coverage and advertising. Maybe that's because they are a rapidly growing category. According to figures from IDC, 2009 worldwide shipments of smartphones represented 15.4 percent of all handset shipments, up from 12.7 percent in 2008. To put it differently, one out of every seven handsets sold in the world is a smartphone, according to these estimates. (Actually, it's about to 2 out of 13.)How could the Wizards of Wall Street only now notice the smartphone's arrival as a standard consumer choice? To answer that, I'll point to my post earlier this month, "Wharton Study: Securities Analysts Discourage Innovation":
A study by Wharton Assistant Professor of Management Mary J. Benner in the January-February 2010 issue of Organization Science examines how incumbent firms fare when "radical technological change" challenges existing industry technology. Data from the digital photography and Internet telephony suggest that security analysts ignored established companies' innovations and new products intended to address disruptive new technologies. In addition, the analysts favored strategies that continued to build on old technology.Wall Street analysts underestimate and ignore new technologies until long after they become established. Clearly brokerages couldn't ignore Apple (AAPL), given its financial performance. But to say that smartphones will only go mainstream this year, when the product category has been rapidly evolving for years, and much of what you expect from such a mainstream device was available on handsets years ago? Maybe such analysts should keep their smartphones handy, so someone can send them a clue... via email, text, or Twitter feed.
Image: Flickr user SarahDeer, CC 2.0.