Mobile industry starts turning upside down
(MoneyWatch) Mobile is supposed to be the wave of the future. Companies big and small are making their bets on it now. But many are betting that what it will be is more of what it has been, and that isn't necessarily the case.
Some new statistics and studies show some significant changes afoot. Shifts in demographics and consumer behavior mean that a lot of companies expecting to ride the wave of the mobile market may find more jolts than a bronco. For example, there is at least one prediction that mobile device sales could take a big dive, with only 16 percent of U.S. consumers planning to buy a new mobile device in the next 12 months.
Although the study does not focus on corporate purchases, which are a traditional extensive source of hardware sales, mobile is different from PCs and laptops. Consumer buying has driven both personal and business use. If there is a shift, it's the product of the increasing power of devices that enables users to make do with what they have for longer periods of time.
Questions of market growth don't arise only in hardware sales, but in projected revenues of mobile carriers. According to market research firm Ovum, mobile revenues will fall globally in 2017-2018. That would be a first for the mobile industry. The problem will be market saturation and dropping average per-user revenue.
In other words, the mobile market is not going to grow at an unchecked pace. That shouldn't be a surprise, as nothing can sustain unlimited growth. However, reason often does not penetrate far into corporate plans. Many businesses large and small will need to reconsider the opportunities that mobile offers.
Market analysis firm IHS agrees that there is a slowdown in the core business of the carriers, which means they need to find new areas for expansion. For the time being, those seem to be largely in the machine-to-machine (M2M) market. Instead of just connecting people, the focus will increasingly shift to the so-called Internet of things to further increase the amount of data communications that is becoming the true financial power in mobile.
As for demographics, there are also indications that as tastes change, power will shift among players. One of the reasons Facebook (FB) has done as well in social networks as it has was the initial adoption of youth. As often happens in fads and fashions, adults, particularly in the U.S., adopt the styles and interests of youth. A new study of teens by Piper Jaffray found that Twitter has become the social network choice of teenagers. This reinforces earlier signs that teens might be tiring of Facebook. It could be that even though Facebook seems like the undisputed social leader, time spent in use could conceivably begin to shift, which would affect plans of marketers and, ultimately, the revenue streams the various companies enjoyed.
Mobile will continue to be a fundamental force in high tech and business in general going forward, but how it will develop is far from sure. That will affect investors, careers, and national economies.
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