For two years now, smartphone sales have been in trouble. Sales are, for the first time in smartphone history, declining. Numbers are, definitely, show a softening trend.
There is a plethora of thoughts around this. I have discussed some of these in the AGL eDigest from time to time. However, at the last few conferences I have attended I have picked up some perspective from others that help me get, what I believe to be, a high level of confidence in understanding the global picture, and why there is no frantic pace to pick up on emerging technologies and devices by consumers.
I have been skeptical of the 5G hype for some time. I was concerned, early in the hype cycle that users were not going gaga over 5G as the industry was expecting. The mistake the industry made was to assume that users would care about lower latency and faster downloads. As it turns out, most users were not all that unhappy with their current wireless device’s performance. So trying to sell the next generation of technology was not a sufficient reason for users to rush out and jump on the 5G bandwagon.
As well, those promised faster downloads, less buffering (lower latency) and better reliability did not prove to be the case with initial 5G deployments.
On top of that, antics such as those by AT&T trying to create a 5G mirage by deploying “5GE and 5G+” did nothing but confuse the issue and trick consumers into thinking 5G was here. All the talk about mmWave and downloading an 8K movie in less than 10 seconds was, largely, shrugged off. So, now we know that 5G is not going to sell phones. However, there are other, current generation, issues.
One significant deterrent to users upgrading is device cost. Users are still satisfied with present device performance. Therefore, they are looking at these pricey phones with a bit of reticence.
Next, come features and apps. The value proposition for spending >$1000 for a phone does not seem to be valid for the marginal network performance/screen/camera/apps/etc. improvements. Following that is the failure of the wow factors of these new phones; for example, the recall of some foldable phones and the issues with others.
Finally, the majority of innovation has been under the covers and hard for consumers to understand. Therefore, they are, simply, no compelling reasons to spend money.
This circles back to the way the industry was assuming the user would understand why next-generation technology matters, and that would be a driver for upgrading. This even extends to Apple, who has been, fairly, bulletproof. The majority of Apple sales are for the cheaper XR model. That is quite telling about what the consumer’s mentality is towards the current state of smartphones.
There are some interesting statistics that support this. According to a recent 451 research survey, for than half (52 percent) of respondents are satisfied with their current phone. Another 24 percent pegged the cost or new phones or lack of interest in the new app. Another 11 percent simply have no need for better or new devices. That means nearly 75 percent of users are off the market for new phones; at least for the rest of the year.
One interesting statistic concerns foldable phones. It is fairly certain that this number has to do with the failure of early models, but, according to the survey, 63 percent were somewhat unlikely or very unlikely to purchase one. Interestingly, old standards such as battery life, camera, and basic functionality are what users care about most.
So, to get the user to find value in future generations of smartphones is more than just incremental improvements in isolated phone functions such as social media, multimedia, gaming, geolocation, etc. The integration of tangential platforms such as smart cities, autonomous vehicles, the Internet of Everything/Everyone (IoX), smart homes, etc., is what will move the consumer to purchase future generation of handheld communications devices, whatever their form factor, or whatever we call them.
Trying to make sense out of all of this is not rocket science. We have a next-generation wireless Titanic, of sorts, on our hands. Obviously, this ship is not going to sink. However, the pervasiveness of wireless communications is getting away from the non-tech type. They are no longer wowed by technology.
We know an iceberg is out there and the job, at hand, is to direct the ship so it does not run into it. The industry needs to stop focusing on technology and start focusing on what can be accomplished by it, by the user. That will provide compelling reasons for upgrading. Just selling 5G as the next generation of wireless will not succeed.