Last week, both HTC and Samsung released less than inspiring quarterly numbers raising the question, has the smartphone market become over-saturated? With smartphone makers releasing new phones regularly, it raises the debate that maybe the bubble is about to burst when it comes to smartphone sales. What is going wrong? What do companies need to do to sustain smartphone growth?
This of course all starts with the news that HTC and Samsung’s stock fell last week after not meeting sales or market expectations. In the case of Samsung it is particularly interesting. Samsung actually managed a 47% increase in profit and is viewed to be selling a large number of its new Samsung Galaxy S4 smartphones. But still, the market spoke, and stock prices fell. In fact, Samsung’s stock has dropped almost 17% this year. But why? This is because Samsung warned investors that it didn’t think it would be able to grow sales as well they had in the past.
Now the obvious question. Why can’t companies grow sales? What has happened to the smartphone market? Well, to start, I can’t remember the last time I was wowed. I didn’t adopt the iPhone until the 4S came along, but you can bet I remember the keynotes from Steve Jobs telling me about a phone that would ultimately grow to take over the mobile phone market. Since then, what killer feature or insanely popular piece of tech has captured the audience and truly wowed it? Lots of people enjoyed Sony dunking its phone in a tank of water, but gimmicks aside, we are still waiting for the new iPhone. Since 2007 we have been waiting for the next great smartphone, and six years is a lifetime in the world of tech.
But I don’t need to say anything. Smartphone makers have been giving out subtle signs that they know the road is getting rougher. As mentioned, Samsung told its investors about their fears, but even Apple is concerned. The smartphone giant is reported to have cuts its production of new iPhones from 40 million to 25 million. These companies are obviously paying attention to world statistics, as it is expected by 2014 that the number of cellphones will exceed the number of people on earth. Clearly these companies need to innovate or risk being added to the pile of cast-off phones.