The end of an era: Where next for the big smartphone brands of today?

mobiles ericson

Africa’s marathon to catch up with the rest of the world in terms of connectivity and access is now a sprint to the finish line. Ericsson’s latest report shows penetration rates on the continent have overtaken India.

The market we began our careers in has now, not only matured, but is expected to cross 100% penetration within 5 years. I’d say that is conservative guess, based on what I’ve seen over the past 10 years that I’ve been watching mobiles in emerging markets and the erstwhile bottom of the pyramid.

Market forces are simultaneously creating another perfect storm. This time, its the handset makers and the big brands we’ve become accustomed to watching. Their time in the sun is over, as the market maturity curve shows a downward trend.

The smartphone industry grew at a single-digit rate this year for the first time, according to data from IDC. Just two years ago, the industry was expanding at a breakneck 40 per cent.

Two years ago, I predicted this day. I wonder if any of the manufacturers had the foresight to change gears back then, given the amount of time it takes to get new products, developed from scratch, to market.

Second, first-time buyers in emerging markets will power growth. Handset shipments in the Middle East and Africa rose 50 per cent year on year in 2015, IDC estimates. Chinese groups Xiaomi and Huawei — which catapulted to third place in shipments this year — have just entered those markets selling budget phones. Fierce battles are also playing out in India, where locals Micromax and Intex are fighting Samsung.

There are two paths that I can see happening. One will be the predictable one as foreseen by these analysts and trend watches – budget brands and low margin markets. This is the same path that mobiles took in the pre-smartphone era. A product category emerges, it sells like hotcakes, then growth slows as the last mile of market saturation is mopped up over time. Remember the netbook?

The other path, is that of the long tail of mobile phone design. Instead of top down market domination by the ginormous global brands like Apple and Samsung (Anyone remember those pioneers of the frontier – Motorola and Nokia?), it will be customized handsets for the discerning customer who wants something more than the oligopoly of iOS and Android.

The Linux of mobiles are already out there, geared up for downloadable personalized solutions. Handsets are commodities. Its a matter of time before one can buy a handheld device and download a customizable “phone” of choice, as the era of big boxes ends.

Ps. I notice that my posts looking over mobile industry trends were each written 24 months or so, apart. Is that the timeline for change in rapidly transitioning markets?

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