Staggering wealth has been generated by the smartphone business for numerous companies such as Apple, which triggered companies such as Intel and Hewlett-Packard to scramble and take some action themselves. However, it seems as if the best days of the smartphone market may actually be behind it as companies that had hitched their fortunes to the smartphone juggernaut are faced with a troubling trend. Even though they are still immensely popular, there has been a slowdown in smartphone sales, which totaled $338 billion last year and their prices are also reducing at a very quick pace, making it difficult to earn a profit through them.
This is perhaps the worst possible time for HP, Intel and other Silicon Valley companies whose businesses are highly dependent on the business of personal computers. Because of dwindling sales of PCs, these companies sought ways to tap into the smartphone market, but according to analysts, it’s a little too late for them. Even the mighty Apple Inc. is facing a threat because it derives most of its revenue from its immensely popular iPhone line. HP recently launched two smartphones in order to compensate for the sluggish sales of personal computers, but analysts think that it waited too long.
Analysts are also concerned about the future of Intel, which derives its revenue by making chips for personal computers and was attempting to expand it to smartphones as well. According to some experts, by the time these companies manage to gain some traction in the market, it will become so low-margin and mature that it will no longer be worth entering. Since the 1990s, smartphones had been around, but their popularity had reached new heights when the first iPhone had been launched by Apple in 2007. Although statistics show that there is plenty of opportunity for sales available, there is a slowdown in the breakneck rate of purchase.
It was reported by International Data Corporation (IDC), a research firm that even though global smartphones sales increased by 39% in 2013, as compared to 2012, this increase is expected to slow down. They are expected to grow around 19% in the current year, 8% in 2017 and 6% in 2018. In addition, the greatest growth that can be seen is in emerging markets, where mostly inexpensive and reasonably priced gadgets are heavily demanded. It is also predicted that the average smartphone price that was $335 in 2013 will eventually drop down to $260 in 2018. It remains unclear as to what this means for the second biggest smartphone maker of the world, Apple Inc.
It is being reported that the higher-end segment of the smartphone market is coming to maturity and reaching its saturation point. What’s worrying is that it has all the hallmarks that were seen in the PC market- vendor consolidation, slowing growth and limited technology differentiation. This trend is also worrying for Samsung, the biggest smartphone maker and Google, who’s Android OS it uses in its smartphones and raises questions about the timing of Hewlett-Packard.