Have smartphones reached their peak?
Apple (AAPL) is down 40% from its September 2012 high and HTC (2498.TW) has fallen 80% since April 2011. Samsung (005930.KS) is down 14% this month alone. Smartphone stocks, whose owners once relished in rapid gains, are tanking.
Aaron Pressman, Yahoo! Finance tech reporter, believes that this is the end of the line for the smartphone era. In the United States 59% of phone users currently have smartphones and a projected 100% of U.S. phone users will have them by 2015. We’ve reached market saturation.
“Already growth in shipments of new smartphones in the U.S. market dropped to 14% last year from 51% in 2011 and 52% in 2010, according to figures from IDC. Worldwide, growth slipped to 46% from 76% in 2010,” writes Pressman.
So what’s a company to do?
Drop prices and shift focus to emerging economies.
According to Pressman: “The average selling price of smartphones worldwide has already declined to $372 this year from $443 in 2011, according to IDC. That average is projected to slip to $309 by 2017."
The slippage is a combination of the fact that phones in developing countries on average sell for about two-thirds the price of phones in developed economies, and that average phone prices are falling 3% to 4% a year in all regions, IDC says.
Cheaper phones, however, mean lower profit-margins and perhaps an unceremonious end to the smartphone boom.
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