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Mobile device market feels pressure from tech fatigue

Posted: 02 Mar 2015 ?? ?Print Version ?Bookmark and Share

Keywords:TrendForce? tech fatigue? mobile device? smartphone? tablet?

As a classic example of "having too much of something" being bad for you, the world of mobile devices could be waking up to an uncertain future, one that is leaning toward an unwelcome scenario. The market has been basking under the light of consumer excitement and skyrocketing demand for a good number of years, but that same light is now starting to dim.

If we go back a couple of years, the prospects for new technologies never looked rosier. iPhones sold off the shelves. Smartphones were hot and tablet sales were growing fast. We gleefully anticipated the smart watch and salivated over the Internet of Things.

Today, the picture is much more conservative. Google Glass is off the market and being "reinvented." Smartphone sales have slowed, not risen with the expected surge, and the tablet bonanza has fizzled. Smart watches are the butt of jokes and pundits regularly question their value and their prospects in the market. The implications are the end of the hi-tech mobile boom.

Mobile devices

Mobile device fatigue is setting in for a large portion of the consumer base.

Let's look at the numbers: A January report from TrendForce shows a strong increase in units for 2014 over 2013. Total units were 1.167 billion in 2014, against 927 million in 2013, which is a change of 240 million units (26 per cent). The same chart shows that unit totals for 2015 are expected to be 1.29 billion, a growth of just 123 million over 2014 (10.5 per cent), which is a dramatic drop. The 2014 numbers were bolstered by Apple's iPhone6 sales, a reflection of the loyalty of the customer base.

For tablets, the news isn't too good. Unit sales declined in 4Q14 compared with a year ago. IDC reports a 3.2 per cent decline, the first ever quarterly reduction in unit sales, and for the whole year, growth in units was a paltry 4.4 per cent. Even Apple and Samsung, the volume leaders, weren't immune from this. Both declined about 18 per cent on the quarter, each losing three points of market share to "Other."

Why would mobile tech slow like this? In a Darwinian sense, the new mobile organisms have expanded to fill the available space, and the game now is a battle of niche differentiations, rather than the happy times of a market growing at full throttle. Put another way, if you asked a tech vendor why their product is a winner, they'll now talk about shaving half a millimetre off phone thickness or the availability of neon green phones, rather than a bunch of useful new features. (Apple increased their phone to be the same size as Samsung's, a strategy that clearly succeeded in protecting its base, but a one-off gambit.)

That's because the playing field on technology has plateaued. Adding more horsepower doesn't bring much benefit. Screen resolution is as good as most people need, and the cameras have more than enough pixels for any selfie. Moreover, there is no premium for performance, so compressing prices downwards and making phone replacement take months longer.

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