Have We Hit Peak Phone?

September 09, 2016
By: Doug Mohney

If Apple's biggest excitement from the latest iPhone (News - Alert) announcement this week is adding dual-cameras and ditching the traditional 3.5mm headphone jack, what is wrong (so to speak) with this picture?  The bigger problem may not be with Apple as much as the market and cellphone industry.  Has the era of Peak Phone arrived?

Apple, Samsung (News - Alert), and an array of Asian cellphone manufacturers, including Huawei, LG, and Sony, have quickly run through numerous technological advancements.  Everyone is offering regular (4.7 inch) and large-sized  (5.5 inches plus/minus) devices, with newer/faster/more processors, roughly the same amount of RAM and flash storage, with resolution constantly tweaked upward on each iteration. Durability, more specifically water and dust proofing,  is Apple (News - Alert)'s latest "see, we have it, it is brand new, just ignore the last two generations of Samsung phones that have already done it" catch-up move. 

Everyone is making, more or less, the same phone models with more-or-less the same features, with little tweaks to pricing and configurations.  Getting a new cell phone is increasingly becomes a matter of when the onboard battery dies or when it is dropped hard enough to make the screen unreadable -- there are a lot of you out there with “gently abused” glass because you don't want/can't shell out for a new expensive phone on anything quicker than a two to three year cycle/service plan.

The tech media passing judgment on the iPhone 7 is a conservative lot for sure.  Ditching the 3.5mm headphone jack in favor of (easily losable) wireless earbuds or forcing a wired connection into the Lightning jack has generated a lot of negative buzz and grumbling, but Apple hasn’t helped by describing the move as “Courage.”

At some point, something in the mobile phone market has to give, just like the PC and tablet worlds.  New $600 to $1000 cell phone prices are pushing existing owners to delay purchasing the latest model, so sale numbers are going start slowing down. Manufacturers are already trying to “crack the code” for making lower cost smartphones to flood the growing markets of Asia and Africa, encouraged by Facebook and Google (News - Alert) to reach “the next billion” consumers.  Producing lower cost – but still very capable – hardware for developing markets is only ultimately going to drive the cost of high-end cell phones downward.

Consider where innovation is going and expect— apps and broadband.  Whether or not people need multi-gig speeds in a device designed to fit in a pocket is an open question, but 5G is going to deliver it so you can get a 4K experience on a five inch screen.  Carriers are talking up 5G and how it fits with the Internet of Things (IoT) more than how 5G will deliver new mobile experiences, aside from 5G's potential hook into connected cars.

I'm not saying mobile handset evolution is dead, but it is going to be very, very slow. Motorola (News - Alert)-Google couldn't make modular mobile phones work while LG has been poking a stick at swappable parts – nobody is breaking down doors to buy or emulate them.

Apple's biggest strength and weakness has been delivering an optimized device in a particular niche.  The Mac, iPod, iPhone, and iPad have all demonstrated Apple's ability to deliver an imagination-capturing device, followed by a slow erosion of leadership and market share as competitors do things faster, better and/or cheaper.  The handset market may be reaching maturity and a slow down far more quickly than anyone has anticipated.




Edited by Alicia Young