Smartphone glory years behind us

Apple’s 2016 iPhone launch confirms what has been obvious for a while. The phone golden age is over.

It’s over in two ways. Saturated phone markets in rich countries mean everyone needing a call-making pocket computer now has one.

And it’s over for hardware evolution. For now, at least, phone design has reached the end of the line.

That doesn’t mean phones won’t improve. They will.

Today’s new iPhones are better than last year’s models. Apple isn’t lying when it says these are the best-ever iPhones. Yet it isn’t important.

The plateau of phone productivity

Phone technology plateaued two years ago about the time of the Apple iPhone 6 and 6 Plus. Since then improvements have been incremental.

Sure today’s processors are faster and phone cameras are better. Battery life is a little longer. Some apps are smarter. None of this changes much in the real world.

You won’t be much more productive with a 2016 phone than with a two year old one. Nor will you have much more fun. Since 2014 upmarket phones from top brands have been good enough for most purposes.

There could be an evolutionary jump when mobile networks move to 5G. And there’s always a possibility a new technology will emerge from left field.

That’s all folks

Yet for the most part, that’s it. Phones have evolved to the point where they do everything we need and they do it well enough for most people.

There are few compelling reasons to upgrade phones. Unless you’re rough with your hardware, there is no urgent need to spend on new kit every two years or so.

You may want the newest features, but you won’t get productivity benefits or more fun. The returns on phone investment have diminished. At this point it becomes a matter of fashion or cosmetics. Some many view phones like they see jewellery.

Nobody needs a phone that does iris recognition. Features like this are like chrome and tail fins on 1960s American cars. They do little more than tell you this year’s model is different from last year’s model.

Today’s phone market is a replacement market.

Wear and tear

Phones wear out. They wear out faster than PCs. That’s because you use them more often. You drop them more often, charge and discharge their batteries more often.

You can expect to get a good two years from a phone so long as you don’t drop it or use it to stop bullets. If you are more careful, three or four years is possible. There are people using even older phones.

Switching from constant upgrades to a replacement market means phone sales will stop growing. They may decline. This is already happening.

Top of the phone market declining faster

The downward sales trend is more noticeable at the top of the market. And it’s even more noticeable in the Android world.

With Apple you get the benefits of a wider ecosystem if you also use iPads and Macs.

This effect is less pronounced with Android. There are no less expensive ways to get an Apple ecosystem phone.

Samsung’s top phones are twice the price of similar models from, say, Huawei. Most of us would struggle to think of useful things to do on, say, a Galaxy S7 that we can’t do on a Huawei P9.

Where more means less

The more expensive phone may have five or ten percent more functionality.

It could be worth the money if the extra features make you more productive or stay entertained longer. Otherwise, it’s money that could be better spent elsewhere.

This poses a problem for phone brands like Samsung and Apple. For now, they still have momentum from the glory years and there may be pockets of untapped growth.

Yet they need to find ways to persuade existing users to upgrade before existing models wear out. They need to give users reasons to switch brands. They are running out of headroom.