Behind the collective carnival of smartphones: market saturation and consumer fatigue

Not long ago, Motorola released its heavyweight product MOTO X after a two-year absence. A smartphone with a strong Google flavor is hailed as Motorola's lifeline and a model product for Google to re-plan Android smartphones. Google is trying to change the direction of the smartphone industry from hardware competition to software services, but how many people will choose to follow is still unknown. While waiting for the change to happen, Google or Motorola have to face the upcoming fierce battle.

New iPhone sparks collective smartphone craze

Although the MOTO X that was leaked in advance is full of sincerity, it cannot be regarded as a blocker to the iPhone. As expected, Apple will release a new generation of iPhone in September this year, and all rumors so far have put the cheap iPhone on the cusp. Not long after that, Samsung has accurately stated that it will release its new generation of Galaxy Note smartphones on September 4, and it is rumored that it will also release a Samsung smartwatch.

September is the fixed time for Apple to release new products every year. Since the iPhone 4, other smartphone manufacturers have always deliberately released new products before Apple, trying to grab a part of the market and consumers' attention before the new generation of iPhone comes out. Earlier yesterday, South Korean mobile phone manufacturer LG released its latest smartphone G2. Together with Motorola earlier, two manufacturers have already sneaked in before Apple this year.

After LG and Motorola, it is almost certain that Samsung and Sony will follow. Samsung has always regarded itself as Apple's biggest competitor, while Sony has elevated the smartphone business to one of the company's three major strategies. Compared with the first two, the flagship products of these two will be more interesting.

The smartphone industry has developed to the point where it has become a necessity in people’s daily lives. Mobile phone manufacturers have passed the era of endless competition in hardware and are now more concerned with software innovation. Consumers are also keen on innovative services that can bring more help to their lives and work.

In 2013, all smartphones changed their competitive thinking. Instead of emphasizing hardware configuration, they deliberately downplayed hardware parameters and emphasized software innovation. This situation was particularly prominent in the Android phone camp. The two most typical examples are Samsung S4 and HTC One. Samsung built super software services on S4, and chose software innovation services as a selling point in a series of soft and hard advertisements later. HTC seized the innovative appearance design and photo effects of HTC One as a publicity point, and no longer emphasized its leading hardware configuration as before.

It used to be a norm for Android smartphones to compete with each other in hardware configuration, which also caused doubts in the industry about whether the configuration of smartphones was wasteful. But in fact, Android smartphones did not have much advantage in the early competition with iPhones. The system was too fragmented, incomplete, and the number of applications was scarce, so mobile phone manufacturers worked hard on hardware parameters. But Apple has never over-promoted the hardware level of its products. Most of the time, it is iOS and some network services.

The double embarrassment of market saturation and consumer fatigue

Six years ago, only 1% of the world's population owned a smartphone, but this year the proportion will reach 27%. According to a recent analysis by JPMorgan Chase, the number of smartphone users will continue to grow in the next few years, but the growth rate of smartphone sales will begin to slow down. This year, smartphone shipments will increase by 37%, but the growth rate will drop to 17% next year.

Data shows that the penetration rate of smartphones in China is around 50%, which is relatively high compared to the global level. However, analysts point out that with the stimulation of low-priced copycat smartphones and different mobile Internet usage habits at home and abroad, the prospect of saturation of penetration rate in China's smartphone market may only come in two to three years.

In other words, the penetration rate of China's smartphone market will approach or exceed 80% from 2014 to 2015. However, the main factors affecting whether it can quickly exceed 80% will still depend on the average unit price of smartphones, 3G and EDGE data charges, and Chinese residents' consumer expenditure.

It can be seen that high-end mobile phones will face two obstacles in the next few years. First, in those markets that can afford high-end mobile phones, the market saturation is already very high. JPMorgan Chase believes that the saturation of the high-end mobile phone market in the United States will reach 72% this year. As fewer and fewer consumers buy smartphones for the first time, manufacturers will need to rely on the demand of existing customers for mobile phone upgrades.

In addition to being affected by market saturation factors, the entire smartphone industry has shown a tired competitive attitude since 2013. The competition in hardware specifications such as multi-core processors, memory size, screen resolution and even phone size has made consumers tired and even numb.

The two top flagships released in the first half of this year, Samsung S4 and HTC One, both chose to focus on the software level. Samsung launched eye rolling technology and smart pause, while HTC launched the new Sense 5.0.

Second, there may be fewer reasons for users to upgrade their phones. The resolution of current phone screens and cameras is already sufficient for most users. High-speed data technology LTE has enabled many people to upgrade their phones, but the technology is already sufficient for video chats and online movie streaming. Therefore, further speed increases may not be necessary. Short-range communication chips may allow mobile phones to replace credit cards in the future, but merchants and payment processors must work harder.

So, going forward, if smartphone manufacturers want to further enhance their market appeal, they may need to increase the attractiveness of prices rather than just relying on functional improvements, but this in turn may also lower profit margins.

Another point that we have to face is that when smartphones are more popular than cabbage, consumers are beginning to feel aesthetic fatigue. Since Apple launched the touch screen phone, large screen and touch screen have become the "standard configuration" of smartphones. Just as the designers of global smartphone manufacturers are following the path of Jobs every day and haggling over whether the screen should be 4.5 inches or 4.6 inches, something quite interesting happened. A few months ago, the limelight of smartphones was actually snatched away by Nokia 105, a simple entry-level feature phone.

The question is, compared with the current proliferation of large-screen smartphones, why did a seemingly monotonous and old-fashioned product bring such acclaim around the world after its release?

It is understood that Nokia 105 only has a 1.4-inch display, no camera, and even only the simplest T9 numeric keypad. Although the functions are simple, it has obvious advantages. It is well-known for being durable, waterproof and dustproof. Although others can download various APPs to show off themselves and play various games, it can also listen to the radio and can be used as a flashlight.

In addition, since mobile phones are considered both technological and fashionable, this "old" mobile phone has aroused heated discussions around the world. Of course, it has outstanding advantages in terms of function and price, such as amazing battery life and impeccable low price. As for fashion, it is easier to understand - global users have become aesthetically fatigued by so-called smart phones with only a piece of glass, so once a mobile phone that returns to nature appears, it will attract attention.

It is worth reflecting that both domestic operators and mobile phone manufacturers are still blindly rushing on the road of large-screen smartphones. This may seem innovative, but in fact it is just following the path of Steve Jobs.

Conclusion:

From competing in hardware to software services, smartphone manufacturers are facing the dual embarrassment of market saturation and consumer fatigue. Although all companies are competing fiercely and launching new products with gimmicks, with the market share roughly determined, new concept products such as wearable devices have gradually become the main contenders for users' attention. Whether the collective carnival of smartphone manufacturers will result in a bright spring or a bleak winter will soon be known. As one of the consumers, the question that most people are more concerned about may be whether they can become the beneficiaries of the collective carnival and competition of smartphone manufacturers.