Asymco: The last feature phone

In the past 12 months, 31 million U.S. cellphone users gave up their feature phones. In the past 24 months, more than 60 million switched to smartphones. The conversion rate of more than 550,000 users per week has not changed much since late 2009.

Over the past 12 months, iPhone gained 16.3 million new users, Android gained 23.3 million new users, BlackBerry lost 6 million users, and Windows Phone lost 1 million users.

People are abandoning feature phones partly because of demand for smartphone services and partly because of the reduced supply of feature phones. Shelf space allocated to smartphones is approaching 100%. A sample of Walmart stores I visited showed that AT&T had a 1:7 feature phone to smartphone inventory ratio, Verizon had a 2:8 ratio, and T-Mobile had a 4:5 ratio.

T-Mobile has been behind in smartphone strategy, and with their decision change in 2013, maybe it will become a standard across the US to give only 12% of shelf space to feature phones like AT&T does. And when the US does this, the whole world will follow.

The shrinking shelf space for feature phones is accompanied by an accelerating decline in product categories. The last feature phone in the US may not appear in 2013, and may not appear in 2014, but there is a good chance that it will appear in 2015.

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