Has The Global Smartphone Market Reached Full Saturation?

Carolina Milanesi, chief of research at Kantar Worldpanel ComTech, has released a report saying that smartphone ownership in major smartphone markets around the world have now reached full saturation levels. In other words, Milanesi thinks that the global smartphone industry is now at its peak, in terms of growth.

Milanesi provides information that in North American regions, 65 percent of consumers already possess a smartphone device. In European markets, the number has grown to 74 percent, while in China, widely considered the biggest smartphone market in the world right now, the percentage is already at 72 percent. What these relatively high percentages mean is that the number of consumers who have yet to own or buy their first smartphone device is fast dwindling.

And with only small enhancements in each new generation of smartphones being introduced in the market, it has become more and more difficult for phone makers to get consumers to buy new smartphone models. The evidence is pretty clear -- Samsung is currently suffering (or trying to recover) from decreasing sales and profit margins, while the once unstoppable Apple is looking to post its first ever slump for its iPhone devices. Last month, research firm Gartner has even predicted that spending for smartphone devices (and other hardware) will decline this year, the first time that it will do so since 2010. 

Of course, phone makers are not giving up. LG has just unveiled its LG G5 device, its first ever smartphone that comes in a modular design, which has the advantage of being combined with similarly modular accessories. Apple is rumored to be preparing to introduce a smaller iPhone (only 4 inches in size) that comes with a more affordable price. 

According to Milanesi, today’s phone makers now must face the challenge of convincing non-smartphone owners to switch to smartphones, while at the same time, persuade currently owners of smartphones to go purchase a new model. Obviously, this will not be a walk in the park for mobile manufacturers. Non-smartphone owners are inherently hesitant to buy smartphones because they cost money to acquire. Secondly, current smartphone owners are no longer that trigger happy in upgrading to a new model because 1) their smartphones are still perfectly okay, and 2) the newer model does not exactly offer anything new, except maybe for some enhancements here and there.

Sooner or later, the smartphone industry will have to go beyond hardware in order to sustain continuous growth. Virtual reality may help, or maybe the concept of the Internet of Things. Whatever it is, it better appeal to today’s consumers.