The smartphone party is officially over

No, I’m not just talking about the curious case of the exploding Samsung Galaxy Note 7 here – although it did create quite a boom (pun intended) internationally, not so much in India. It is emblematic of the mood that’s gripping the smartphone market at large, ironic as it may seem. Nine years of record-breaking year-on-year growth, after Steve Jobs flagged off The Great Smartphone Race back in 2007, the smartphone juggernaut is running out of steam.

Smartphone sales growth all over the world is slowing down, and in some markets it’s declining outright. Various reports from industry watchdogs like IDC and Gartner are predicting lowest percentage growth in annual smartphone sales in close to a decade. The Western market (US and Europe) is well and truly saturated, while emerging markets (China and India) are signalling the end of the boom. Next year is going to be more of the same, all the way till 2020.

This is unprecedented.

Having observed smartphone trends closely both in a personal capacity (since 2001) and in professional life as a tech analyst (since 2008), I can see why the party’s finally over and it’s time to sober up.

IDC claims that consumers are increasingly happy with their smartphone purchases over the past six to twelve months, which means fewer people are buying or upgrading them as frequently as they used to.

Consumers have slowly realized that their annual smartphone refresh cycles didn’t get them noticeably faster processors; instead they got less flashier screens and half-baked tech that had no real-world use. They’ve learnt to wait, save money, even skip a generation to buy something that felt more like an upgrade – both in terms of looks and performance. I know I have.

We at Digit are spoilt for choice, getting to test and use any smartphone our hearts desired, but if I had to be honest with you I seriously don’t see the point of investing in high-end flagship smartphones anymore. Not only are they extremely expensive, what differentiates them from the rest of the pack in terms of design and features is becoming less clear cut with each passing year. I, for instance, am following a 2-year smartphone refresh cycle since 2010, and the most I’ve ever spent on a smartphone is Rs. 25,000 – just last year.

Back in the early 2000s, up until the launch of the first iPhone, at least phones used to look different – remember the iconic designs of Nokia nGage, Motorola Flip and others? The Blackberrys, Sony Ericssons, even Samsungs of the world looked and felt different, giving buyers a strong reason to go for this phone or that, or change frequently. But now with the advent of touchscreens, there’s so little to separate one candybar-shaped device from another.

Smartphones aren’t only faced with lack of serious or meaningful innovation that consumers could relate to, but OEMs of budget to mid-ranged smartphones sporting 4 to 4.5-inch screens are looking at up to 50-percent increase in prices of LCD panels for at least the next six months, according to a troubling report by TrendForce. A rise in the price of a critical component would force OEMs to jack up prices, but they’ll not do it anticipating consumer backlash (especially in the budget segment), which means reduced profit margin. Double whammy!

The smartphone industry needs to rescue itself from this crisis of innovation. The only thing that’s of any real value to consumers is the promise of phone-based VR implementations seen in the likes of Google’s Daydream or Samsung Gear VR. Or something like Microsoft Continuum for Windows phones, allowing you to connect a smartphone to an external monitor, mouse and keyboard to transform it into a PC. But everything else on the smartphone innovation front seems evolutionary, incremental changes; nothing’s revolutionary or a true breakthrough to capture people’s imaginations and urge them to refresh their handsets on an annual basis.

What do you look for in a smartphone before purchasing it? How long do you wait before you replace your phone? What would be the next big smartphone breakthrough? Let me know your thoughts.

This article was first published in November 2016 issue of Digit magazine. To read Digit's articles first, subscribe here or download the Digit e-magazine app for Android and iOS. You could also buy Digit's previous issues here.