Wouldn’t the world be a better place if everyone owned an iPhone? That would eliminate most of the world’s known smartphone malware, improve privacy and security, and make support and service uniform around the globe, and make Apple the world’s most valuable technology company.
Wait. Scratch that. Apple already is the world’s most valuable company, and the world being what it is, and Apple being what it is, the iPhone will remain the premium smartphone of choice for the foreseeable future, but with a typically small market share. Why? Think different strokes for different folks.
What will happen to Apple and the iPhone when everybody in the world owns a smartphone?
The Migration Theory
What happened to the traditional PC industry is about to happen to smartphones. Saturation. Two things happen a world where everyone has a PC, and they’re cheaply produced commodity items which do much the same thing regardless of price.
First, annual sales begin to stall, then drop, because PC users don’t have an immediate need or a compelling reason to upgrade from last year’s model (or even models from years ago). For PCs, sales stalled a few years ago, and now they’re dropping because modern computing– the reasons we buy computers– has moved toward mobile devices headed by the smartphone.
Second, a sizable number of traditional PC users migrate toward more capable, more powerful devices which are low on maintenance and high on usability. That helps to explain why the Mac, itself a PC, continues to enjoy record sales every quarter. PC customers migrate toward quality, ease of use, and value.
How does that migration process compare to the smartphone industry? It’s much the same.
First, annual sales of smartphones begin to stall. Why? Saturation. Everyone who needs a smartphone, regardless of brand or quality or capability, has one.
Second, as saturation occurs, a sizable number of traditional smartphone users migrate toward more capable, more powerful mobile devices which are low on maintenance, high on usability, and integrate well into a mixed device ecosystem which contains personal computers, tablets, wearable devices, and content management which provides higher privacy and greater security.
You see where I’m going with this, right?
We’ve already seen the effect market saturation has on personal computers. Windows PCs have become cheap commodity items, a fractured and fragmented platform, while Macs become the premium quality device which attracts many switchers who need dependability, value, and security.
The same phenomenon is taking place with smartphones. Android mobile devices have become cheap commodity items, a fractured and fragmented platform, while Apple’s iPhone has become the premium quality device which attracts many switchers who want and need more dependability, higher value, and greater security.
Samsung manufactures more smartphones than Apple manufactures iPhones, but word on the streets says the company, already struggling with marketshare, revenue, and profit issues, plans to cut back on production in 2016. Why? The smartphone market, specifically the Android device segment, has begun to slow, and like PCs before it, will contract.
Meanwhile, and for the foreseeable future, Apple’s fortunes will continue to ride on the ecosystem of computing devices, centered by the iPhone’s placement as a premium product, easily differentiated from Samsung and other Android devices by iOS.
We see some of this phenomenon taking place now. Not everyone in the world owns an iPhone, but those that do have propelled Apple into the ownership position of the industry’s profits. And while the smartphone industry has begun to stall before the expected contraction, Apple will continue to receive new customers who migrate from less platforms.