So, why are we close to peak technology gadget? Humanity isn’t making similar advancements to keep up with the changes brought about by advancing technology. Already we are living in the era of peak iPhone, peak smartphone, peak Mac and peak Windows PC. We humans are saturated with technology gadgets.
All these peaks are indicative of a few very obvious issues. The first is saturation. Technology will continue to advance, but we do not yet have another iPhone-like or smartphone-like market in the works. Apple’s iPhone brings in seven times the revenue and profits of Mac or iPad, and the company’s fastest growing division isn’t even a piece of hardware. It’s Services. Services which rely on hardware.
In essence, Apple’s iPhone, Mac, and iPad are not growing, but we see a similar situation with Windows PCs and smartphones. The only growth is the catch up game in less developed locales on planet earth. Everywhere else we have the basics of what we need and want already. Does anyone think Amazon’s Echo or Apple’s HomePod will become the darling of a billion households? No. There are just so many gadgets we can fill our homes with and it seems we may be reaching a peak.
Among technology gadgets for people, what is growing these days? Headphones? Smartwatches? Wearables? Nope. No. Nah. Talking speakers? Sure. They’re new. They are not iPhones or even iPads. Apple follower Ben Bajarin:
We’re probably nearing Apple’s peak for ASP. I’m not going to say it’s peak ASP because I do think they could have one more bump in them, especially if they broaden the line for designs like the iPhone X and bigger screens, and obviously they can tip the pricing for devices that are more than $1,100. I think we could still see at least maybe one more ASP bump and then it will normalize. But it won’t be a lot. It’s not going to be another 50 bucks. It might be another $10 or $15 increase in ASP. And then that’s probably about it. It might go down, it might fluctuate, but I do think we’re nearing the peak of what people will spend for these types of things.
Peak iPhone, meet peak profit from iPhone.
Check out Jason Snell’s yeoman work on Apple’s recent Q1 2018 earnings. With consideration for quarterly (seasonal) adjustments, the Mac is flat. iPhone sales for the past four years are, well, flat. Apple’s four quarter moving revenue average looks more flat than not.
What’s going on?
That flat trend holds up elsewhere. PC sales? Not doing so well. Plateau, if you will. Smartphone sales? Plateau again. Apple’s massive revenue and profits come mostly from a base of customers already present, and new products simply fit into the company’s famed walled garden ecosystem.
What’s going on?
I have a few theories that work together.
First, the iPhone (and the smartphone as we know it today) is a once in a generation product that defined the future. Second, there is no iPhone replacement. Instead, we have new gadgets which exist within the same framework or ecosystem, but nothing new is driving the technology market forward the way iPhone moved the market from 2007 until the past few years.
Second, even though we keep adding humans to humanity, the underlying economic system benefits more those at the top of the scale than it does the great unwashed masses below. The iPhone era is something of an anomaly for humanity as it has become an affordable luxury. So is Watch, but it is not the communication and productivity device for the masses. HomePod? AirPod? Same thing.
Apple and other technology giants have sufficient resources to maintain growth and profitability, but certainly do not have another iPhone era waiting in the wings. For now, we are sitting at a plateau, self-driving vehicles not withstanding, a sort of peak technology gadget era.