The natural evolution of the smartphone market (marketing 101)

SUMMARY:  Smartphones revolutionized everything from shopping and dating to politics and computing itself. They are some of the most popular products ever put on sale. But after a decade-long boom, devices once seen as miraculous are moving through to the “mature” stage of the product life cycle.

According to The Economist “global smartphone sales fell in each of the past four quarters (see chart), the first full-year decline. Industry watchers think 2019 will be anemic, with either more falls or very modest growth. Apple’s new forecasts show it is feeling the same chill that is affecting the rest of the industry.”

Smartphones have progressed through the product life cycle. At their maturity, the strong growth in smartphone sales is diminishing. Competition is appearing with similar products.

According to most MBA schools, “the primary objective at this point is to defend market share while maximizing profit”. Apple, for example, is losing market share to competitors but trying to maximize profits by setting high unit prices. However, this strategy is not working.

Another symptom of a mature market is that products tend to become commodities. Today our smartphones are tools to help us better manage our time and contacts. One could argue that the innovation in the smartphone market has disappeared although there are rumors that Samsung is getting ready to launch a foldable smartphone.

My question, therefore, is why didn’t the marketing geniuses at Apple force this? Did they really think that people were going to spend $800 every 2 years for a new phone because of an upgraded camera?

There is another lesson to learn here from Apple

The other lesson here is that an erosion of brand equity can be caused when a brand turns its back on innovation to pursue profits. Apple used to be a “cool” brand for hipsters and pirates. Now it’s a giant money making corporation that hid money offshore to avoid paying taxes. They are late to the party with smart devices and their Home Pod has been a miserable failure.

Steve Jobs really didn’t care about the company’s stock price. He wanted to introduce products that would change the world. Tim Cook has done nothing but stay to the blueprint laid out by Jobs. The only reason Apple has introduced a new iPhone every year is to make money but someone should have foreseen that the market was at the mature stage and that consumers were not going to continue to go in debt every year for a new phone when their old ones work just fine.

Apple is considered a top brand but I would argue that unless they regain their brand mojo they will continue to lose sales and customers. Social media trends, on PC’s, is talking about the new HP’s, Sell and Microsoft Surface. When Apple is mentioned it’s usually mentioned with quotes like “$1700 for a new MacBook Air?”.

So the downward spiral begins…

About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

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