Menu
Get it together with software, or get out, Gartner tells smartphone manufacturers

Get it together with software, or get out, Gartner tells smartphone manufacturers

Growth in smartphone sales is slowing, and to survive, manufacturers will have to deliver more than just the hardware

Smartphone manufacturers are facing an increasingly stark choice: Build an ecosystem of services around their devices, or get out of the game altogether.

Only those able to deliver value beyond the hardware, like Apple, or to manufacture at scale, such as Samsung Electronics, are likely to survive, according to Gartner analyst Roberta Cozza.

As for manufacturers that achieve neither, well, "some of those players might just leave the market," she said.

So who might the quitters be?

Against the odds, BlackBerry CEO John Chen has recently doubled down on his hardware plans, promising in recent interviews two new smartphones before the end of the year.

Microsoft, on the other hand, is out after last month's lay-offs at its phone division -- unless the rumors are true, and it really is working on a Surface phone.

"I'm not sure how long they will keep the Lumia going for their enterprise customers, but the battle is lost," said Cozza.

The smartphone manufacturers in real difficulty are those with a market share down around that of BlackBerry or Microsoft, but without a big software or service business to fall back on.

"HTC is one that is challenged," said Cozza.

Its HTC One flagship phones get consistently good reviews, but the company is making no headway.

"The strength of HTC is somewhere else today, in what they do on the VR side," said Cozza.

If HTC and Microsoft, say, were to give up on smartphones, that would at least leave a little room for others to grow. Gartner is predicting that smartphone sales will grow just 7 percent in 2016, about half the growth rate last year, and it expects growth to remain in single digits going forward.

You'll have heard the reasons before: Mature mobile markets have been saturated for years now, with manufacturers relying on the upgrade cycle to drive sales.

That cycle is getting longer, as the technical differences between smartphone generations get narrower. For example, Apple's last product launch was essentially a 4-year-old design with a year-old interior -- so there is less and less reason for people to upgrade.

Big spenders now wait an average of 2.5 years before replacing their smartphones, a little less in developing markets, according to Gartner.

Manufacturers may change their habits to match. After six years of alternating new and S iPhone models, Apple is said to be considering a move to a three-year refresh cycle, according to a report in last Tuesday’s Nikkei newspaper.

That all makes Microsoft's decision to step back from smartphone manufacturing and concentrate on its software features like security and manageability look like a good move.

"Not having a smartphone is a drawback but they have other assets that could drive consumer interest," Cozza said. Microsoft CEO Satya Nadella has been promoting products like the company's conversational assistant Cortana, she said, "so they can push what they are good at cross-platform." Cortona runs on Windows 10, Android and Apple's iOS.

There is still room for newcomers in the smartphone market, said Cozza. People still using feature phones in developing markets are looking to upgrade, and the replacement cycle is a little shorter there.

Xiaomi is doing well in China, and "we may see other local champions like Micromax or Wiko," she said. Micromax Informatics is based in India while Wiko, a French company, is expanding across Southern Europe and into Indonesia.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Slideshows

Top 50 defining moments of the New Zealand channel in 2016

Top 50 defining moments of the New Zealand channel in 2016

Reseller News looks back on a tumultuous 12 months for the New Zealand channel, assessing the fallout from a year of sizeable industry change. Whether it be local or global mergers and acquisitions, distribution deals or job changes, the channel that started the year differs somewhat to the one set to finish it - Reseller News assesses the key moments that made 2016.​

Top 50 defining moments of the New Zealand channel in 2016
​Hewlett Packard Enterprise honours high achieving NZ channel

​Hewlett Packard Enterprise honours high achieving NZ channel

Hewlett Packard Enterprise honoured its top performing Kiwi partners at the second running of its HPE Partner Awards in New Zealand, held at a glitzy ceremony in Auckland. Recognising excellence across eight categories - from distributors to resellers - the tech giant celebrated its first year as a standalone company, following its official split from HP in 2015.

​Hewlett Packard Enterprise honours high achieving NZ channel
Nutanix treats channel partners to Christmas cruise

Nutanix treats channel partners to Christmas cruise

Nutanix recently took to the seas for a Christmas Cruise around Sydney Harbour with its Australia and New Zealand staff, customers and partners to celebrate a stellar year for the vendor. With the sun out, they were all smiles and mingled over drinks and food.

Nutanix treats channel partners to Christmas cruise
Show Comments