Businesses Can't Be Just A Smartphone Company Anymore

Behold the device roughly one-third of you are using to read this, the platform through which more than 3 billion earthlings live, swipe, and Uber. While smartphone makers appreciate our fondness for their devices, they’re not going to like what comes next: Last quarter, smartphone shipments declined 2.3% from 2018, per IDC.

Why? Not biting on uber-expensive flagship phones, consumers are holding onto devices longer, upgrading less often, or turning to midrange models.

An Apple Watch and service a day

In its earnings report Tuesday, Apple said iPhone revenue fell 12% YoY to about $26 billion, just over 48% of the company’s total quarterly haul.

• Blast from the past: 2012 was the last year iPhone sales made up less than half of Apple’s quarterly revenue. The iPhone 5 dropped that September and “Call Me Maybe” spent nine weeks at #1 on Billboard’s Top 100.

Knowing that maybe you wouldn’t call on a new iPhone, Apple leaned into its services and wearables units. The former pulled in a record $11.5 billion in revenue last quarter, up 13% YoY, and CEO Tim Cook said wearables sales are “accelerating.”

Huawei takes the pain away

Smartphone shipments declined in China for the ninth consecutive quarter, per Canalys research released Tuesday. Huawei’s weathering the storm by clawing market share away from competitors: It shipped 37.3 million smartphones to Chinese customers in Q2 2019, up 31% annually.

Elsewhere in Asia: Samsung, the world’s biggest smartphone vendor, reported an increase in smartphone shipments overall but a decline in its more profitable flagship, the Galaxy S10. In Q2 2019, Sony sold under half the smartphones it did in Q2 2018.

The doctor’s prescription...

...could be some combo of: 1) 5G devices 2) the healthy wearables lifestyle 3) new features like gesture control 4) getting flexible with foldable flagships 5) making midrange models and 6) Aspirin for that headache you got going through this list.

Medicine for thought: Despite the saturated market, 2020s smartphones will be very advanced devices, packed with sensors and advanced chips, capable of on-device AI, and ready to download data at blazing-fast speeds. They’re just going to be harder to sell.