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A light beam for Apple as the iPhone Sales Mature

Photograph by Nicolas Tucat / AFP / Getty Images Text size About 10 billion smartphones have been sent since Apple introduced the iPhone 2007. That's a lot. And the industry database Gartner just released 2018 smartphones sales: 1.5 billion units are shipped. It is another large number, but transports increased only 1.2% last year. Unfortunately, with 3 billion smartphone subscribers worldwide and a weak 1.2% growth, the smartphone market seems to be fully matured. It damages the shares of the units' manufacturers. Samsung Electronics (ticker: 005930.Korea) fell 17% in the fourth quarter, Apple (AAPL) lost 30%, and Apple providers like Barron's track fell above 20% on average. Investors may be concerned that they have to wait for 5G before smartphone growth accelerates again, but mature markets have an extra growth card for game exchange cycles. And the telephone exchange cycle should help the sector in 2019. Swap cycles are often an important source of demand for mature industries. For example, industrial companies Dover (DOV) and Fortive (FTV) have grown their fuel companies with double-digit percentage points due to a gas pump replacement cycle. Gas pumps overload smartphones. According to industry surveys, people stay longer on smartphones, but still replace them every three to three years. We estimate that old telephones, which are the leader in remuneration, represent over 12% of the smart phone base today. With our math it is a record level, and it should be enough to help smartphone manufacturers accelerate the growth of the latest technology-4G phones-2019…

 A light beam for Apple


Photograph by Nicolas Tucat / AFP / Getty Images

Text size

About 10 billion smartphones have been sent since Apple introduced the iPhone 2007. That’s a lot. And the industry database Gartner just released 2018 smartphones sales: 1.5 billion units are shipped. It is another large number, but transports increased only 1.2% last year.

Unfortunately, with 3 billion smartphone subscribers worldwide and a weak 1.2% growth, the smartphone market seems to be fully matured. It damages the shares of the units’ manufacturers. Samsung Electronics (ticker: 005930.Korea) fell 17% in the fourth quarter, Apple (AAPL) lost 30%, and Apple providers like Barron’s track fell above 20% on average. Investors may be concerned that they have to wait for 5G before smartphone growth accelerates again, but mature markets have an extra growth card for game exchange cycles. And the telephone exchange cycle should help the sector in 2019.

Swap cycles are often an important source of demand for mature industries. For example, industrial companies Dover (DOV) and Fortive (FTV) have grown their fuel companies with double-digit percentage points due to a gas pump replacement cycle.

Gas pumps overload smartphones. According to industry surveys, people stay longer on smartphones, but still replace them every three to three years.

We estimate that old telephones, which are the leader in remuneration, represent over 12% of the smart phone base today. With our math it is a record level, and it should be enough to help smartphone manufacturers accelerate the growth of the latest technology-4G phones-2019 even though 5G is slated to come forward a year or two later.

There are still many 3G phones that need replacing. Probably 300 million to 400 million.

The turn-around to demand for mature markets is the inventory cycle. An inventory cycle is what investors had to live through when Apple cut iPhone component orders in November. There were too many things in the supply chain.

That dynamic looks like it has played out. This year, Apple vendors responded well to the latest advice that just met Wall Street expectations. No new bad news has been enough to drive Barron’s supplier index up about 20%, so far. The strong business increased despite the fact that supplier revenues are expected to fall over the coming quarter. Apparently, investors believe the worst of component cuts – and superfluous stocks – are behind Apple.

Superfast 5G is of course the next big upgrade cycle that will drive smartphone replacement. Phones based on that technology are starting to deliver this year. The Consumer Technology Association predicts that the industry will deliver 2.1 million 5G phones by 2019. This is only about one tenth of 1% of the total smartphone requirement. But more phones will come in 2020 and 2021 as mobile operators upgrade their networks.

Even when 5G arrives, it will be difficult to penetrate the smartphone market further. Growth comes from price-volume – as consumers are trading 3G and 4G technology for 5G. Maybe why Apple stopped giving the iPhone’s sales data.

There is something to contemplate. We also wonder what happened to the other 7 billion or so smartphones that are no longer used. Video player for children? Paperweights? Who knows, but don’t try to remove the battery from an old phone, it’s very dangerous.

Write to Al Root at [email protected]

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