On Thursday, August 1, 2013, the Wall Street Journal published an article written by Spencer E. Ante and Ryan Knutson, Good Luck Leaving Your Wireless Phone Plan (http://online NULL.wsj NULL.com/article/SB10001424127887323971204578630202425653338 NULL.html?mod=WSJ_hpp_MIDDLE_Video_second&cb=logged0 NULL.49253956952178873). Some of the information included in this article adds strong support to our contention U.S. consumer interest in high end smart phones has peaked. We see few opportunities for dramatic sales growth for these products (present day architecture), at least for the near future. Here’s what we found:
U.S. Telcos Experience Very Low Rates of Wireless Subscriber Churn
Strong smartphone sales require consumer purchases. U.S. consumers purchase smartphones to connect to wireless telephone services. Messrs Ante and Knutson’s article contends “[t]here are 326 million wireless subscribers in the U.S.”. The U.S. Census Bureau projects a total U.S. population of 316.382 million people as of today, August 3, 2013 (we obtained this information at U.S. and World Population Clock (http://www NULL.census NULL.gov/popclock/)). It doesn’t take a lot of math to conclude most of the people likely to subscribe to wireless telephone services plans are already subscribing to them. These numbers show there are, presently, more plan subscribers, today, than the entire population of the U.S.
But the article goes on to note a mere 19 million subscribers changing carriers. So where are all the millions of new smartphone sales going to come from to support the revenue forecast for prominent platform manufacturers, Apple, Nokia, Samsung, Google, etc?
All of the upside potential for these manufacturers is to be found in emerging markets. But we don’t see these emerging markets buying into high end smartphones in a big way any time soon. No wonder Tim Cook, Apple CEO just traveled to China to meet with China Mobile Chairman Xi Guohua. We plan on writing a blog post on what we’ve read about this visit shortly.
In sum, we maintain a highly skeptical position on this question. We also think “new” technology (for example, Google’s Moto X smartphone introduced on the same day) is largely devoid of anything really “new”. Most of the features any subscriber could want are already included in current offers.
We are much more interested in efforts to incorporate computing intelligence within venues, for example, automobiles, passenger transportation, and homes. These markets present the dramatic sales growth figures we suspect Wall Street is after.
Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)
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