How Close Is the End of the Smartphone Boom?

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Pretty close, analysts predict. This is because of the simple fact that everyone of can afford a smartphone already has one. Gartner's latest research into the state of the mobile industry is a dire warning to all phone manufacturers. The financial analysis firm believes that the growth in smartphone sales will fall to a single digit, half the rate it was in 2015.

It's hard to think that people buying 1.5 billion devices in a calendar year is a bad thing, but for companies who make profit on scale, it's a nightmare. Last year, LG made just 1.2 cents in profit for every phone it sold, and you need to sell a lot of phones at that cost before you can consider yourself a big deal.

For years, China was held up as a beacon of hope for companies struggling to wring more profits out of the US and Europe. With its enormous population and emerging middle class, a desire for smartphones would be impossible to satisfy, or at least that was the theory. By 2015, that country had become saturated with devices, helped by local players Huawei and Xiaomi selling devices almost at cost.

People in the west are pulling out of the 24-month upgrade cycle, preferring to hold on to their perfectly working devices for up to 30 months at a time. Thanks to the financial pinch that has rocked the world since 2001.

As the technology updates have "become incremental, rather than exponential," there's little reason to rush out on launch day to grab the latest handset. The firm says that India is the next great hope for smartphone companies to make a profit, but even now it may be too late. The country still buys feature phones more than smartphones, and the average selling price for a device is $120.

Although Google's Android One initiative may eventually prove its worth here, for now only devices that come in under that price are going to make a profit.

The report concludes saying that companies will still try to enter the "complex and competitive" phone business. But, some of the established players will "exit the market." It mentions no names, but we can already think of one company that's struggling to stay afloat after being undermined by ultra-budget Chinese competition.

At least one "nontraditional phone maker" could become a top five player in China by 2018. With the cost of low-end smartphones plummeting and the market becoming saturated, it's not unreasonable to see that.

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