Marriott Student Review

Volume 3 Issue 1 Uncharted Article 10

April 2019

Beginning of the New Era

Braden Terry [email protected]

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Recommended Citation Terry, Braden (2019) "Beginning of the New Smartphone Era," Marriott Student Review: Vol. 3 : Iss. 1 , Article 10. Available at: https://scholarsarchive.byu.edu/marriottstudentreview/vol3/iss1/10

This Article is brought to you for free and open access by the Journals at BYU ScholarsArchive. It has been accepted for inclusion in Marriott Student Review by an authorized editor of BYU ScholarsArchive. For more information, please contact [email protected], [email protected]. Terry: Beginning of the New Smartphone Era

10:34

BEGINNING of the new SMARTPHONE ERA

BY BRADEN TERRY

A decade ago, computers were made for work and productivity.

Portable were beginning to become mainstream, and cell phones were about as personal as a wallet. Today, do everything a can do while also functioning as a personal connection to the rest of the world. In 2016, global smartphone sales reached $1.5 billion even though the market did not exist in 2006.

Apple’s iPhone ignited creation and rapid expansion of a previously nonexistent market. Smartphone sales have risen since the release of the original iPhone in 2007. In 2007, Apple’s stock was worth $12. Creation of the smartphone market increased Apple’s stock to a peak of $227 in 2018. Other firms, such as and , have benefited from the same expansion over the past decade.

Published by BYU ScholarsArchive, 2019 1 Marriott Student Review, Vol. 3, Iss. 1 [2019], Art. 10

However, total sales of smartphones for inflation, the prices of each iPhone sells their smartphones by promoting more customers. Samsung’s decrease decreased in 2017 for the first time have remained consistent for each as status symbols rather than in Q4 sales continued into 2018: “The To keep the market alive, Apple will need to since the market opened. To keep release with exception to the iPhone demonstrating the practical use. A Company posted KRW $59.27 trillion identify the problems in the current market and the market alive, Apple will need to X and iPhone XS. Consumers were lack of features tailored to Chinese in consolidated quarterly revenue, adapt to the changing need for smartphones identify the problems in the current outraged at the proliferated price in customers along with massive prices down 10 percent from a year earlier, going into the next decade. market and adapt to the changing 2017 and did not change their minds has caused Apple to lose in . and KRW $10.8 trillion in quarterly need for smartphones going into the in 2018. Higher prices have caused Apple’s lack of a foothold in China has operating profit, down 29 percent.” though total smartphone sales might larger storage, new , next decade. consumers to avoid buying the new severely hindered total sales because Industry leader Samsung reporting have already peaked. Smartphones and a standard 3.5mm headphone jack. iPhone models. China is a large and expanding market decreased sales is not good news for are not a finished fad. The problem Owners of the original iPhone quickly Apple Misses the Mark for smartphones. the smartphone market. Apple’s performance in China is is that today’s iPhone is the same as bought the iPhone as well as new “The bigger you are, the harder you even more unsatisfactory. The Chinese Recently, Apple has modified their China’s smartphone market is also tomorrow’s iPhone. customers who did not previously fall” represents Apple’s misfortunes in yuan declined 5.7 percent compared prices in China to better fit the market. experiencing a significant decline. have an iPhone or smartphone. In Total smartphone sales are 2018. In 2018, Apple’s total revenue to the US dollar in 2018. Deflation iPhones have had a small increase in Chinese smartphone sales dropped contrast, the differences of the two declining because current users are dropped 15% from 2017. The decline of Chinese yuan has caused iPhone sales as an effect.8 Other problems 10.2 percent and have been on the most recent iPhones released are as not buying more phones. For the past in sales occurred right after Apple prices to be massive in China because Apple has yet to address are battery decline since the second quarter follows: iPhone XS has (1) slightly more decade, every year’s new iPhone was introduced the 2018 iPhone models, Apple sells the iPhone in US dollars. replacement issues and other accessory of 2017. China is a perfect market RAM and (2) a slightly faster processor. a notable upgrade form the prior year. iPhone XS and iPhone XR. These Massive prices in China detour Chinese issues. Competing firms offer cheap for smartphone manufacturers Consumers who have the iPhone X do The first upgrade of the iPhone was models are incremental upgrades on consumers from purchasing any accessories for their smartphones and because of its large population and not feel a need to spend $999 on such the iPhone 3G. The iPhone 3G was the prior year’s model, iPhone X, and iPhones. In addition, Apple faces huge repair options for broken batteries, growing number of people leaving a small upgrade. This same pattern is released one year after the first iPhone Apple brought over a negative aspect competition from Huawei in China. screens, etc. The lack of these options poverty. These conditions should occurring with all other smartphone and came with massively upgraded from the 2017 model, the price. Apple Huawei sells smartphones specifically moves consumers to other than generate massive smartphone manufactures and results in a decrease specifications. Included in the new increased the price of the iPhone in tailored to Chinese consumers’ needs at Apple. As a result, Apple is expecting sales, but the industry is not seeing of overall demand. iPhone was a larger battery, a 3G signal, 2017 for the first time. When adjusted a much lower price than Apple. Apple revenues of $55 billion in 2019 as the expected growth. compared to $61 billion from 2018. For the foreseeable future (and unless a major change in the industry Figure 1: Cost of Various iPhone at Launch The Other Guys Figure 2: Increases in iPhone Sales vs. occurs), smartphone sales are (adjusted for inflation) Price of iPhone Apple is not the only firm predicted to be sluggish. Apple and the reporting decreases in sales recently. other prominent firms in the industry Samsung has been the global need to identify the current problem leader in smartphone sales for the and make the necessary changes to past few years. In Q4 2017, Apple increase sales again. overtook Samsung in the number of smartphone sales, but Samsung Customers are Satisfied reclaimed the title once the Galaxy S9 The decline in smartphone sales is was launched in 2018. Samsung usually not marking the beginning of the end has higher sales than Apple because of mobile computers. People will still be Samsung has more influence in other streaming videos from the of their foreign markets than Apple. Apple hand a decade from today. The number overtaking Samsung in number of of people who have smartphones is Data source: u/zonination, sales is shocking because Samsung has Data source: Statista.com editors, Unit Sales of the Apple Worldwide from 2007 - The cost of each iPhone at launch (adjusted for inflation), (.com, 2018) also going to continue to rise even 2018 (in millions), (statista.com, 2019)

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demonstrated technology in their successor should have a 5G wireless Going forward, Apple needs to give consumers The Next Big Innovation upcoming devices. signal in the base model without 1 Benjamin Carton, Mr. Joannes Mongardini, Yiqun more of the functionalities they want while also Li, A New Smartphone for Every Fifth Person on Earth: Quantifying the New Tech Cycle (IMF Working Papers, Smartphones have started to become raising the price tag. Alongside the 5G 2018), PDF e-Book, 1 – 7, https://books.google.com/s? lowering the price tag just Apple has not introduced a foldable hl=en&lr=&id=JttRDwAAQBAJ&oi=fnd&pg=PP1&dq=s martphone+sales&ots=B9UmJ7YZCC&sig=Fjpq2615TlV “bezel-less wonders” (increasing screen- iPhone, Apple should also release a GQyuJBSk6OAb0n04#v=onepage&q=smartphone%20 like Jobs did in 2007. Jobs’ iPhone or a 5G iPhone to compete sales&f=false, accessed February 2019. to-body ratio), which is not bad, but second model with a foldable screen. innovation is what has led with the competition. Apple will 2 Anonymous, “Apple – 39 Year Stock Price History | AAPL,” macrotrends.net, 2019, https://www.macrotrends. selling bezel-less wonders is not At the expense of foldable screen net/stocks/charts/AAPL/apple/stock-price-history, Apple to success. need to introduce these features into accessed March 2019. enough to keep the market at the technology being cutting-edge, this their upcoming products or else their 3 Jake Swearingen, “We’re No Longer in Smartphone Plateau. We’re in the Smartphone Decline.,” Intelligencer, same momentum. As Apple and other iPhone will be expensive. The first December 4, 2018. customers will move towards the firms push smartphones to be luxury folding iPhone will be a stepping stone 4 Steve McCaskill, “Apple plans iPhone price cuts to “Without new demand, the competition. The first 5G iPhone will address affordability concerns,” TechRadar. January 30, 2019 Wednesday, via LexisNexis Academic, accessed products by increasing prices and for Apple to perfect the design for the February 2019. smartphone market has come to be a greater sales pusher than the decreasing bezels, consumers are less 2020 iPhone model. The 2020 iPhone 5 u/zonination, The cost of each iPhone at launch (adjusted a turning point,” said Huang Wei ( first foldable iPhone based on Apple’s for inflation), (reddit.com, 2018) likely to purchase new devices. When model will have both 5G and a foldable 6 Li Tao in Shenzhen, “Analysts expect iPhone price cuts Deputy Director of the Research past performance. The first 3G iPhone in China as Apple seeks to revive sales,” South China someone breaks their phone screen screen while costing the same price as Morning Post.com. January 30, 2019 Wednesday, via Department of Integrated Circuits and was able to convince current iPhone LexisNexis Academic, accessed February 2019. they do not buy a new phone, they buy an iPhone today. By recreating Jobs’ 7 Anonymous, “Sending a new signal,” Beijing , Institute of Integration of users to purchase the new device Review, January 10, 2019. a new screen because a new phone is formula, Apple will survive in the new Informatization and Industrialization and the first 4G iPhone did the same. 8 Juli Clover, “iPhone Sales Growing Following Price Cuts far too expensive. If Apple would make smartphone era. in China,” MacRumors.com. February 1, 2019 Friday, via China Academy of Information and When Apple introduces the 5G iPhone, LexisNexis Academic, accessed February 2019. new devices with far superior features, 9 Source: Chris Smith, , Anonymous, “Apple bests samsung in worldwide Communications Technology) told iPhone sales will increase dramatically. phone sales amid disappointing Q4,” Twice, 33 (3), 26. (bgr.com, 2019) then people would be motivated to 2018, ABI/INFORM via ProQuest, accessed February 2019. Beijing Review. Without an incentive 10 Anonymous, “Electronics Announces Fourth Samsung purchase new devices and sales would Quarter And FY 2018 Results,” Communications Today. to upgrade, consumers are waiting Conclusion 2019, ABI/INFORM via ProQuest, accessed February 2019. ramp up. longer to upgrade. Several years ago, Apple’s high prices also play a role in 11 Anonymous, “Sending a new signal”. The smartphone boom is not 12 Anonymous, “Electronics Announces Fourth Samsung users were upgrading on an average of decreasing the benefit from upgrading. Two solutions to Apple’s dry Quarter And FY 2018 Results”. doomed to end here. Apple can return every 15 months instead of the current As Apple continues to attempt to innovation are forthcoming: (1) 13 Kit Hong Wong, “The effects of consumption values sales to where they were five years and relational benefits on smartphone switching behavior,” Emerald Publishing Limited Working Paper, average of every 22 months. establish itself as a luxury brand, Apple foldable smartphones and (2) 5G 2018, https://www-emeraldinsight-com.erl.lib.byu.edu/ ago by innovating the phone again. doi/full/10.1108/ITP-02-2018-0064, accessed February believes it can charge high prices for wireless signals. Apple’s competitors, 2019. (Department of Steve Jobs famously introduced the Kit Hong Wong 14 Anonymous, “Mac, iPod, iPhone & iPad Specs - iPhones to make up for decreasing Samsung and Huawei, have both EveryMac.com’s Ultimate Mac Comparison,” everymac. HealthBusiness Administration, Fooyin iPhone as a revolutionary device that com, 2019, https://everymac.com/ultimate-mac- sales revenue because people will introduced foldable phones that comparison-chart/?compare=all----devi ces&highlight=0&prod1=iPhone067&prod2=iPhone071 University, Kaohsiung, ) ran is a combination of a phone, iPod, and &prod3=AppleTV003, accessed March 2019. pay for the status symbol. However, will go on sale in 2019. Foldable a study to determine the rational computer. Jobs created an affordable 15 Anonymous, “Sending a new Signal”. when costumers buy smartphones, smartphone technology is a fresh take benefits people gain when they choose product with functionality in mind 16 Anonymous, “Sending a new Signal”. they are looking for function, not style; on smartphones and is exactly what 17 Wong, “The effects of consumption values and to switch smartphone brands. From which is why consumers were drawn relational benefits on smartphone brand switching therefore, this pricing strategy does the industry needs to reinvigorate the behavior”. his study, Wong determined people to it. Going forward, Apple needs not work. “Apple will exhaust that market. However, both phones are 18 Swearingen, “We’re No Longer in Smartphone Plateau. put more value on the functionality to give consumers more of the We’re in the Smartphone Decline.”. strategy,” says David Yoffie, a professor sporting a $2000 price tag. Consumers 19 Anonymous, “Apple bests samsung in worldwide of the device rather than the brand functionalities they want while also phone sales amid disappointing Q4”. of international business at Harvard are not willing to widely adapt new of the device. Since consumers buy lowering the price tag just like Jobs 20 Swearingen, “We’re No Longer in Smartphone Plateau. Business School who also sits on the technology until We’re in the Smartphone Decline.”. new smartphones when they believe did in 2007. Jobs’ innovation is what 21 Lisa Eadicicco, “Smartphones are getting weird again, board of HTC. “When Apple is at an the price shrinks. 5G wireless signal is and it could be a sign that the industry is on the brink the new device delivers more benefits has led Apple to success. of another huge change,” businessinsider.com, February average selling price of $800, and the the more likely market buster. Mobile 26, 2019. than their current device, consumers 22 Dale Ford, “The wireless world converges at mobile rest of industry is at $300, you can only World Conference 2018 and 2019 were To recreate Jobs’ formula for success world congress 2018,” Microwaves & RF, 2018, ABI/ are not buying as many phones in 2019 INFORM via ProQuest, accessed February 2019 defy gravity for so long.” Apple is going both dominated by firms showcasing in 2019, Apple should introduce 5G as in 2009, because most smartphones to see more revenue plunders if they their 5G technology and how they and foldable screen technology into offer the same benefits as the device continue charging extra for a feeble will embrace it in their products. the 2019 iPhone models at half the cost they already own. status symbol. Again, Apple’s competitors have of the competition. The iPhone XS’s

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