Cellphones on the Path of Extinction

Semiconductor based electronics has continuously improved lives of people through various kinds of technology upgrades in the gadgets for our daily use. Imagine the journey from a mechanical typewriter to a laptop computer connected through a laser printer, transition from black & white photography to exotic coloured photographs on your finger tips, all kinds of banking transactions from anywhere on your phone, tablet, or laptop, and so on. Although the first handheld mobile phone was produced at Motorola in 1973, analog cellular networks evolved in 1980s giving way for further evolution of cellular networks into digital in 1990s. The digital cellular networks boosted data communication with 1G, 2G, 3G broadband and now 4G. One can do much more than just talking with a handheld mobile device from anywhere, anytime; see a whole movie on your smartphone. The data communication was the real catalyst for transition from cellphones to smartphones. Add to it the power of several ‘Apps’ to ease different functions for daily use in our lives.

Now it’s more than 30 years we still have commercially working cellphones in some parts of the world. The cellphones are already replaced by smartphones in the developed world and are being rapidly replaced in the developing countries. Thanks to the low-cost smartphone providers in China and India. How long do we think it will take for cellphones to become extinct? Let’s see some data from IC Insights report on smartphone market trends.

From the above graph, it appears that in last 2+ years the smartphone share of shipment in the total cellphone shipment has increased from 50% to 80%. It’s expected that the smartphone share will surpass much beyond 90% in next 3 – 5 years; IC Insights forecast says 93% by 2018. Can we see elimination of cellphones from the market post 2020? Make a guess from the following chart.

We can see a continuous decline in non-smart cellphone shipment and also almost stable to less than 5% growth in total number of cellphones. The net result will be complete elimination of cellphones from the market in next 5 years or so.

Although Appleand Samsungdominated the smartphone market in 2013 and 2014, both appear to lose market share to Chinese smartphone makers such as Xiaomi, Yulong/Coolpad, TCL and Huawei. The top six smartphone suppliers in China had increased their worldwide market share from 21% in 2013 to 29% in 2014. In Q1 2015, the top six China-based smartphone suppliers had a 25% market share though.

Today, a key factor in the smartphone market is replacement of cellphones by smartphones in the emerging markets like China, India and other developing countries. If a cellphone can be replaced by an smartphone in less than $200, people can happily afford it. In fact an smartphone can come for even less than $100 in these countries. And they have almost all functions of a low-end smartphone.

I had bought an Android1 Micromax Canvas, an Indian company smartphone for about $100 for my daughter. In normal day-to-day working, if I compare that smartphone with my Google Nexus, I do not see any appreciable difference. So wait for five years, all remaining cellphones in the worldwide market will be replaced by smartphones!

For detailed reading of IC Insights report, you can get it HERE.

Pawan Kumar Fangaria
Founder & President at www.fangarias.com