Is the mobile phone industry struggling to make progress due to a lack of innovation or a change in concepts?

The shrinking mobile phone market

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In fact, this is not the first time that the mobile phone market has experienced a decline. In the past two or three years, the mobile phone industry has been in a state of moving forward from a low point. The reasons for this situation can be mainly divided into the following aspects.

First, the smartphone user market is saturated. The current smartphone industry can be said to have gone through three stages: initial, explosive, and weak. In 2007, global smartphone shipments exceeded 100 million units. In 2010, smartphones began to replace feature phones. In particular, the shipment growth rate remained at a high level of over 60% from 2010 to 2011, and the penetration rate increased rapidly from 15% in 2009 to 66% in 2014. In 2013, it exceeded the shipment volume of feature phones for the first time. By the end of December 2020, the penetration rate of smartphones in the Chinese market had reached 96%, basically achieving the coverage rate of "one smartphone per person".

Second, smartphones are updated slowly. After more than a decade of development, the smartphone industry seems to have run out of ideas. Although smartphone manufacturers still launch a large number of new models every year, they are basically just minor improvements based on the previous ones. Even the iPhone, which is known as the benchmark in the mobile phone industry, has lost its creativity that once "changed the world".

At the same time, as the homogeneity of mobile phones becomes increasingly serious, the replacement cycle is prolonged, resulting in a relatively sluggish overall shipment of smartphones. Although the emergence of 5G smartphone products has boosted mobile phone sales to a certain extent, due to factors such as the epidemic and the lack of obvious consumer experience with 5G technology, the smartphone market has not seen significant growth due to 5G.

How to stimulate market demand

Expanding sales volume is the primary goal of mobile phone brands this year.

"The degree of innovation and upgrade in configuration and function of many models on the market has weakened this year, but the pace of many Android manufacturers entering the high-end market has continued to accelerate. Therefore, in the short term, the competition in the domestic market, especially in the mid-to-high-end market, is a competition of products, but more importantly, a competition of brand image." said Wang Xi, research manager of IDC China.

For mobile phone brands, the current mobile phone market is increasingly concentrated in the top players. According to IDC data, the top 5 smartphone brands in China account for 82.9% of the market share. Therefore, the continuous improvement of smartphone performance is still a necessary means for each brand to increase the stickiness of existing users and attract users of other brands.

Due to the serious homogeneity of smartphone products, patch innovation is no longer the most direct driving factor for users to change their phones. Major mobile phone manufacturers need to optimize their products based on user feedback to enhance user stickiness while also focusing on shaping their brand image.

For consumers, mobile phones are no longer just electronic products, but products with social capabilities and social circles. According to ZDC survey data, factors such as camera, appearance design, processor, screen display and charging life are the most concerned indicators when users buy new phones, and these indicators are obviously "face" indicators in the consumer social process.

Before there is a clear direction for technological iteration, mobile phone manufacturers should make good use of the social attributes of mobile phones to stimulate users' consumption desires. At the very least, it can stimulate demand.