Tuesday, July 17, 2012

The great smartphone boom is about to end. That’s according to one savvy tech prognosticator, Bill Whyman, head of the investment research firm International Strategy & Investment‘s tech strategy research team, who tends to look more than a couple quarters ahead.

Whyman contends that as smartphone penetration reaches 50% sometime next year, the market will start to slow for the first time. That will put pressure on all the players, from struggling RIM to to Google‘s newly acquired Motorola and even to so-not-struggling Apple. Assuming Whyman’s right, here’s what he thinks happens next:

Growth slows: Emerging-market demand means it won’t fall off a cliff, but as market share of smartphones reaches 50%, Whyman says, the current 45% growth slows as that second 50% becomes much harder to get. Over time, much of the new demand will be replacing older models, further driven by upgrades to faster 4G networks.

Competition intensifies. It’s hard to imagine the smartphone battle getting more heated than it already is, but Whyman says this will be an inevitable outcome of a slowing market.

Still, he thinks Apple, especially with its iPhone 5 still likely to ignite another boom in purchases when it debuts this fall, will be fine and, with Samsung, will dominate the high end of the market–especially the profits. That’s thanks to their brands, wide distribution by the carriers, low component purchasing costs and, especially in Apple’s case, a thriving app ecosystem. Chinese companies such as Huawei will own the low end, he believes, leaving RIM, Nokia, Sony (Sony?), Google’s Motorola unit, and even HTC struggling.