Why are smartphone companies losing their market value? An inside look at the smartphone industry.
If your stock portfolio is made up of big mobile technology companies, you’re probably feeling a little worried about the return on your investment recently. Over the past months we’ve seen lots of troubling financial data and weak stock performances from many of the big smartphone companies. The chart below shows the stock performance of a selection of the industry’s big players since the beginning of the year.
Interestingly, only ZTE is better off than it was at the start of the year, share price wise anyway. The largest manufactures, Apple, HTC, and Samsung (SEC) are the worst performers so far this year, despite having some of the largest shares of the global smartphone market.
But even if you’re not an investor, stock prices are a good indicator of how the market views a company’s performance, and a troubled stock price often signals struggling fundamentals with a company. But what could possibly be wrong with this multi-billion dollar industry?
One simple explanation would be that the high-end market is simply becoming saturated with handsets, which is having a direct impact on the sales of handsets like the Galaxy S4, HTC One, and the iPhone. We’ve heard a lot of concerns recently about sales forecasts and results for the
So what does this tell us? Well, it looks like early smartphone adopters are just as keen as ever, we already know that the Galaxy S4 sold a lot of handsets in its opening quarter, but it appears that the average consumer is becoming less interested.
Sales estimates for the Galaxy S4 are now predicted to trail off at much faster rates than with previous handsets, dropping nearly 50% from their peak come the end of the year. Other Galaxy handsets, like the S2 and S3, had a lot of market staying power, but the Galaxy S4 may not. You can also see that the rate of growth is slowing too, down to 42.3% compared with sales increases closer to 90% for the previous generations.
The reason for this could be quite simple; people are already quite happy with their existing smartphones. Older handsets, like the Galaxy S2, are still more than capable at doing everything that most people need, and consumers may simply be more reluctant to change up for new models all the time when they don’t see a clear benefit.
An alternative explanation for this apparent trend could be that the market has become much more competitive over recent years, with more manufacturers producing handsets all within the same price ranges. Looking back to the days of the Galaxy S2 and S3, Samsung’s smartphones were the only real competition to Apple’s dominant iPhone. Since then, HTC, Sony, LG, and even company’s like Pantech and ZTE, have all released high-end products into the market with competing features and prices.
Via: Android Authority