Smartphone Adoption Growth Will Taper Off | What it means
A lot of new smartphone penetration stats have come to light in recent days. We thought we’d share some highlights along with some observations on what they mean for fellow New Market Entrepreneurs looking to build businesses upon the mobile wave.
It’s true that nothing lasts forever and it appears that, at least here in North America, smartphone adoption has officially entered ‘the back nine”. Consider:
- Mobile phone users now on smartphones
- Pew says that among mobile phone owners smartphone penetration is 53 percent.
- Nielsen says that it’s now 55 percent
- comScore reports that smartphone penetration is just over 49 percent.
- Flurry Analytics, the outlier, said in a recent report that 78 percent of US mobile phone owners now carry smartphones.
- No surprise the younger and more affluent demographic has embraced at an even higher rate. Here’s a demographic breakdown of smartphone ownership from Pew
Henry Blodget recently shared an analysis that supports that smartphone sales growth will taper off. If you are building a new market venture that depends upon smartphone penetration, you need to take a look. Here are some highlights:
Recent data suggest that the U.S. smartphone market is already more than halfway penetrated. This is important, because the growth rate of most technology markets tends to slow rapidly once the halfway point has been reached.
Let’s put some numbers on this.
- There are approximately 310 million people in the United States.
- Of these people, approximately 250 million are over the age of 14.
- According to Comscore, about 235 million of these Americans use mobile devices
- It seems likely that almost all of these folks will eventually have smartphones.
- This creates a “total addressable market” for smartphones of about 225 million people in the U.S.
Henry goes on to site the same stats mentioned above to make the case that the 255 million addressable market is over 50% penetrated. He then goes on to observe that thanks to the standard adoption curve, growth will taper off as markets reach 50% penetration (thanks to the math and lack of urgency behind the late majority and the laggards tend to adopt.
As the chart shows, the peak of market growth in terms of annual unit gains occurs around the halfway mark. Shortly after the halfway point is reached, the number of incremental new users each year begins to decline. And soon, when the market becomes saturated, unit growth flattens.
This would seem to be validated by this chart:
What does it all mean?
So what does this mean for New Market Entrepreneurs looking to capitalize on smartphone adoption? Honestly, it’s a glass half-empty or half-full proposition where the true answer rests in examining the demographic you are hoping to win over. We believe there will be continued rapid growth in the young/affluents to close to 100% (We believe it will cap out btw 85-90%). Whereas the older, less affluents will be much slower to adopt and will never get close to 50% penetration.
In the high penetration potential demographic markets, if you are offering a me-too product, you will be lost in the shuffle as everybody is also gunning for them. Alternatively, if you can offer something unique to the late adopters and/or laggards, you may be able to help to define and own a new market. In short– as is always the case in winning new markets– you must carefully assess your target market alternatives and develop product/solutions that will make a difference.
But wait, there’s more: tablets! The market penetration story of the tablet space is only just beginning. Of course, Apple’s iPad is lapping everybody else right now. Sure, tablets are not currently as ubiquitously (inexpensively) mobile as smart phones. And they are not as infinitely portable as smart phones. But when considering mobile-related New Market Opportunities one cannot overlook the complementary, upside market potential of tablets.