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Has The Tech Industry Reached Its Tipping Point?

Analysts say smartphone makers need to push into under-saturated areas like Africa and elsewhere, and also sell more services like cloud storage

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Apple, smartphone
Customers walk past an Apple logo inside of an Apple store at Grand Central Station in New York, Aug. 1, 2018. VOA

Behind Apple’s disconcerting news of weak iPhone sales lies a more sobering truth: The tech industry has hit Peak Smartphone, a tipping point when everyone who can afford one already owns one and no breakthroughs are compelling them to upgrade as frequently as they once did.

Some manufacturers have boosted prices to keep up profit, but Apple’s shortfall highlights the limits of that strategy. The company said demand for iPhones is waning and revenue for the last quarter of 2018 will fall well below projections, a decrease traced mainly to China.

Apple’s shares dropped 10 percent Thursday on the news — its worst loss since 2013. The company shed $74.6 billion in market value, amid a broader sell-off among technology companies, which suffered their worst loss in seven years.

Apple’s news is a “wake-up call for the industry,” said analyst Dan Ives of research firm Wedbush Securities.

Apple, smarphone
An Apple iPhone X, left, and a Samsung Galaxy S9 Plus mobile phone are displayed during a preview in New York, Feb. 21, 2018. VOA

And it’s not just Apple. Demand has been lackluster across the board, Ives said. Samsung, long the leading seller of smartphones, has been hit even harder, as its phone shipments dropped 8 percent during the 12 months ending in September.

“The smartphone industry is going through significant headwinds,” Ives said. “Smartphone makers used to be like teenagers, and the industry was on fire. Now it feels like they’re more like senior citizens in terms of maturity.”

Victim of its own success

Tech innovations in phones grew in leaps and bounds earlier in the 2010s, with dramatic improvements in screen size, screen resolution, battery life, cameras and processor speed every year.

But the industry is a victim of its own success. Innovation began to slow down around 2014, once Apple boosted the screen size with the iPhone 6 and 6 Plus models. While phones kept improving, new features tended to be incremental, such as a new flash technique to already excellent phone cameras. It’s the stuff consumers won’t typically notice — or want to shell out for.

“Since the iPhone 6 you’ve seen it has been tough to innovate to continue to raise the bar,” Ives said.

Apple, smartphone
A Chinese man uses iPhone to take picture as he prays for health and fortune on the first day of the New Year at Yonghegong Lama Temple in Beijing, Jan. 1, 2019. VOA

Apple customers now upgrade every 33 months on average, longer than the 24 or 25 months three years ago, he said.

Apple’s diminished growth projections, fueled by plummeting sales in China, have reinforced fears the world’s second-largest economy is losing steam. Its $1,000 iPhone is a tough sell to Chinese consumers unnerved by an economic slump and the trade war with the U.S. They also have a slew of cheaper smartphones from homegrown competitors such as Huawei, Xiaomi and Oppo to choose from.

The fact that even Apple’s iPhone juggernaut is suffering cements a larger trend for all major smartphone makers. After a steady rise for a decade, worldwide smartphone shipments fell 3 percent to 1.42 billion in 2018, the first annual drop, according to International Data Corp., which tracks such movements. IDC estimates that shipments will rebound 3 percent in 2019 to 1.46 billion, but that still falls short of 2017 levels.

No ‘silver bullet’

It doesn’t help that top phones come with four-digit price tags — $1,100 for the iPhone XS Max and $1,000 for Samsung’s Galaxy Note 9. The top-end Max model sells for $1,450 in the U.S.

iPhone, Chinese, apple, smartphone
The Apple iPhone 7 is displayed at an Apple store at the Grove in Los Angeles, California. VOA

“They’re getting more and more expensive while offering fewer and fewer new, innovative features that I’ll actually use,” said Zachary Pardes, a tech-savvy 31-year-old in Fairfield, Connecticut. “I’ll upgrade when the battery stops working. When I’m forced to buy a new phone, I’ll buy a new phone.”

Vivian Yang, a manager at a Beijing technology company, also balked at the price. “Nobody needs such a phone,” she said.

IDC analyst Ramon Llamas said the cycle might bottom out and start growing again in 2021 or 2022, when people’s current phones start reaching the end of their useful life. “People will still replace their phones. It’s going to happen eventually,” he said.

But there’s no “silver bullet” that will spur growth to levels seen in the past when the industry was less mature.

Foldable smartphones, with screens that unfold like a wallet to increase display size, are one thing that could spur excitement, but they’re expensive and not due out until at least the end of the year.

Apple, Tim Cook, Campus
iPhone 8 was launched with a special edition red colour, Pixabay

Another thing that might spur growth: 5G, the next-generation that telecom companies are currently in the process of building, expected to be faster and more reliable than the current 4G network. The first 5G compatible phones are due out this year.

“There’s more pressure on 5G as the next-wave smartphone,” since sales are so lackluster, said Ives. “There will be a battle royale for 5G phones.”

But 5G will take years for broad, nationwide deployment, so the new 5G smartphones coming out this year are not likely to make much of a splash immediately either.

Also Read: Apple Users Spent $1.22 bn on App Store in One Holiday Week

Analysts say smartphone makers need to push into under-saturated areas like Africa and elsewhere, and also sell more services like cloud storage, streaming music and phone software. But the glory days of untrammeled growth appear to be over.

“It’s going to be a slow slog,” Llamas said. “By no means is this the end of the smartphone market. But this is an indication that the smartphone market can be a victim of its own success.” (VOA)

Next Story

New Technology That Can Clean Water Twice As of Now

more than one in 10 people in the world lack basic drinking water access, and by 2025, half of the world's population will be living in water-stressed areas.

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water
Novel technology cleans water using bacteria

Researchers, led by one of Indian-origin, have developed a new technology that can clean water twice as fast as commercially available ultrafiltration membranes, an advance that brings hope for countries like India where clean drinking water is a big issue.

According to a team from the Washington University in St. Louis, more than one in 10 people in the world lack basic drinking water access, and by 2025, half of the world’s population will be living in water-stressed areas.

The team led by Srikanth Singamaneni, Professor at the varsity, developed an ultrafiltration membrane using graphene oxide and bacterial nanocellulose that they found to be highly efficient, long-lasting and environment-friendly.

The membrane technology purifies water while preventing biofouling, or build up of bacteria and other harmful micro-organisms that reduce the flow of water.

Water
The membrane technology purifies water while preventing biofouling. VOA

For the study, published in the journal Environmental Science and Technology, they used bacteria to build such filtering membranes.

The Gluconacetobacter hansenii bacteria is a sugary substance that forms cellulose nanofibres when in water.

The team then incorporated graphene oxide (GO) flakes into the bacterial nanocellulose while it was growing, essentially trapping GO in the membrane to make it stable and durable.

They exposed the membrane to E. coli bacteria, then shone light on the membrane’s surface.

After being irradiated with light for just three minutes, the E. coli bacteria died. The team determined that the membrane quickly heated to above the 70 degrees Celsius required to deteriorate the cell walls of E. coli bacteria.

While the bacteria are killed, the researchers had a pristine membrane with a high quality of nanocellulose fibres that was able to filter water twice as fast as commercially available ultrafiltration membranes under a high operating pressure.

When they did the same experiment on a membrane made from bacterial nanocellulose without the reduced GO, the E. coli bacteria stayed alive.

The new technology is capable of identifying and quantifying different kinds of cyanobacteria, or blue-green algae, as a threat to shut down water systems when it suddenly proliferates. Pixabay

While the researchers acknowledge that implementing this process in conventional reverse osmosis systems is taxing, they propose a spiral-wound module system, similar to a roll of towels.
Also Read: India Gets Assistance of Rs 3,420 Crore From Japan
It could be equipped with LEDs or a type of nanogenerator that harnesses mechanical energy from the fluid flow to produce light and heat, which would reduce the overall cost.

If the technique were to be scaled up to a large size, it could benefit many developing countries where clean water is scarce, the researchers noted. (IANS)