I have been doing a series for Forbes called Looking Back and Looking Forward, where I look at a few companies I follow and share thoughts about their failures and success in the last decade. I also speak to their CEOs or a top exec from each company to hear their thoughts about their vision for the company in the upcoming decade.
This link sets up the idea of the focus of this Forbes series and explains why I wanted to do this series. My first piece in this series was on Dell that posted last week. Here is a link to that story so you can see an example of this series that is in the works.
As I was researching this series for Forbes and doing a ‘last decade’ trend analysis, there was one major story that kept coming up, and that was the role the smartphone played in shaping what happened in tech in the last decade. Without smartphones, we would not have had ride-sharing services, the acceleration of mobile payments, mobile navigation, and hundreds of things that a smartphone-enabled in the last ten years.
I have always felt that the economic benefit and impact of the smartphone was much broader than the smartphone itself but had never seen its economic impact quantified until I received this Statista chart below in an email over the weekend. It comes from a Deloitte analysis of Apps Annie and others and states that the smartphone economy is estimated to be almost a trillion-dollar business by 2020.
One number on the chart that I had looked for over the years has been the accessory business. Deloitte estimates it at $77 billion, and I am not surprised at this projection. The iPhone was introduced in January of 2007, and by the next CES, there were already 50 or so booths at the show, which had many types of smartphone cases, third party power plugs, and cords. At this year’s CES show there will be hundreds of booths peddling a plethora of products and accessories related to smartphones and other handheld mobile devices. Add to that the thousands of sites around the world, many listed through Amazon, that carry every kind of smartphone case imaginable and various cords and dongles, and it is not hard to see the size of the accessory business skyrocket in the last decade.
Deloitte’s analysts put the wearable business, which has been deeply tied to smartphones in various ways, at $25 billion, smart speakers at $9 billion, and music at $10 billion. Besides the actual revenues tied directly to the smartphone itself, mobile advertising at $176 billion has been a significant driver pushing the smartphone economy to the one trillion economic benchmarks. Only in the last decade has mobile advertising exploded and added significant revenues to the smartphone economy.
This does not even take into account the earnings the telecoms have made through smartphones via data plans and the money they make by skimming parts of the advertising fees that go through some of their networks.
I realize that when Steve Jobs introduced the iPhone, he proclaimed it would change the world, but I don’t think that in his wildest dreams that it could be responsible for a trillion-dollar industry that started with the iPhone.
Now think about the smartphone, 5G, IoT, and all things mobile over the next decade. If the smartphone begat a trillion-dollar industry, imagine what the total economic impact of these new technologies will drive by the end of the next decade.
As in the last decade, there will be applications and services that we have not even thought of that could spring up to spur new uses for the iPhone. 5G will connect to sensors, and potentially millions of devices at the edge, perhaps managed through a smartphone.
One big question for the next decade is if demand for new smartphones themselves can continue to grow as they did in the last decade. In the chart below, IDC points out that the smartphone market is in a Pre-5G slump. Many people will be waiting for 5G networks to become widely available before they buy up to a 5G phone. IDC’s numbers point to a decline in demand in 2019 and not seeing a bump up again until 2023.
The impact of 5G on smartphone demand will happen at some point, but 5G smartphones will be expensive for the first three years, which would partly explain IDC’s bearish view of smartphone demand through 2022.
Regardless of a potential slowdown in smartphone demand at the beginning of this next decade, I would not bet against the fact that the smartphone economy could end up closer to being nearly a two trillion dollar market by 2030.
