#165: Peak smartphone
We can't sell any more phones. Now what do we do?

Hello! It's been a busy few weeks here in Amsterdam, as summer kicks off and we've had a few short vacations.

Charged is back in full swing, and much of my focus these days (I work for myself now!) is on building out re:Charged to make it a killer way to get the news for those that just don't have time to keep up with the technology industry's broad impact on the world.

Next week, I'll be flying to San Francisco to attend Google I/O, the annual developer conference, which I'll be covering in detail each day for re:Charged, and a roundup will be found in this newsletter the following weekend.

For now, settle in, enjoy the reads and say hi by hitting reply!

Happy Sunday,


Peak Smartphone is here

The noises coming out of component makers points to an industry about to reach an inflection point: smartphone sales may be about to fall dramatically for the first time.

Peak smartphone has been feared for years, particularly as phone features became a commodity, but every year that peak has ended up not quite arriving yet — so what's different this time?

Chip makers are starting to get nervous.

Samsung signaled this week that while it's made record profits in the last year, things aren't looking up for the next twelve months. Not only did it say that "stagnant sales of flagship models and an increase in marketing expenses" are problematic, its chip and display business is suffering too.

The iPhone X is, in my mind, the symbol of peak smartphone; the perfection of a product that's so damn good it may be the last hit — because where do we go from here? Sure, there are obvious tweaks for a second-generation iPhone X, but I think we've seen the end of the splashy smartphone refresh cycle.

Even such a high level of refinement has struggled to sell to consumers in droves — Samsung, which is the exclusive iPhone X OLED display provider, said that its OLED business is struggling with slower than anticipated demand for panels. Other component makers are firing the same warning flares.

Three key Apple suppliers saw early growth in component sales on the back of iPhone X, then "cratered" in the following quarter. TSMC, the maker of the iPhone CPU, has reported the same. Coincidentally, the International Monetary Fund reported for the first time that shipments have begun to decline overall. 

Market saturation

This isn't an issue for Apple alone but everyone in the industry: phones are lasting longer, fewer flagship features are emerging and performance improvements are seeing diminishing returns. 

It is, however, somewhat more of a problem for Apple, which relies on more than 70 percent of its profits derived from the iPhone alone, with the next-closest device line being the iPad at just a fraction of those sales.

If the iPhone's revenue dried up in a fashion similar to the PC sales slump — however unlikely that is — Apple could face an existential crisis as Intel did. Like Intel, Apple doesn't just have the luxury of just leaving their game, and iOS is everything.

Apple saw this coming, moving going further upmarket by raising the price of iPhone X and increasing margins in anticipation of these shrinking sales. Extracting more value out of less sales may just be the cure.

Emerging markets are obvious opportunity. Markets in both Africa and Asia still see less than 50 percent of people owning a phone, usually due to handset price and the cost of connectivity, which Google is now specifically targeting with new versions of Android.

Less often is better

Using your phone for longer is better for your wallet, the environment, and flips the model on its head: we don't need something better every single year. Peak smartphone is market saturation, and that phones last longer is a compliment to the key players — even if their investors hate it.

Google is well poised to profit from this new world, because it can afford to lose money on bets like Pixel since it already makes its revenue elsewhere. Apple is already aggressively moving into the subscription service business, albeit slowly, for the same reason: monetizing hardware will get more difficult.

Peak smartphone presents a question for the industry: can a company like Apple, with the majority of its revenue from its smartphone alone weather such a storm? PC vendors imploded for years because they both didn't see it coming, and didn't hedge their bets. 

This time around, Apple has hundreds of billions in the bank, and Samsung, the second biggest manufacturer of smartphones, also happens to make the chips that power almost every phone out there — a great way to hedge bets until the next wave of innovation.

All that remains is the answer to what's next. AR? VR? The smart home? Voice speakers? This time is different because everyone is racing to figure out where the puck is going, out of fear of missing the next iPhone-sized industry. 

Like with the PC market, you're likely to begin keeping your phone for longer than ever before as a result of the slowing pace of innovation. This is the new norm. Maybe that's OK... until we find the next thing to keep buying.

This is an adapted version of a briefing send to re:Charged subscribers this week.

Other news

📱 Huawei, afraid of sanctions, is working on its own Android alternative

💻 Intel struggles to manufacture next-generation technology

📦 Amazon to raise the price of Prime to $119

🔊 Sonos prepares for an IPO in June

🎙 Google jumps into Podcasts


Technology moves fast. Keep up with it, and be the first to know with re:Charged, my new briefing delivered four days a week.

Sign up here with the code april-love to get 40% off your first month — this deal expires in 48 hours.

Join 300 others giving their support and building a better model for news! 💌


The laptop that was supposed to change the world

One Laptop Per Child was supposed to build a $100 laptop that would change the world. What happened to it? Well, for one, an industry pivoting away from netbooks, and a solution nobody really asked for.

🌎 Read the story on The Verge

Other great reads

Open, closed and privacy: Google's bet on RCS (Stratechery)

Artificial Intelligence —  The revolution hasn't happened yet (Michael Jordan)

The reason your local mall is failing (Strong Towns)

Your story is your power (Medium)


New Gmail

There's a new Gmail design out this week, and I'm almost certain it was hard to miss — but it's such a big deal that I can't not mention it. The Gmail refresh is a peek at Google's new design language, and a fantastic refresh for a tool that felt suspended in time.

Google's added great features, like the new sidebar calendar, which I love, and even confidential email that self-destructs. I've ditched Inbox for this, because Google even made it available for G Suite customers on day one!

🌎 Meet the new Gmail


Thanks for reading! You're a part of a community of 15,000 others getting the best in tech news every week.


Like on Facebook:

#165: Peak smartphone