Startup Musings

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Analyst reports keep predicting that smart phone market share will explode in the next few years. Pyramid Research forecasts that smartphones will comprise 60% of all new handset sales in the US by 2014.   Pretty soon it would be difficult to buy feature phones, simply because mobile stores won’t stock them anymore.  Operators are all about maximizing ARPU (average revenue per user), and it is in their interest to push smartphones to consumers.  Smartphones come with data plans,  and that’s where the growth will come from in this nearly saturated mobile market.

However, baby boomers are famous for being slow to adopt technology.  They buy only what they need, and only after the benefits are thoroughly demonstrated by other early adopters.  This behavior extends to their adoption of smartphone technloogy.  According to Emarketer, baby boomers are slowly warming to smart phones, but they still lag far behind their Generation X and Y peers in smart phone ownership.  Baby boomers are the largest demographic segment in the US right now, yet they comprise only 21.1% of all smart phone owners.

So how would smart phone ownership and usage play out for baby boomers in the next few years? Things can go one of two ways:

1. Baby boomers finally “see the light”, realize they will reap productivity gains from using a smartphone for business, and will finally jump on the bandwagon in the next year or two.
2. Baby boomers will adhere to their preference for a feature phone that looks and acts like a phone.  They will continue to be slow in adopting smartphone technology.

Interestingly, the diminishing availability of feature phones doesn’t necessarily mean that people will be forced to adopt smartphones.  This is because you can buy a bonafide smartphone, like the Nokia C5 below (to be released in Q2 2010) and use it only for voice and texting services. It would be a complete waste – but it can be done.

So what do I personally think will happen?  I personally believe #1 will come to pass much sooner than we might realize.  The parallel I draw is SMS.  Five years ago, when I first started watching the mobile industry, text messaging was a newfangled phenomenon that largely belonged to teenagers and college students.  If anyone was to ask me whether I thought anyone Generation X and above would adopt this technology, I would have laughed in their face.  Fast forward to today, and texting is ubiquitous.

Being an early adopter and staunch supporter of smartphone technology, I do hope we will see a similar phenomenon with smartphones, as availability goes up and prices go down.