Will the Recession Affect Smartphone Sales? Yes

by Reads (10,620)

There’s been a great deal of talk about the "R Word" lately.  This isn’t the venue to debate whether the United States is or isn’t in a recession, but I think we can all agree that economic situation in this country isn’t as good as it could be, and we can move on from there.

So, what does this mean for the smartphone market? Will the economic downturn affect sales? I predict sales will be affected… in the most positive way possible.

The Major Driving Force

Companies want their employees to stay in touch with the office when they are traveling. The standard solution for this is to outfit people with mobile phones and laptops. This works, but it’s pretty much the most expensive way to handle it.

There’s a cheaper solution, and in these lean economic times it’s one companies are turning to in increasing numbers: you guessed it, smartphones.

This is hardly a new situation; companies have been outfitting their workforces with smartphones for years. But the financial downturn is going to make smartphones ubiquitous. Instead of it being unusual when a company-issued phone is a BlackBerry or Treo, it will become unusual when a company is still giving its employees dumbphones.

Previously, some businesses gave their traveling workers smartphones and laptops. Going forward, it’s more likely they’ll be outfitting people with smartphones _instead_ of laptops.

A laptop is a nice thing to have long on a trip, but a large percentage of the time it’s overkill. The employee only uses it to check their email a few times. A smartphone can do that, and at a much lower cost for the company.

The maintenance cost for a laptop in a corporate environment is surprisingly high. The yearly cost of keeping one up can easily exceed the purchase price. Smartphones are cheaper to buy and cheaper to maintain.  There’s no significant threat from viruses, for example, and software updates are rare.

Laptops are a nice safe solution, and businesses large and small have have grown accustomed to distributing them in bulk. But times are leaner now, and that’s going to force companies to turn to a more financially savvy option, and that’s going to be good for smartphone sales

The Other Side of the Street

The situation is different for consumers. They certainly aren’t going to give up their cell phones — most people now regard these as necessities, not luxuries. Still, $3.50 gas is sucking up a significant percentage of people’s disposable income, and paying $100 or more for a smartphone can seem like unnecessary extravagance compared to the free phones carriers offer when signing a contract.

But there’s a force pushing people to step up to a smartphone, and its name is "iPhone".

Apple has shown people that a smartphone can be just as easy to use as their old dumbphone, and can do much more. And people are obviously listening, as demonstrated by the millions of iPhones that have been sold.

And this effect has spread all around the industry. Other companies have picked up the gauntlet Apple threw down, and are releasing their own consumer-friendly models that have sold in the millions, like the HTC Touch and Palm Centro.

In addition, there will be some consumers who will choose a smartphone for the same reason business do: by combining functions, it’s actually the cheapest solution. These days, someone considering a phone, iPod, and personal video player could save considerable money by just getting the right smartphone.

So don’t worry about the smartphone industry in this time of economic turbulence. The need for cost-cutting in the enterprise will actually help sales, and companies finally discovering the formula to make devices appealing to consumers will help them weather the downturn.

I’d say HTC’s announcement of strongly increasing revenue and profits is proof of what I’m saying.

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