What to do with the boring smart phone market?

Published en El Pais, January 16th 2018

The smart phone market has two major players (Samsung and Apple) followed by several smaller players and with Google entering the mix it can be a difficult market for new entrants to compete in but is that even something tech companies should strive for? Sometime next month Samsung will be unveiling their new smartphone (likely named the Galaxy S9) and while the phone promises the traditional improvement like more power and a better camera, it is not expected to have that many new features compared to its predecessors. Some may be disappointed, but this can hardly come as a surprise as all smartphones seemed to be in a period of innovation stagnation.

That question is something more and more people are asking themselves as worldwide phone sales are starting to dip dramatically. Apple alone went from a 50% growth from 2009 to 2013 to just 1.7% in the past year. Even the iPhone X is seeing far weaker sales than expected despite being proclaimed as the best phone available. The fact is that many people are simply holding on to their phones until they become unusable rather than buying a new one for modest upgrades.

While this trend is bad for Apple and Samsung, this trend shows us that investors and governments should focus more on the software development rather than expensive hardware. A few months ago, I wrote about a bolivian phone and how it could potentially develop a tech hub in Bolivia if the phone does well. It is already in the software game, but the company cannot do all the heavy lifting. Luckily developing software requires far less cost and the World Bank right now is willing to work with South American countries to promote innovation by providing advice on creating tax breaks for technological start up companies as well as providing loans to governments who need help setting this up. It is already doing so in Peru, Columbia and Chile so why not Bolivia as well? This move will help hedge bets against a decline in mobile sales and less reliant on a manufacturing industry currently being propped up by protective tariffs.

The smartphone market is flat, risky and an expensive market to get into with an ever-decreasing potential payout. There is obviously no guarantee in the software business but if South American countries like Bolivia invest in it, a whole new industry can be created and with it many well paying jobs for years to come.