After years of double-digit growth, smartphones have finally met a fate similar to tablets, desktop computers, and laptop PCs: slowing shipments amid market saturation. Information technology research company Gartner now expects smartphone shipments to slow to 7% growth this year, down from the 14.4% growth the industry experienced last year.
Gartner's research director, Roberta Cozza, characterized the state of smartphone sales going forward: "The smartphone market will no longer grow at the levels it has reached over the last seven years. Smartphone sales recorded their highest growth in 2010, reaching 73%." Additionally, Gartner's research suggests the majority of year-over-year smartphone growth will come from developing markets like India and China.
This is a poor forecast for high-end smartphone vendors like Samsung (NASDAQOTH:SSNLF) and Apple (NASDAQ:AAPL) that make the majority of their profits in developed markets. It's likely to take a novel concept to encourage consumers in developed markets to upgrade, and Samsung may be onto something with its newest concept.
A bendable phone?
According to Bloomberg, Samsung may be working on a next-gen bendable smartphone utilizing organic light-emitting diodes, or OLEDs, for a model that could come to market as soon as 2017. Bloomberg quotes sources describing a phone/tablet combo that could be used as a handset with a screen size of 5 inches, but expanded to an 8-inch tablet by unfolding the bendable screen.
Samsung has always led Apple in the OLED race: Samsung has been using OLEDs for multiple generations of high-end smartphones. Apple has slowly been working on replacing its liquid crystal displays, or LCDs, with OLEDs due to their lighter and thinner displays, better viewing experience, and faster response times, and increasingly it looks like Apple will incorporate the technology into 2017's iPhone generation.
A smartphone and a tablet without the drawbacks of a phablet
Make no mistake, however: The key here is the bendable display. The trend in smartphones has been a larger display, which narrows the difference between a traditional smartphone and a tablet. So-called phablet models, which average between 5 and 6 inches, have exploded in popularity at the expense of cannibalizing the tablet.
For all their popularity, however, phablets do present trade-offs. The larger form factor impacts portability, an important factor for smartphone screen sizes, and while larger than traditional smartphones, phablets are still limited in display size versus conventional tablets. Samsung's potential product appears to solve both issues by offering a tablet-sized display with the portability of a traditional smartphone.
There would be risks for Samsung with such a product: The user experience cannot suffer as a result of the bendable screen. If it does, it's likely this product would be relegated to niche status. In computers, the newest trend is the 2-in-1 laptop/tablet hybrid, as users are increasingly looking to one unit to meet the majority of their computing needs. Samsung is attempting to bring this concept to the smartphone, and could have a hit on its hands by doing so.
Jamal Carnette owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Gartner. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.