Smartphones eat into other industries
By Kim Tae-jong
The huge popularity of smartphones has been fast eating into other industries such as console gaming and camera companies due to their high-tech features and various applications that can replace traditional devices.
According to recent data from market research firm Strategy Analytics, the number of smartphones in use worldwide surpassed the 1 billion mark for the first time in the third quarter this year, meaning one out of every seven people has a smartphone.
More amazingly, about 60 percent of the whole population in Korea or over 30 million people had a smartphone as of August.
It has taken around 16 years for the smartphone industry to reach this historic milestone, creating new opportunities for information technology firms and booming related industries.
But at the same time, the mobile revolution has overshadowed once-booming industries.
The past few years have not been so kind to game console makers, especially market-leading Japanese firms, as casual players do not feel like buying game machines or titles as they can easily play popular games on their smartphones.
Nintendo, the world’s largest maker of video-game machines, recently cut full-year profit and sales forecasts as free titles on smartphones and tablets dissuade consumers from buying separate gaming devices.
Annual sales of Nintendo’s flagship 3DS handheld player will be 17.5 million, 5.4 percent lower than previously estimated, the company said in a statement in October, adding it also lowered its forecast for 3DS software sales 4.1 percent.
The impact of smartphones is also easily detected in other industries beyond gaming.
As smartphones up their camera capabilities, the compact camera industry now shares the sense of crisis, too.
Given that many high-end smartphones are beginning to rival the photo quality of many compact cameras, consumers shun buying both.
According to industry data, camera makers here sold about 1.6 million compact cameras in 2010 when smartphones began to boom, but the figure dropped to 1.4 million last year and is expected to plunge to 1 million this year.
“It’s true that smartphones have had an impact on our industry,” Hong Ji-eun, an official from Sony Korea, said. “So we’re now developing more high-end compact cameras which can compete with smartphones.”
Smartphones have also hit calendar and paper planner makers hard, which used to enjoy booming sales around this time of year, as they were popular year-end gifts. But they have become less popular because people can instead use various smartphone applications which help them organize their schedules.
Yangjisa, a leading local manufacturer of stationery products such as notebooks and planners, has suffered sluggish sales. Its operating profit dropped 65.7 percent in the July-September period, compared to last year.
“We believe that the impact of smartphones will grow,” an official from the firm said. “To cope with it, we will come out with new products such as customized paper planners.”
Smartphones have an indirect impact on some industries, as they have changed life habits.
For example, subway billboard advertisers used to target commuters and consequently put eye-catching posters and advertisements inside trains. But most passengers tend to keep their eyes on their smartphones, so businesses don’t want to waste money putting up ads that people do not pay attention to.
“As you can see, almost everyone is using their smartphones on the subway,” an official from an advertising agency said. “Who would care about ads in the corner of the train?”
Experts also said that smartphones will continue to eat into other industries for a while.
“There is still room for growth in smartphones here,” KDB Daewoo Securities analyst Song Jong-ho said. “That means smartphones can inevitably have an effect on others industries which overlap features that they offer.”