Facebook’s killer quarter reinforces mobile’s dominance

Apple may be selling fewer iPhones, but Facebook’s huge gains once again confirm the power of mobile

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Credit: REUTERS/Dado Ruvic

If you paid attention to Apple’s quarterly report earlier this week, you could be forgiven for thinking that the mobile revolution was beginning to stall.

Slipping mobile hardware sales

For the first time ever, iPhone shipments slipped year over year, and the growth of global smartphone sales is slipping to about 7 percent this year, per Gartner. That’s the first time it’s dipped below double digits. Ever.

Similarly, iPad sales have been going nowhere for a while now. In fact, the IDC Worldwide Quarterly Tablet Tracker recently noted a 14.7 percent decline in worldwide tablet shipments in the first quarter of 2016, noting “an overall disinterested customer base.”

Though device sales growth may be slowing, the mobile revolution continues to pick up steam. As the mobile hardware market matures, the mobile software, services and advertising businesses are doing just fine.

Growing mobile usage and revenue

If you don’t believe me, ask Mark Zuckerberg about Facebook’s “soaring” mobile revenue. Amidst big overall increases in revenue during the first quarter, Facebook said it earned 82 percent of its advertising dollars from mobile, up from 73 percent in the same period last year. As the New York Times put it: “Facebook … has figured out how to wring billions of dollars from its members on mobile devices.”

Here’s the point: Even if people aren’t buying mobile devices with the same frenzy they used to, they’re using them more than ever.

Women leading the way

Want more proof? A new survey of 500 women by consulting firm Influence Central says the average American family now owns 2.6 smartphones, and 54 percent have dumped their landlines. Some 81 percent of women say they keep their phone near their bed at night, up from 62 percent in 2012.

And Facebook’s results make sense given that 51 percent of the women surveyed now report they always connect to social media via their phone, up from just 29 percent four years ago 

Virtual reality hardware

This kind of market maturation is nothing new. It’s a typical pattern for new technologies. At first, the hardware gets all the growth. Eventually everyone who wants one has one, and that part of the market flattens out into a replacement-driven situation. The size of that installed base sets the stage for the growth of sustainable software and services businesses. Want to see a hardware market hoping to enter the big growth phase? Take a look at virtual reality. IDC says the VR hardware market will hit $2.3 billion this year, with combined virtual reality/augmented reality hardware sales topping 110 million units by 2020.

Eventually that growth will level off, of course. The question is how big will the market be at that point? The answer to that question reveals how big a software and services market VR will create. Good luck catching up to the mobile revolution, though.

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