700,000 Americans abandon their traditional landline phones every month, according to the Economist, and roughly 25% of all Americans are “cell phone only.”

We’ve written in these pages before about how technological and demographic changes are fundamentally altering sleepy old industries like newspapers and college text books.  The revolution in telephony, however, is a much bigger deal involving much larger companies and a lot more money.

Like many revolutions, this one is being led by the young.  The chart below makes a vivid point: younger Americans in their 20s and 30s, who generally tend to be highly mobile (bordering on nomadic) have shunned the traditional home phone en masse, opting to use their mobile phones exclusively. In 2008, more than 40% of the “just out of college” age cohort chose not to bother with a home line, and the number has risen every year.

It’s not hard to understand why.  When you move every 6-months, transferring your home phone service can be a cumbersome drag in an era in which Americans are used to instant service.   It’s also uneconomical for a young single person to pay for both home and mobile service, especially considering that young people spend comparatively little time at home.  (Plus, an iPhone is so much cooler than a home phone, dude.) Read the rest of this entry »

Technology has always been a great disruptor of the existing status quo, and it’s not always pretty.  The Industrial Revolution led to massive displacement of business owners, workers, and tradesmen with pre-industrial skills or inferior products that were no longer in demand.  Likewise, more recent technologies, such as Internet file sharing, have absolutely decimated the recording industry and may soon wreak havoc on the movie industry.   Mobile phones have destroyed the traditional fixed-line telecom business.  And now we see that VOIP (voice-over-Internet protocol) may soon wreck the mobile phone industry.

As we read in Brad Stone’s article today’s New York Times, “Skype, the Web Phone Giant, Bring Cheap Calls to Cellular.”

Stone writes, “Skype, the Internet calling service that has more than 400 million users around the world, is aggressively moving onto mobile phones….  The idea of bringing Skype to mobile phones has always been viewed by cellular operators as potentially threatening.  It opens up the possibility that people will use their data plans to make calls using Skype instead of the more expensive and profitable voice minutes on the carriers’ cellular networks.”

The mobile operators are right to be scared; they of all people should know.  Mobile phones have put regular long-distance call plans into what is almost certainly terminal decline. Read the rest of this entry »

It’s official:  the mobile phone market is now saturated.   As one of the key technologies to gain mass acceptance during the tech boom of 1990s, mobile phones have been an industry that HS Dent has watched closely (see graphic below).  It has been HS Dent’s long-held view that the market saturation of several key technologies–such as mobile phones and broadband internet–would coincide with a peak in productivity growth, a slowing in tech-related spending, and long-lasting recessionary conditions for the industry.  As chance would have it, the saturation also coincided with a credit crunch and a general recession.  But what kind of future can handset makers like Nokia, Motorola, and Samsung look forward to once the economy begins to recover?   Read the rest of this entry »