Rise of the Smartphone Continues

Focus: STOCKS

We have yet to hit the saturation point on smartphones, which means there are still good opportunities to cash in on this trend, suggests Richard Moroney of Dow Theory Forecasts.

The smartphone has graduated. It’s no longer just a niche gadget, but a powerful tool many consumers cannot—will not—live without.

While that’s a strong statement, Americans’ spending habits back it up. From 2007 through 2011, household spending on telephone services rose nearly 11%. Total household spending rose slightly over the four-year period, but would have declined without the gain in phone expenditures.

At a time when nine out of ten adults in the US already own a mobile phone, some worry that growth in this market is tapped out. We aren’t ready to make that call, for at least three reasons:

  • Demand for data: According to research firm eMarketer, the average American spent 65 minutes a day on mobile devices last year, more than double the time spent just three years ago. Data from researcher comScore shows that in July, more than 51% of mobile phone users browsed the web on their phones, up from 30% in December 2009. The percentage of phone users who listened to music on their phones more than doubled, to 28%, from 13% in December 2009. Such usage trends, coupled with the stubbornly persistent rise in US consumers’ spending on phone service, suggests the thirst for instant data access is far from quenched.
  • Room for expansion: More than half of US mobile-phone users now carry smartphones, but the percentage is far lower in most of the rest of the world.