Many news sites have reported perky news items about Flurry’s Christmas app download statistics. And most of them have been comprehensively out to lunch. The real news in Flurry’s numbers is not that Christmas Day app downloads once again bounced sharply from the average December day since that obviously happens every year. A truly gruesome bit of real news was buried in the exhibit that compares Christmas 2012 download volume growth to Christmas 2013: App download volume increased by 90% year-on-year back in 2012 but by just 11% in 2013.
The Christmas app download volume growth has collapsed. This matters a great deal to the smartphone industry, because high-end smartphone sales depend on affluent markets where the Christmas bounce is big: The United States, the United Kingdom, Germany, France, Italy, Spain, Australia, etc. Low-end smartphone sales dominate markets where the Christmas sales bounce is small-to-non-existent: Malaysia, Indonesia, Philippines, India, Nigeria, etc.
The cataclysmic slowdown of app download volume we just witnessed is likely a sign that the number of consumers buying a high-end smartphone for the first time has tanked in the Western world. The people who triggered the massive Christmas app download surges of 2012 and 2011 were consumers who had just received the first high-end smartphone and have either switched from a feature phone or a low-end smartphone that lacked strong app support (Nokia, BlackBerry, etc.).
That pool of consumers has been exhausted. Refugees from Nokia and BlackBerry camps have already bought an iPhone or a Samsung Galaxy. All high-income and middle-class consumers have already migrated from feature phones to smartphones. Gartner’s Q3 2013 numbers reflected the same phenomenon. Globally, Apple and Samsung stopped gaining market share in the autumn quarter while Lenovo, LG and Huawei were all market share gainers.
The point about Flurry’s Christmas statistics is that consumer behavior may be changing faster than anyone predicted. Nobody in the app industry expected that app download growth relative to Christmas 2012 could drop to just 11%. A decline to roughly 30% growth was widely expected and some pessimists anticipated just 20% growth.
But consumer behavior is shifting faster than we comprehend. The industry history of the high-end device market in 2014 may be written in blood as vendors ranging from HTC to Sony face brutal conditions in the $400-plus phone market.