Yesterday saw the release of Apple’s new iPhone – the iPhone 7.
The smartphone is a wonderful thing and it just got better.
Today I want to get a bit flighty and consider what the impact of the smartphone and its associated technologies might be as more and more people around the world own them…
The smartphone revolution has barely begun
Here in the UK now, pretty much anyone who wants a smartphone has one.
My dad is 84. He now has one – he bought his first iPhone last summer. My boss, Merryn, has one – of course. So does my other boss, John – well, he has a Samsung (actually, Samsung has a 23% global market share to Apple’s 16%).
My Bulgarian cleaner has an iPhone. The people who work for her all have iPhones. When I was up in Edinburgh last month, I spent some time at the homeless hostel on Cowgate. Many of the drunks and addicts that sleep rough now do so with a smartphone.
According to the 2016 Ericsson Mobility Report, by 2021 there will be more than 6.3 billion smartphone subscriptions in a global population of just over seven billion, while global mobile broadband subscriptions will reach 7.7 billion by 2021 – more than there are people.
In other words, the vast majority of the world’s population will soon be online. And a smartphone is the way by which most will use the internet – at least at first.
The technology has become almost unimaginably cheap. We are almost all of us now able to do myriad different things that just weren’t possible a few years ago. And it’s all going to get cheaper and better.
Long-distance phone calls and telex used to cost a fortune. Now we have email, SMS, WhatsApp, Skype, Facetime, Facebook or Twitter. Almost everyone in the world will soon be just a few clicks away.
Kids can now make films that previously would have required multi-million-dollar budgets. We have instant access to untold amounts of information, when before we had to go to the library.
But more than half the world’s population has so far been excluded from all this – they don’t have the internet access, they are unbanked and they don’t have the hardware. The smartphone is about to change all that.
That will open up so many new possibilities to the world’s poor, opportunities that did not previously exist: to educate themselves, to make new contacts, to create, to buy and sell.
Those that want to – ie most people – will be able to learn, improve, communicate, trade, exchange and generally improve their lot in ways that were not possible before. New markets that did not previously exist will appear. The developed world will have several billion new partners to sell products to, outsource jobs to and to receive products from.
When you consider the sheer weight of numbers, the possibilities are quite daunting. We are on the cusp of a global economic boom of historic proportions. Rather as the Industrial Revolution enabled many to escape rural poverty and, within a generation, form a new middle class, so something similar is about to happen – but on a much bigger scale.
Why the next tech boom could be just beginning
So how best to play this theme? With tech stocks, or tech funds and tech exchange-traded funds (ETFs) if you don’t have the know-how to cherry pick.
But aren’t tech stocks near all-time highs? The Nasdaq has hit a new all-time high. However, this may not signal the end of the bull market.
Technical analyst JC Parets, over at All Star Charts, has just put out a note showing the relative strength of tech stocks to the S&P 500 (the wider US stockmarket).
If you look at the ratio between the two, we are still way off the highs of 2000 – even although tech is so much better now than it was 16 years ago.
He describes the last 15 years as a “monster base” (where a sector or stock bottoms out over a long period, usually after a boom-bust phase) and argues that this is not just bullish for tech but for equities in general.
If he’s right – and his technical analysis ties in with my simple “what happens when everyone has a smartphone?” line of thought – then good times lie ahead.
PS For regular updates on tech trends and investment, you should sign up for our new free email, Exponential Investor
Category: Investing in Technology