Having been in the business of smartphone distribution for many years (28 in fact), I get rather bored of hearing the cynics beating on the same drum over and over again.

Will we ever do another deal? There’s no profit anymore! Its over!

Well it’s not over! In fact it’s just started. Let me tell you why.

The latest figures released show that in the first quarter of 2018, there was a global distribution reduction across the whole manufacturing spectrum by an average of 29%. Now that’s big!

It’s only big because what we now have in place is a mature market and not an emerging market, or rather, one that is growing. Its taken over 30 years to grow, but it finally got there. Now that its fully grown up, we as traders and entrepreneurs should be in is a position to capitalise on that mature market.

It didn’t disappear, its still there! It’s just changed into something else.

Smartphones are embedded into our DNA. There are seven billion people in the world today, and approximately 2.5 billion are smartphone users. Most people would pay their smartphone bill before putting food on their table. So don’t worry guys, people will still be purchasing smartphones for a long time to come.

Do you seriously think you won’t make any money from the game?

Shortly there will be many casualties coming down the road. Big hitters and famous names alike. I personally think Samsung will suffer in this new environment. I, for one, won’t shed a tear for them.

They have had their day, made their loot and now they must graciously give up the ghost and allow others to have a share.

In my day I have seen the top spot jump from Motorola to Nokia, from Nokia to Rim, from Rim back to Nokia, from Nokia to Apple and from Apple to Samsung. Now we have rising up from the Far East many young companies like OnePlus and Xiaomi, for which an Android system offers much better value for exactly the same product as produced by the top spot players. So hey Samsung, maybe it’s time to step down graciously and allow someone else to have a bit of glory. Of course, that won’t happen!

Anticipating the drop in distribution figures, Apple announced that they had reduced their future orders on components and parts by 20%.

Saying that, I think Apple will remain in vogue for a time to come, after all they still have their IOS system, most people feel that changing from IOS to Android would be the same as  needing a brain transplant. However this is most certainly not the case - if you think that, then maybe a brain transplant should be an option for you.

So where do we go from here guys? More importantly, and due to the vendor’s reduction in volume, what will the vendors do to try to rectify the situation?

The first thing they will do is panic. This will be due to the fact that their shareholders will be well and truly banging on their doors for their share of the diminishing profits. So I guess that for a start they will make rash decisions. After all, desperate people always do desperate things.

It’s very possible that they will relax their distribution model and allow easier access to their product through less controlled channels. What does that mean for us?

Well, what that means for us is that we will have easier access to the product at better prices. We will first get access to it, most importantly, and if we are very clever we will be able to sell it. After all guys, isn’t that what we are good at?

During the vendors moments of despair they will irrationally attack anyone who they think is taking a margin away from them.

Beware the used market! 

Non-genuine parts will become a major issue, so unless you are selling used smartphones that are recycled from harvested parts off original products, or you are selling graded handsets that have never been tampered with, you may be in for a shock!

To scare us off, the vendors will blame us for their market depreciation and attack us with litigation and legislation.

If all we are left with is recycled smartphones using harvested parts along with original graded handsets, I for one say “now that’s a real business.” We can surely and safely make some loot out of that. Its preferable to trying to surf our way through the abundance and availability of some of the suspect and poor quality used product available in the marketplace today.

Don’t worry guys, the used market is still growing by an average of 7% annually, and if we play our cards right it’s not going anywhere in the short- to medium-term future. At least that’s what the analysts are saying!

Of course the vendors don’t like the used business. They don’t like any business if it involves someone else making a profit off of their intellectual property.

Now that we have the decline on new products, they will undoubtedly blame someone else for it.

That will inevitably be the parallel trade. But hey, I purchased it and I’ll do what I want with it.

Try and stop me if you dare!

Keep The Faith
The Old Hand

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