Every revolution has its limits.
Ten years after Apple's (AAPL) original iPhone launched, the smartphone has easily become the world's most popular computing device. And for quite a few consumers, particularly in emerging markets, it's their only computing device. For activities such as search, social media, music-listening, casual gaming and the viewing of short-length videos, combined smartphone and tablet usage has eclipsed PC usage by a sound margin.
Nonetheless, as Intel (INTC) , Nvidia (NVDA) , Sony (SNE) , Roku (ROKU) and many others can attest, rumors of both the PC and TV's demises have been greatly exaggerated. For while touchscreen-based portable computers with high-res cameras and constant web connectivity (i.e. smartphones) have many uses, there are still plenty of activities for which access to a larger screen and/or a physical keyboard and mouse remains quite useful.
Here a few major areas where smartphone and/or tablet usage has fallen short of the more optimistic projections set this decade.
1. Productivity tasks
A few years ago, I quipped that I'll buy into predictions that tablets will fully replace PCs in the lives of "mainstream" consumers when I walk into a coffee shop and see as many tablets opened up as notebooks. Based on that criteria, we still aren't anywhere close.
For tasks such as composing longer documents and e-mails, creating spreadsheets and presentations and performing advanced photo and video-editing, PCs are still clearly preferred over smartphones and tablets by both home and office users. That, together with long tablet upgrade cycles the fact that many consumers have decided a phone with a larger screen (i.e., a phablet) is the only mobile computing device they need, is a key reason why tablet sales have been in a multi-year decline: Research firm IDC believes they fell 6.5% last year to 163.5 million. By comparison, IDC thinks PC shipments fell just fractionally to 259.9 million.
Even Apple, which possesses a huge high-end tablet share and has neglected its relatively cheap MacBook Air notebook line in recent years as it promotes the iPad Pro as a notebook alternative for mainstream users, might be rethinking things a bit. KGI Securities analyst Ming-Chi Kuo recently reported Apple plans to launch a MacBook Air "with a lower price tag" in Q2.
2. Advanced gaming experiences
The huge amounts of time that consumers spend playing Candy Crush Saga, Clash of Clans and other hit casual mobile games hasn't done much to reduce the amount of time spent playing more advanced titles on game consoles and PCs -- particularly in the first-person shooter and sports genres. It also hasn't stopped customers from paying up to buy the hardware needed to have high-end gaming experiences.
Per Statista, the average amount of time spent on consoles by U.S. users rose 30% from Q2 2014 to Q2 2017. Sony, meanwhile, has reported that lifetime sales of the PlayStation 4 (launched in 2013) have topped 76 million, a figure that puts it on the verge of topping the PlayStation 3's lifetime sales.
In addition, Nvidia is coming off a fiscal year in which its Gaming segment revenue rose 36% to $6.7 billion. Demand from cryptocurrency miners helped some, but gaming-related demand -- from both Nintendo Switch console processors and Nvidia's Pascal-architecture PC gaming GPUs -- was the larger driver.
Game developers such as Activision (ATVI) , Electronic Arts (EA) and Take-Two Interactive (TTWO) definitely can't complain about all this activity. Especially when it's accompanied by new opportunities to monetize hit titles such as selling in-game content and subscription services, and promoting e-sports leagues.
Quite a lot of online shopping activity has shifted to mobile devices. But when it comes to actually pulling the trigger on a purchase, many consumers still prefer to use a PC rather than a phone or tablet.
Though reporting that smartphone-based shopping grew much faster than online shopping overall, Adobe estimates mobile devices still only accounted for 33% of online shopping revenue on Cyber Monday last year. Intel says its data indicates U.S. consumers spend about 90% more time shopping on PCs than smartphones (the numbers probably aren't as strong in emerging markets). And while PayPal's (PYPL) mobile payment volume rose 53% annually in Q4, it was still only equal to 37% of its total payment volume.
Smartphones should continue gaining e-commerce share -- particularly as biometric authentication (fingerprint sensors, Face ID, etc.) and solutions such as PayPal's One Touch make shopping more convenient. But it's clear that a lot of consumers remain partial to shopping on larger screens.
4. Long-form video
Though traditional TV viewing may be under pressure, that doesn't necessarily mean consumers are spending less time watching movies and shows on their TV sets.
This week, Netflix (NFLX) disclosed that 70% of its viewing happens on connected TV sets, even though TVs only account for 25% of its sign-ups. And in October, Alphabet's (GOOGL) YouTube said that over half of all viewing for its YouTube TV service is happening on TVs via its Chromecast HDMI sticks. Roku, for its part, has reported user data that implies its 19 million-plus active users spend over two hours per day on its streaming platform for TVs.
For videos lasting a few minutes or less, mobile devices have clearly become the most popular viewing option, as data from YouTube, Facebook and others drives home. But when consumers want to "lean back" and watch something for a while, TVs remain far more popular.
Looking further down the line, the fact that PCs and TVs remains preferred options for many activities could bode well for augmented reality and virtual reality headset usage, once technical limitations in areas such as display quality and processing power are addressed. The fact that these headsets can deliver a much larger effective field-of-view than phones or tablets, while also enabling immersive entertainment experiences and (in the case of AR) potentially allowing a user to keep both of his or her hands free, could pave the way for huge long-term adoption.
When it comes to computing and digital entertainment, there's no magical "one-size-fits-all" device. The smartphone may be in a league of its own in terms of usage, but that clearly doesn't mean other platforms can't maintain massive usage time as well.
Jim Cramer and the AAP team hold positions in Apple, Activision, Nvidia and Alphabet for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL, ATVI, NVDA or GOOGL? Learn more now.