In this video taped in 1994, Steve Jobs discusses the realistic, albeit somewhat depressing, reality of life in the technology world:
Jobs points out that all of the work he had done so far in his career - and, remember, the iPhone and iPad had not even been designed at this point - would quickly become obsolete.
Nothing in technology lasts forever, he notes. His contributions will lead to further innovations, and what is considered new and exciting at the time will soon be forgotten.
I had seen this video just before I attended a lunch meeting hosted by Citigroup's global technology team. Based on what I heard from Citi's analysts, it may very well be that we are seeing Jobs's words played out in the mobile device world.
The words that they used were "Device Exhaustion".
Their view is that the world already has enough smart mobile devices. Most consumers see little reason to upgrade their current smart phone or tablet for only a modest change in technology.
There are new devices in the works, of course. Apple is working on a smart watch that is scheduled to appear later this year, and the company is apparently continuing to work on a new Apple television. However, in Citi's view, neither area offers that same potential for growth that the smart phone or tablet did a few years ago.
Citi points out that mobile broadband subscriptions are 75% penetrated in the developed markets worldwide. Unless one of the tech leaders can come up with a new innovative idea, future growth rates will almost certainly slow.
Fully one-half of Apple's iPhone sales in the first quarter of this year were their older iPhone 4 models. Verizon is offering the iPhone 4 for free if the customer signs a two year service contract. Price, not innovation, has been the driver of iPhone sales in the U.S.
The hope is for growth in the emerging markets, which only have a 25% penetration rate. The problem here, however, is that consumers in the emerging markets don't have the same level of income as those in the developed markets, so prices will need to fall further to sustain growth rates.
It's not just the smart phone market. Citi's personal computer analyst Kevin Chang notes that tablets are destroying the market for PC's. In China, for example, tablets will soon be available for $100. Since most tablet users don't need all of the functions of a PC, Citi is expecting further declines in PC sales.
In short, the view from Citi is not a hopeful one for the sellers of IT hardware. Glen Yeung of Citi has been one of the few bears on Apple on Wall Street, and while he said he would love to upgrade the stock the data is just too discouraging at this point to warrant a change in his opinion. Citi is equally negative on Samsung.
Technology remains a tough area to invest in.