Yahoo’s ‘mobile pause’ prediction is wrong, damaging, and based on a sample size of one

Yahoo’s third Mobile Developer Conference in San Francisco yesterday started on a positive note but then crashed into a pit of largely made-up despair.

In CEO Marissa Mayer’s keynote address, she highlighted Yahoo’s efforts within the mobile space, saying that the company supports 250,000 developers, reaching 800,000 apps across 2 billion devices. There were also several product updates about Flurry and an announcement that its App Publishing suite has generated approximately $200 million in revenue.

Sounds good, doesn’t it?

The doom and gloom came from Simon Khalaf, Yahoo’s senior vice president of publishing products, who delivered the event’s second keynote.

If I’m honest, what followed sounded much like 1990s AOL declaring that the Internet is in trouble because fewer people are using their CD-ROMs for anything other than drink coasters.

Khalaf warned that there will be an industry-wide pause in mobile growth. His rationale for this bombshell? “It’s the seventh year, and there’s something about the number 7. With Web 1.0, it was the crash, so everyone is jittery.”

That’s not a solid starting point for a data-led conversation, but let’s continue.

Khalaf went on to say that year-over-year smartphone sales have declined and that somehow a reduction in hardware sales means we have a serious industry-wide problem. “Wall Street thinks that hardware is on the decline due to saturation, but there’s more opportunity in software. It’s the sign of a maturing industry,” Khalaf said.

But I’m struggling to see where Khalaf is finding the data to support his rationale. In his keynote yesterday, he stated that we just had “a phenomenal growth year, but growth rates are declining. Year-over-year smartphone sales declined: [growth was] 6 percent in 2014 to 2015, but it’s not growing as fast.”

I can’t find that 6 percent from any of the respected sources. If you look at data from the IDC, Counterpoint Research, and GFK, you see a very different picture. Here are the worldwide smartphone growth rates for Q1 to Q3 2015 versus the same periods in 2014:

Note that Q4 is missing, thanks to a delay in sources releasing the final quarter’s data, although IDC has released preliminary findings for the entire 2014 vs. 2015 period.

For the full year, IDC recorded a total of 1,432.9 million units shipped, marking the highest year of shipments on record. That, by the way, is up 10.1 percent from the 1,301.7 million units shipped in 2014.

Was there an average decline, quarter by quarter from Q1 to Q3? Yes. Was there only 6 percent growth? Depending on whom you ask, growth was between 6.47 and 15.4 percent on average across the first three quarters, and IDC data shows a strong holiday period that I would expect to be reflected in Counterpoint’s data, and GFK’s data too.

It isn’t as if the mobile hardware industry is in any mortal peril. Based on aggregated data — and taking into account the overall smartphone shipments trend from 2009 onward — over 1.5 billion new smartphones will be sold in 2016. Then there are tablets, phablets, wearables, and other connected devices to consider.

Oh, and there are still over 5 billion Trump-phones (what I like to call the “not smart” variety) in the wild that can be churned. That is a big opportunity, in anyone’s language.

But that isn’t the point. Since when has a supposed slowdown in new hardware sales meant that the consumable elements — in this case, apps — are in immediate trouble? Or, to put it in “Ross and Rachel” terms, that it is time for a break?

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Mobile is the fastest-moving, fastest-growing marketplace we’ve ever seen. Over 1,000 apps launch per day on iOS and another 1,300+ appear every day on Android. And, as we discussed in yesterday’s webinar on app store optimization, it is like any other marketplace — the vast majority of new apps will fail, and only the few will succeed. But those that do will succeed beyond their wildest dreams (or sometimes nightmares), thanks to the sheer size of the app economy.

Those economics don’t change because the growth rate at which people are buying new smartphones is slowing slightly, and, as I’ve illustrated, the aggregated data from a range of sources suggests the industry isn’t exactly in real danger.

Using a single source of data to gain an understanding of a complex marketplace is never a good idea. That is why the research we do at VB Insight draws on six types of data from disparate sources.

And while Khalaf attempted to put a positive spin on the doom and gloom he peddled yesterday and even made some predictions about the importance of hardware in 2017 — odd, given that hardware was disparaged earlier in the talk — I fail to see why, at a time when Yahoo needs developers on its side, he would choose to focus on a sample of one dataset that paints an unnecessarily grim future.

His rationale?

“When egos go down, productivity goes up.”

How positively autocratic.