This has been an eventful year for alkaline batteries. First, in April, Energizer Holdings announced that it would split its household-products business, which includes Energizer batteries, from its personal-care business, which sells Schick razors and Hawaiian Tropic sunscreen. Then, on Friday, Procter & Gamble announced plans to spin off Duracell into a separate business as part of a larger plan to merge, discontinue, or divest about half of its brands in order to focus on its most important ones.
People have simply been buying fewer batteries. In the United States, battery sales fell four per cent in the fifty-two-week period ending in late September, according to Nielsen data analyzed by Jefferies & Company and cited in the Wall Street Journal. This was “the worst showing among the Top 25 categories in the household products and personal care market,” according to the Journal. Still, P. & G.’s Duracell announcement doesn’t signal the death of batteries; Duracell, the top U.S. battery company, still has two billion dollars in annual sales. Even if sales continue to erode, it will take a long time for batteries to be rendered altogether obsolete.
Yet the changes in the sector signal the difficulty of sustaining single-purpose electronics in the age of the smartphone. As if to underscore this, Duracell’s Web site lists some of the devices in which you might use its CopperTop AA batteries: toys, remote controls, flashlights, calculators, clocks, and radios. The use of batteries in toys will surely live on (a colleague with three children wrote to me about the P. & G. announcement saying, “As someone who buys millions of Duracell batteries a week, I’m surprised.”) but smartphones can perform many of the same functions as the other listed devices.
Smartphones will surely replace even more electronics over time. In 2008, David Pogue raved in the Times about the Flip video camera (which ran on AA batteries) calling it “one of the most significant electronics products of the year” and “a mega-hit.” A year later, Cisco acquired the startup that made the Flip. But smartphones were starting to offer better and better video quality; by 2011, the Flip had been discontinued. As Phil Schiller, Apple’s senior vice president of worldwide marketing, said following the launch, this September, of the iPhone 6 and iPhone 6 Plus, “I’d bet the iPhone has become the world’s most popular camcorder.”
The Flip is in good company. Since the smartphone débuted (not all that long ago, remember—Apple introduced the iPhone in 2007), it has displaced or considerably shrunk the market for alarm clocks, navigation devices, calculators, and hotel key cards. With the new Apple Pay payment system, which lets people use their iPhones at cash registers, Apple is now seeking to replace both the physical credit card and its carrying case. A Web page for Apple Pay defines the goal of the service: “Your wallet. Without the wallet.”
Even the wearable-camera maker GoPro—whose shares have more than doubled in value since the company went public, in June—has acknowledged that it might be vulnerable to smartphones. In the section of its I.P.O. filing that detailed the potential risks to its business, the company wrote, “Smartphones and tablets with photo and video functionality have significantly displaced traditional camera sales. It is possible that, in the future, the manufacturers of these devices, such as Apple Inc. and Samsung, may design them for use in a range of conditions, including challenging physical environments, or develop products similar to ours.”
As Nick Paumgarten noted in his recent feature about GoPro for the magazine, the camera has become popular by appealing to adventure-sports enthusiasts, although it has lately been trying to expand to more mainstream consumers. On Friday, however, GoPro shares fell more than nine per cent, after the investment firm Oppenheimer & Co. suggested that it would underperform the market as a whole. “With the first act successfully completed,” the Oppenheimer analyst Andrew Uerkwitz wrote, “we believe Act 2—moving beyond action/adventure video capture—will prove more challenging.” GoPro’s second act will, of course, place it in direct competition with smartphones.
P. & G. intends to finish the split of Duracell next year. (Although it could also entertain other options, such as selling the brand to a private-equity firm that would be attracted by the brand’s profits and less concerned about growth. P. & G.’s C.E.O., A. G. Lafley, called Duracell “a business with attractive operating profit margins and a history of strong cash generation.”) It’s hard to feel too bad for Duracell, which had a good, decades-long run. Pity instead the companies that make stand-alone devices; at ever-increasing rates, smartphones are coming for them.
