Leading mobile phone analysts say a "sea of sameness" is turning buyers away, with many considering gadgets such as cameras or virtual reality accessories instead.
"Phone manufacturers have gravitated towards a rectangular touch screen with a camera with a battery; but how do you make that different?" asked Ben Wood, an analyst with CCS Insight, in an interview with Al Jazeera.
"We went through a decade of innovation from 'candy bar' phones to 'lips' to 'sliders'; there was always a reason to upgrade, but now that is starting to diminish."
Thousands of mobile technology companies and tens of thousands of experts and analysts are gathered this week in the Spanish city of Barcelona for the World Mobile Congress, the world's largest mobile technology event.
An estimated 1.6 billion mobile phones are sold each year worldwide, but only two of the top five makers - Samsung and Huawei - saw increased sales in the last quarter of 2015, signalling a change in the industry.
"The rising Chinese manufacturers are chasing business because their [domestic] market is slowing down," says Wood.
"They are looking internationally, so that's why Sony and HTC have gotten left behind, and companies like Samsung and LG are looking over their shoulders."
Wood says that the arrival of cheap high-spec Chinese phones has put margins of all manufacturers under pressure and has forced them to look at other ways to make a profit.
"If your margins are being squeezed on your devices, you've got to find some other places where you make that up," he told Al Jazeera.
"Samsung is making a big bet on virtual reality and the 360 camera [that] they have announced. LG is going with a modular phone, hoping they can sell people up."
Influence on other products
Technology from mobile phones is also making its way into other products, including a pet and baggage tag that can be tracked worldwide at all times.
"The ability to tag and follow becomes really relevant," said Michael O'Hara, the chief marketing officer of the GSMA, the association of mobile operators and related companies, which runs the Barcelona event.
"For instance, with your animals, you can fit them with a collar and follow them. The latest technology allows the batteries in those devices to last for up to 10 years."
The mobile industry is also eager for an individual's phone number to become the main means through which they can be identified online.
An installation at the event demonstrated the technology and how, by using a virtual shopping screen - currently being trialled at bus and metro stops in Dubai - commuters can shop on their way home from work using their mobile phone number.
"It's a virtual shopping experience, but what they are actually showing there is that you are using your mobile number to authenticate that it is you, and then you can pay through your cell phone," O'Hara said.
Source: Al Jazeera