Smartphone sales overcome challenge of consumer satiety with increasingly futuristic features
Bigger displays and better cameras were the obvious hallmarks of the latest smartphone releases from both Google (the Pixel 3 and Pixel 3XL) and Apple (the iPhone XS, XS Max and the soon-to-come XR). Reviewers, however, were quick to point out the similarities to their respective predecessors — and suggested consumers hang on to last year’s models. It turns out, consumers didn’t really need the advice. Even hardcore iPhone fans, known for lining up and even camping out for the latest launch, did not turn up in the same numbers as for the iPhone X.
“From an innovation perspective, everyone is waiting for what the next big wave will be,” said Dan Krausz, National Sector Lead for Telecommunications at KPMG in Toronto. “There are obvious trends — bigger screens, the demand for more video continues to increase, better and more cameras, more Artificial Intelligence software — but what we are really seeing is consumers are sticking with what they have at the moment.”
How we got here
It’s generally accepted that the first true smartphone was the Nokia 7650 launched in 2002. It had physical buttons, a small screen, was designed for 2G technology and ran on the Symbian Operating System, making it the first mobile phone able to take third-party applications. “It was designed like a regular phone and we used it to call people,” said Wayne Lam, principal analyst, mobile electronics, IHS Markit in Los Angeles. “The iPhone came on the scene in 2007 and threw the design book out the window. No more buttons. A bigger screen you could touch. And it was more than just a phone. That’s when the smartphone as we know it took over the industry.”
Lam likens the evolution to Darwinism, with the most successful evolving with successive generations. Today people use their smartphones to interact on social media, watch videos and consume content in a mobile way. “The smartphone industry didn’t think about Facebook or Uber in the beginning. All of these applications came after the hardware platform,” said Lam. “That’s the cycle: smartphone manufacturers create capabilities and hit on a killer application that further drives evolution. The next iteration does that better, faster, with more processing power.”
The result: in the past five years, screen sizes have almost doubled, with the average screen size at 5.8 inches today (the Pixel 3 XL is 6.3 inches and the Apple XS Max is 6.5 inches). Screens aren’t just larger, they’re more immersive, more colourful. The computational or digital cameras are so good they’ve largely killed off the point-and-shoot camera market, and even they are getting better.
Multi and better cameras. LG just came out with the LG40 Thin Q, which has five cameras. The next evolution? Lam sees smartphones going after the high-end DSLR photography market. Built-in projectors, 3D and hologram features are also in the works, but Lam is skeptical largely because they aren’t particularly practical.
Flexible screens. Think Westworld’s smartphones that fold out into a tablet. “There have been previous versions with seams. Now companies are working on a single foldable screen that would open up,” said Duncan Stewart, Director of Technology, Media and Telecommunications Research for Deloitte Canada. “It would be thicker, heavier, and it’s not clear if consumers want it. Tablets are already being replaced by lighter, more mobile smartphones, with sales down nearly 50 per cent from 2014.”
Imagine your smartphone being able to predict your next usual activity, or bring up suggestions, or remind you to get into your car because it takes 45 minutes to get to your next event. These types of enhancements will happen thanks to AI. “In the past, it was the hardware that defined smartphone in terms of processing power, memory capacity, network interface, display size, battery life. In the future, carefully designed applications that allow consumers to easily interface anywhere and live their lives will define smartphones,” said Sagar Naik, Associate Professor in the Department of Electrical and Computer Engineering at the University of Waterloo. “This is where Artificial Intelligence will play a big role. For example, an app powered by AI will match my need for a painter with the three best options on my phone within minutes rather than me having to search that information out.”
Augmented Reality. AR apps (digital overlays) already exist that enhance what you see through your phone. Just think about all those instagram filters, Pokémon Go and more practical tools like the IKEA app that allows you to take a photo of furniture in a magazine and see it in your living room. “That’s now,” said Lam. “In the future, AR will move from smartphones to wearables that are linked to your smartphone. For example, glasses that incorporate AR, so that when you bump into a colleague, an information bubble will appear in your lens, telling you their name, where you last saw them.”
Smartphone as healthphone. The ability of smartphones to connect with medical devices is on the horizon, said Deloitte’s Stewart. “The Apple watch recently received FDA approval for both a built-in atrial-fibrillation-detecting algorithm and an ECG. Regulators appear to be open to the idea of consumerization of medical devices that connect or attach to the smartphone, transforming it into a medical hub.”
5G technology. With 5G mobile networks expected to be available in Canada by 2020, this is perhaps the biggest game-changer for smartphones, bringing faster speeds, more capacity, lower latency and more competition. “5G unleashes the potential of the Internet of Things,” said KPMG’s Krausz. “Where the smartphone finds its way in that ecosystem of connected devices is going to be interesting.”
Where smartphones failed
Microsoft Kin One and Two came out in 2010 and within weeks the prices dropped. Built with Facebook and Twitter at their core, they were targeted to social media addicts but failed largely because they weren’t really smartphones, had no apps or games yet required a data plan with Verizon.
Google announced its modular Project Ara smartphone project in 2013 and shuttered it in 2016 without ever releasing it to the market. Modularity is a concept where you can upgrade the phone with customizable features. Motorola is still trying to make it happen but all those options seem to cause consumers paralysis of choice.
Amazon Fire launched in 2014 and quickly fizzled out. It featured four cameras to create a false sense of 3D and presented a different flavour of Android but proved to be too odd. Plus, it was exclusive to AT&T at the time.
More recently, Essential, a startup by Andy Rubin, the father of Android, has hit on a lukewarm reception. Among its features: a magnetic interface and snap-on 360 degree camera.
Finally, BlackBerry, once the tech leader, has fallen to the back of the pack largely because of its failure to keep up in a consumer-driven market.