Internet of things will guide next big breakthrough in smartphones

Nabila Popa March 16, 2016 No Comments
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Internet of things will guide next big breakthrough in smartphones

GoogleKayvan Shoaye RadkayvanshrHi-Tech Development Group LLCInternet of things will guide next big breakthrough in smartphones2016-03-16 12:00:03Author Google+ Page

These days, everyone only seems to want to look forward, without ever stopping to look back. And nowhere is this more keenly felt right now than in the smartphone industry, where everyone is eagerly awaiting the next big breakthrough in mobile technology. Such breakthroughs are usually the staple of the annual Mobile World Congress (MWC) trade fair, but this year’s edition — hosted in Barcelona last month — was somewhat underwhelming.

Indeed, if Apple had been in charge of branding for the 2016 event, it would probably have been called MWC 2016s.

So what is going on with the mobile phone industry these days? Why has the rate of innovation suddenly stalled? Have we already seen it peak?

I strongly believe that one of the best ways to figure out what the future might hold is to take a good look into the past and understand what factors brought us here in the first place. So let’s take a look at the evolution of the GCC smartphone market over the past couple of years and see what lessons we can learn.

How we got here

The smartphone industry has come a long way in the past couple of years in terms of size, design and technological leaps. And the numbers aren’t too shabby either, with GCC smartphone shipments rising from 18.4 million devices in 2013 to 26.1 million in 2015. Spurred by improved product quality, greater choice of brands, better infrastructure and cheaper data packages, this stellar growth means that smartphones now account for about 77 per cent of all mobile phones sold in the region.

And while nothing quite as revolutionary as the introduction of the first iPhone has occurred during this time, there has been one development that is bringing a lasting change to the industry — the influx of cheaper, lower-end devices from the likes of Huawei and Lenovo (among others) and the subsequent plunge in the average price of a smartphone.

And if you don’t take my word for it, consider this: in 2013, only 8.6 per cent of smartphones were priced below US$200; by 2015, that share had risen to about 40 per cent.

Smartphones suddenly became affordable for the vast maj­ority of the consumer market, and the inevitable consequence was rapid saturation. Combined with the perception that there is simply nowhere left to go from a technological point of view, this saturation has brought those once-stellar growth rates screeching to a halt. Indeed, IDC’s Mobile Phone Tracker shows year-on-year smartphone sales growth in the GCC tumbling from a high of about 100 per cent in 2013 to 32 per cent in 2014, and down to just 7 per cent in 2015.

It seems like everything that could be done to a phone has already been done, and the lack of a wow factor on show at MWC last month only served to heighten the sense that innovation has stagnated. The disappointment that greets the latest over-hyped flagship launch is often substantial these days, as the market sighs a collective “Is that it?” And while it might be unfair to expect the same levels of innovation year after year, the truth is that we have been spoiled as consumers over the past few years and many of us refuse to accept the law of diminishing returns.

In that regard, the race is on to launch the next big innovation in the smartphone space. But where is it going to come from?

The vendors’ journey

To be honest, it’s a rather murky picture out there at the moment, particularly as the ­major players that spoilt us with innovation after innovation in the boom years are now jockeying for position and trying to figure out what went wrong.

Samsung is a prime case in point. What it did right two years ago was to launch large-screen phones, despite cries of derision from many market analysts who questioned why anyone would want to carry around such a large device.

Samsung proved these critics wrong by addressing an untapped consumer need, and captured more than 60 per cent of the GCC smartphone market in 2013 as a result. And while the South Korean giant still holds top spot in terms of volume, that share had fallen to 45 per cent by the end of 2015. It wasn’t only the increased competition that was to blame, with many in the industry pointing to Samsung’s incoherent pricing strategies, poor treatment of channel partners and overabundance of offerings in every price bracket as the key contributors to the vendor’s current malaise.

It will come as no surprise to learn that Apple remains at No 2 in the market, with the vendor upping its share of GCC smartphone shipments to 19.6 per cent in 2015, a five-point increase from 2013. The most noteworthy thing that Apple did during that period was to follow Samsung into the realms of larger screen sizes with the iPhone 6 series at the end of 2014. Despite not being technologically new, it was a development that many Apple lovers had long been crying out for and helped claw back large swathes of consumers who had migrated to the larger screens on offer from num­erous other brands.

I honestly believe that if it wasn’t for this move, Apple’s share in the GCC would have definitely declined.

During a very successful 2015, Apple launched the iPhone 6s and 6s Plus. And while volume wise it sold well globally and featured many technological improvements, the overwhelming consumer sentiment was that it wasn’t much of an upgrade. Fans are now eagerly awaiting Apple’s new launches for this year, which as rumour has it will also include a smaller iPhone along with the next flagship ­iPhone 7. These are to be unveiled across two separate events, on Monday and one in the usual September slot, something which Apple has not done before.

Regardless of the number of events, a growing band of mob­ile analysts and consumers are beginning to wearily accept that, once again, there might not be anything groundbreaking to get excited about.

One interesting development that has given us something worth talking about recently has been the rise — seemingly from nowhere — of the Chinese brands Huawei and Lenovo. Combined, their share of the GCC smartphone market grew from 5 per cent in 2013 to about 20 per cent in 2015, and they are now just as much a thorn in Samsung’s side as Apple is.

Huawei’s growth can be attributed to a cohesive 360-degree success story — excellent marketing, strong pricing and products, and a solid focus on building sustainable and mut­ually beneficial channel partnerships. In contrast, Lenovo’s success has been built on the simple formula of offering good phones at low prices.

And while Lenovo has gained a large volume share in the low-to-midrange segment, Huawei has managed to succeed in entering the higher price segments as well.

The feel of the future

Now that we have studied the growth of smartphones in the region and analysed the journey of specific vendors, are we any better equipped to judge which brand will bring us the next ­giant step into the future? The simple and honest answer to this is no. Indeed, I don’t believe the answer lies with any one vendor, but rather with the technology industry as a whole, espe­cially as everything becomes increasingly connected via the Internet of Things.

Central to this concept is the emergence of so-called innovation accelerators such as virtual or augmented reality, 3D printing and robotics. And it is when these young technologies begin to mature and reach their full potential that we will finally identify the long-awaited new roles that smartphones can play in our lives. For it is perfectly conceivable that there are things we haven’t even thought of yet that we can do with our smartphones, just like we once never imagined we could use them to browse the net, do the weekly shopping or navigate our way around traffic jams.

It is the emergence of such new uses that will truly signal the next revolution in the smartphone industry. Just think back again to the days of Nokia, when phones kept getting smaller and smaller, to the point we thought they might disappear alto­gether. No one ever thought they would get big again or that we would be able to communicate in ways beyond simple voice and text.

Then came touchscreens and apps — what we now call “smartphones” — and with them the intro­duction of myriad new uses for our trusty mobile devices.

So as we sit here now, questioning what more we can possibly achieve with our phones, it is worth remembering that we have been here before and that there might be something new lurking just around the corner, waiting to bring smartphones to a whole new level. Who knows, perhaps one day our phones will help to navigate driverless cars to pick the kids up from school. Maybe we will be able to prepare a home-cooked evening meal from the office by using a combination of a smartphone and a virtual-reality headset to connect to our own personal robot waiting at home in the kitchen.

Or maybe we will be able to take a picture of a pair of jeans we like on our smartphone, have them virtually projected on to us in the comfort of our home and then made via the 3D printer that sits in the corner of the living room.

Yes, it all sounds rather outlandish as we sit here today, being drip-fed the most minimal of technological improvements, but who really knows when or what the next big revolution will be? One thing is for sure, though — it will have to be as big as the leap from feature phone to smartphone to capture the imagination of a weary con­sumer base and kick start the next industry boom, because unless the latest new smartphone can change my baby’s diaper, I think I’ll just stick with the one I already have.

The writer is IDC’s research manager for systems and infrastructure solutions in the Middle East, Africa and Turkey.


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