Ever since Steve Jobs gave the touch of perfection to smartphones, the concept of this portable, pocketable gadget transformed for everyone. Over the years, we have seen so many things being integrated into a smartphone, essentially consuming a lot many electronic gadgets into it. Calculator, torch, camera, watch and compass, are classic examples.

In recent years, the focus has primarily been on increasing input and output capacities. This meant improving performance factors by increasing the measures of specifications. Camera megapixel counts, battery capacity, screen brightness, memory and storage, are a few of the examples to point out. There has also been new sensors, which add to the utility of a smartphone. But for the past three years, we haven’t seen real value addition to the smartphone. The issue of innovation in smartphones has been synonymous with hardware additions and enhancements. There are two major reasons for that — the logical reasoning behind this is to make smartphones capable of more and more applications, and complementing the digital behaviour of users. The other reason was driven by business compulsions—that is to keep the users excited and widen the just-noticeable-difference (JND), a very important consumer behaviour concept emerging from psychophysics.

As a result, many important innovations, which may have actually come from software enhancements, remain unnoticed, and original equipment manufacturers (OEMs) are unable to monetize these efforts as effectively as they can with hardware. This has also led the industry to primarily emphasize more on hardware elements than taking a balanced approach between hardware and software. This strategy of hardware-only or hardware-led innovation has already started resulting in diminishing returns to scale, wherein most of the OEMs are road-blocked about their next innovation. Luckily, the foldable form factor has become a reality and 5G is around, which will keep the smartphone industry fresh for a while more.

Even with 5G and foldable smartphones, the fundamental issue with smartphone innovation is that they are predictable. Any user with basic understanding of smartphones can predict that the new set of launches is going to be about more of megapixels, memory, processor and battery. But how long is this going to keep them excited? Now, one may ask if there is any room left for innovation. Indeed there is. For instance, a couple of great value-adds could be smartphones intelligently switching profiles adopting to the scenario. Examples could be automatically going into airplane mode when boarding an aircraft, meeting mode by syncing with calendars and so on. Yes, some work has already been done with recent Android updates like being able to have a work and home profile, tagging ‘do not disturb’ mode for apps, etc., but, a lot is still to be done. Another weak area is contacts. Storing and updating contacts is still very primitive. Very few people actually regularly update their contacts. This is because updating it is not user friendly. Now, there could be a way of integrating contacts with LinkedIn for instance, so that people’s job profiles are automatically updated in contacts.

So, why are OEMs going the wrong way? The main reason is, of course, to widen the JND of successive models to trigger potential sales. The other issue is of consumer engagement. OEMs, whatever they may claim, have very low engagement with consumers to actually understand what they want. There are feedback channels, but only confined to existing users through communities. That takes away randomization, which is the essence of any consumer engagement programme.

We have entered a very critical decade for smartphones. What a user was able to spend only on a smartphone, can now be spent on several other gadgets. If the industry does not evolve and get into purposeful and holistic innovation, consumers will not be enticed to upgrade and replace, further increasing the hold-period. Similarly, other region-specific challenges, such as the need for an enduring and experiential smartphone in the sub-$100 price band for India and other emerging markets, is a huge opportunity. Reaching a billion smartphone users will be impossible without a convincing innovation in this segment.

The smartphone ecosystem, worldwide has to come together and chart out an innovation road map benefiting the entire ecosystem. In fact, it is surprising that such a big industry doesn’t have an alliance that works on innovations and standards already. Most of the fundamental IPs for this industry come from adjacent ecosystems and their technology forums. Other than Apple, Samsung, Motorola or Nokia, everyone is more or less dependent on others’ IPs for product development. That needs to change.

Faisal Kawoosa is founder and chief analyst at techARC.

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