AH Primetime: Innovation & Slowing Smartphone Sales

As an industry observer, or even as an Android fan, it's easy to shake your head (or maybe your fist!) when you watch the new Apple iPhone circus. Tim Cook jumps up on the stage and announces to the world how amazing the current iPhone is, then goes on to explain how they've managed to somehow make it even better. The implication is that Apple's engineers have worked tirelessly for months and months to invent a technology, which had already been in use over the fence in the Android, Windows Phone, BlackBerry or even Symbian camps. There are too many examples to quote and today's article is not about Apple's reinventions of existing technology, but have you ever stopped to wonder why Apple are making a big deal out of the ability to send MMS, or have a video conference, or use NFC for contactless payment? It is not because "it just works," instead it is as much that Apple are crowing about it and that Google and Android manufacturers are less effective.

Apple's powerful marketing brand is the main reason why the iPhone is weathering a slowdown in worldwide sales, whereas many Android manufacturers have recently announced disappointing sales. There are a few reasons for the worldwide deceleration but the main one is that the developed smartphone markets have reached something of a maturity and the developing markets are still gathering momentum. There will be a period of slack as sales slow down in one market as they are still gearing up in the other.

By maturity, those developed markets such as the United States of America, Continental Europe and Great Britain, have high smartphone penetration and the majority of new device sales are people upgrading from an older smartphone into a newer model. We have seen many carriers changing their tariffs and contracts designed to keep people with their particular company and a side effect of this is often to reduce the monthly charges when a customer keeps an older device. A customer happy and content to keep a two year old device is considered to be happier to stick with their existing carrier. Carriers want happy, content and long term customers: customers who are constantly searching for a better handset are more likely to reconsider their choice of carrier.

The other issue is that the batch of 2015 flagship devices are incremental upgrades not only to the 2014 models, but also to the 2013 models too. Let's take the example of the HTC One, which in 2013 HTC One M7 came with a beautiful metal body, the Ultrapixel rear and normal front facing camera, a 4.7-inch, 1080p display, NFC and 4G LTE. The 2015 HTC One M9 has a much higher resolution camera, but on paper has a similar overall specification once we are away from the nitty gritty detail. Samsung are something of a special case because whilst the 2015 Galaxy S6 looks similar to the 2013 Galaxy S4, even if it feels different, the Galaxy S6 Edge looks very different. Samsung's error, which we covered here, is in assuming customers wanted the same rather than wanted a different design (and when we remember how Samsung were all about reinventing their smartphones, it seems like a glaring mistake to make). Even Xiaomi, the zero-to-hero smartphone manufacturer, has recently reported slowing device sales.

The world's smartphone manufacturers are building flagship devices with features without explaining how customers need them and how the extra cost is justified. Extra storage, improved cameras and fingerprint scanners are not something people wish to pay more for but instead are seen as being expected. Perhaps Android manufacturers' problem stems from needing to find what customers don't realize they need in their lives? Samsung may have been on to something with the S6 Edge, which has significantly outsold against expectations.

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About the Author

David Steele

Senior Staff Writer
I grew up with 8-bit computers and moved into PDAs in my professional life, using a number of devices from early Windows CE clamshells and later. Today, my main devices are a Nexus 5X, a Sony Xperia Z Tablet and a coffee cup.