The PC Era of Smartphones

Last week, I wrote about how the whole of the consumer tech industry has reached maturity. The point of that post was to articulate, at a high level, how the maturity of the industry changes the nature of the way companies will compete. Today, I’d like to talk about the impacts that observation will impact smartphones.

After Samsung’s press conference yesterday where they unveiled their newest additions to the Galaxy family, I tweeted that we are now in the PC era of smartphones. Folks asked me to unpack that more deeply, so that’s what I’ll do.

Over the past 5-8 years, most of the annual updates that came to PCs were more refinements than true innovations. I’m sure those making these devices would argue they were innovative, but the reality is PCs got better via refinements, not any truly transformative or huge innovative leap forward. An important understanding of the PC market is that PCs are not dead and over a billion people still use them every day for work and play. But the reality is, we are largely doing the same things we did on PCs 10 years ago. Not a lot has changed but with each passing year PCs (and I include Macs in this PC label) have gotten better and better and added things that make us do the things we want and need easier and faster. You could sum up most of the highly regarded features that came to PCs and Macs the past few years are useful but not necessarily innovative. We are entering a similar phase with smartphones.

Our expectations should move from expecting smartphone makers to bring to market a “game-changing” innovation to ones that are more functional or useful. Other than augmented reality, which is still early and ultimately destined for a form factor other than a smartphone, the main features coming to smartphones are things that are useful in helping us do the things we do easier and faster. I expect this to be the case for the foreseeable future, and while augmented reality will still bring in some new use cases, and bring further life to smartphones, I’d still argue those main new AR-driven use cases will still be labeled more useful than innovative.

That being said, I think it is clear the most interesting and useful new features to come to smartphones over the next few years will be around the camera. Samsung’s most interesting new features are nearly all camera related both in how the camera works but also how the software works. Similarly the case with Google Pixel and Apple’s latest offerings where the most behavior changing feature in Face ID is around the camera sensor.

As will be the case, the story of smartphones around 2018 will be new features and competition around the camera sensor. New features that use things like computer vision will be the norm. Samsung’s new feature where you take a picture of your food, and it estimates the total calories is a good example of this. Google Lens is another good example where the camera can provide information for signs, or objects just by pointing the camera at the object. These features will be table stakes on all mobile devices very quickly.

The broader implication here, as annual smartphone releases become much more iterative than innovative, is the continued trend in lengthening refresh cycles. Smartphones are following a similar path to PCs we observed through the years. Thes same point in time PC refreshes got longer when PCs became good enough, is the point in time we are in with smartphones. Which is why the past year in mobile device sales saw the lengthening refresh cycle clear as day.

While refresh cycles of smartphones are still much shorter than PCs, I’m not sure we have settled on what the average age of a smartphone will be for the masses. While the global average is still around two years today, more mature areas like US and UK are now getting closer to 28-30 months as the average age of a smartphone. On this point, I’m certain the average age of an iPhone in the hands of its owner is going to be longer than the average age of an Android device (globally), and I’m not sure we yet know where the average age of an iPhone will settle. If I had to make a bet, I’d guess it’s somewhere between 2.5-3 years.

What is worth pointing out here, is other than Apple and Samsung, the other large smartphone brands like Huawei, Xiaomi, Oppo, and Vivo, all rose to fame and built their mobile businesses off this hyper-growth stage of smartphones. Now that the average life of a smartphone is growing they will all face this challenging dynamic. Those companies with business models that are not solely reliant on handset sales are the ones who will best weather the storm.

In closing, speaking to my point that the PC (or Mac) is not going away anytime soon, we should reflect on this observation as it relates to the smartphone. The PC is more than 30 years old and still useful in most people’s day-to-day workflows. We should keep this in mind when we think about how long it will take for the smartphone to evolve into something else. There is a great deal of life left in the smartphone form factor, but a lot of refinements that can still be made in the coming years. There is where I expect the industry to focus and keep enabling the ecosystem to create and add more value to businesses and consumers.

Some may worry this cycle we are in is boring but I disagree. Vendors can now move their focus to the things that truly enrich our lives regarding usefulness and functionality and not just getting a flashy new “innovative” feature to market. I appreciate how refined my PC/Mac has become because it excels at what it is designed to do and enables me to be efficient in my workflow. Mobile devices will only get more valuable, not less, via these refinements and consumers will appreciate that more in my opinion.