Digital Forbes

The Challenge Of Defending Smartphone Leadership


Haydn Shaughnessy, Contributor

April 28, 2014

Apple’s earnings release is a good time to take stock of where the smartphone leader board stands. Apple is increasing its iPhone sales in geographies such as India, markets where its high margins were supposed to put it at a disadvantage.

So the iPhone still rules and the news today on Mashable is that the Apple Phablet is on hold, or at least postponed, supposedly for technical reasons. But there’s no point in spoiling a winning formula and the iPhone as we know it right now is definitely one of those.

The bigger questions surround the Apple smartphone business model and they are all positive. Apple has invented a way of doing business whose ripple effects are being felt in more and more areas. Who can challenge it and where does it go next?

The platform, that combination of software and server stack, transaction services, and app and content libraries is now vast – over 500 million customers. But the company still looks agile.

Its recent patenting activity includes 3D Displays, environmental sensors for use on devices, new embedded authentication systems, a way to lock drivers out of texting, induction bonding for its assembly lines, and a wide variety of interface improvement patents – and that’s April (all references from Patently Apple)!

Among its recent patents, according to Autodesk futurist Jordan Brandt is a technique for 3D printing the connectors between components at the last yard of its assembly lines, in effect automating the jobs that still require human dexterity in iPhone assembly.

This diversity of innovation doesn’t make Apple the biggest patenter in the world but it surely shows that when a company can externalize key aspects of its business like apps development and content to various ecosystems, then it can get focus on how to keep the platform relevant.

Paul Muller over at HP told me recently that Microsoft and XP are a good example of a company that doesn’t perform the multiple channel innovation that it takes to stay relevant. Paul’s view, backed by HP research, is that companies have to move to continuous deployment in many areas of product. It’s perhaps a commonplace that innovation is headed that way.

But think of the numbers – the average product upgrade cycle will be every three days come 2020.

Its against this background that you have to assess the power of a platform like Apple’s. For sure Apple has lagged certain areas like Phablets. But its patent record shows it hasn’t been idle.

On the other hand if it can resist a fashion like Phablets it can better manage the incredible pace and range of innovation that the platform owner has to deal with. This is a great strategic options move that was interpreted as a negative but now looks eminently sensible.

Competitor Samsung specializes in hardware innovation but has no platform to manage. That falls to Google, the Android curator. Meantime something in the multiple strands of innovation has to give. No company is master of every strand or channel. For Samsung it is software design.

Apple, on the other hand, is managing innovation across assembly, interface, device hardware, application channels like autos and music, software services (enterprise and consumer), and the operating system.

Apple still needs a new giant leap. And it has to be into wearables but not at the obvious end like Glass and watches. These are hardly leaps of technology or imagination. It’s lined up the talent to do something special across the wearable domain, having hired Burberry’s Angela Ahrendts,  Fuel Band designer Ben Shaffer, and former Yves Saint Laurent CEO Paul Deneve, but there’s still no clue as to how or when.

The wearables space is currently providing an outlet for the troubled consumer electronics industry. It offers up the possibility of a comeback for companies that have been totally squeezed by  smartphone’s dominance of consumer purchasing. And right now there is no Apple or Google or Samsung to keep them out.

The Europeans are trending towards the home but the Asian consumer electronics industry sees more scope in the body. EPSON, the printer maker, is making some headway with its Google-Glass like headset, Moviero and has introduced new products in the monitored self. Sony  wants a part of the wearable action but so too do car makers like Nissan (I wrote about 12 companies that want body real estate in 2014, here).

Tim Cook has made the right call on wristwatches, so far giving it a wide birth. He’s made a good call on Phablets – Apple doesn’t need the complications just yet. His crowded innovation agenda cannot become more crowded by form factor innovations.

The platform owner can go much further than this and change the computing paradigm. That means finding the conceptually satisfying application area and stepping two or three years ahead of the competition once more.

Of course it remains speculation whether its special projects team will launch products in this area soon. There is a lot of growth left in the iPhone. The new fact of business life though is that a great platform owner can do systemic innovation and scale it quickly while competitors like EPSON try to figure out the ground rules for creating or attracting a dynamic ecosystem. That’s the kind of advantage that makes Apple impregnable, as long as it doesn’t give the opposition too much time to grow.

Follow me on Twitter @haydn1701 or join me on Facebook. I am here on Google

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