What percentage of the smart phone potential have we seen?

The smart phone is extremely powerful.  You can read mail, surf the web, read Facebook and Twitter, play games, find direction from where you currently are and thousands of other things and even make phone calls from most anywhere!   And most importantly you can store it in your shirt pocket, sorry tablets. 

That said, I’m a firm believer that we have only seen the proverbial tip of the iceberg with the potential of these devices.  I’m remiss to put a percentage, even 1%, on this potential since I’m not sure where it ends.

As we saw with the web, bandwidth drives innovation.   As soon as broadband replaced the dial up modem, which had an absolute limit of 64 Kbps, this innovation engine exploded.  With every increment of bandwidth innovations came to market that were not possible with the previous limit.  That’s why it’s important to ensure service providers never become a dumb pipe. 

Wireless has its bandwidth challenge limited by Shannon’s Law.  Yet we continue to see advances here as well.  We’ve seen 2G, 3G and now 4G/LTE.  5G is in the works.   Smaller cells, femto cells, pico cells and massive increases in Wi-Fi offload will all continue to increase the effective bandwidth available to each smart phone. 

We can only imagine what we and future generations of people will use their smart phone for.  

Apple, 10% Market Share in Smart Device. I've See this Movie Before

Is Apple destined for 10% market share in the smartphone & tablet markets? I’ve seen this movie before.  The big killer is looming.

Apple is great at innovating, branding and selling really cool products.  From its inception Apple has pushed the proverbial envelop over and over again.   The iPhone and iPad products have clearly been pioneers in the entire industry. 

However, like the Macintosh, the inherent forces in the technology universe will overcome them yet again.   The reasons are too numerous to mention.  A fundamental reason is the aggregate sum of R&D and Marketing budgets. 

By Apple’s own doing, there are ZERO competitive forces for iOS products.   Yet in the Android and Window markets there are many manufacturers fiercely competing both against Apple and against each other.   As big and profitable as Apple is they cannot compete over time against the aggregate sum of R&D and marketing dollars of an entire industry. 

One case in point is in semiconductor devices.  For any given common function in a phone or tablet there’s likely to be at least two semiconductor device manufactures competing fiercely for market share.  This in turn drives innovation and economics in that segment.  The same goes for glass, plastics, software and every common component.  If you add up the total R&D investment in the supply chain the problem gets worse for Apple.  Once the “non Apple” solutions start gaining market share, Apple’s slippery slope accelerates.  More R&D and marketing forces and more economy of scale create an unstoppable downward force on Apple. 

Then, the big killer sets in.  No longer do software vendors start with Apple and then migrate to Android then Windows.  They lead with Android and then decide “which one next” Apple or Windows? This too creates a competitive innovation engine that puts further downward pressure on Apple.

Yet, as in the previous “movie”, Apple will have its die-hard consumers to protect a lower market share and provide it profits to continue to innovate.  To their credit, Apple is leading the brand wars, at least in the U.S.  and among the under 25 year old demographic.   Perhaps this movie will have a different ending.