Peak Smartphone – Where do we go from here?

Running Out of Ideas

For a while now, Android smartphone OEMs (Xiaomi, Oppo, Vivo) have been running out of ideas to meaningfully differentiate their smartphones, especially the flagships to consumers. This is primarily because the two key components of are common and undifferentiated for most OEMs and are controlled by external companies with their own priorities:

• 1. Chipset OEMs (Qualcomm, Mediatek):

Except Samsung which have been kitting out their own Exynos chips along with Snapdragon (By Qualcomm) in their phones, most other Android OEMs are totally reliant on the major chipset manufacturers like Qualcomm and Mediatek. This means that fundamental innovations on aspects of :

• Connectivity (5G, WiFi 6, BLE 5.2)
• Graphics (Graphic rendering, gaming performance, responsiveness)
• Image Processing (AI filters, 8K video capture) etc.

are driven by the SoC provider and the OEMs are totally reliant on them. There is zero differentiation because there is no exclusivity, so features here is just a mapping exercise between the segment of the smartphone and the corresponding SoC at that price-point

• 2. Android OS (by Google)

As Huawei learnt the hard way, a complete dependence on Google for the Android OS means that the OEMs have very little room to move up the value chain into the much higher margin business of services. They are completely locked into Android for:

• Customer Identity: The core customer identity for every single digital service on the phone is owned by Google
• UI/UX, Feature Restrictions: Becoming a part of Google’s Open Handset Alliance (OHA) means adherence to fundamental limitations on everything from the UI/UX to the type of services which can be deployed on the phone. There is very little room to differentiate on any core OS experience or workflow

This means that either the OEM falls in line, or really calls Google out on the ‘openness’ of the AOSP (Android “Open Source” Project) like Amazon have done with their Fire OS and create its own fork. This requires a massive investment to back it, and as Samsung discovered with its Tizen OS for their smartwatches – ecosystem really is key.

Bad Ideas

This leaves OEMs with very little room to differentiate.

This led to outlandish ideas from even larger camera sensors, ever-increasing rates of charging or multi-screen ideas which LG tried before its sad exit from the market altogether after years of failure.

1. Better Cameras

• The official Weibo handle of Chinese smartphone maker Xiaomi has confirmed that the upcoming 12S Ultra slated to debut on July 4 will come armed with Sony’s massive 1-inch phone camera sensor
• Samsung recently lifted the covers from the ISOCELL HP3 camera sensor which offers a staggering 200-megapixel sensor, featuring the smallest pixels that Samsung has ever crammed on a sensor

But, so what? Will this meaningfully change the quality of your pics to change your purchase decision? Android phones have long out-specced the iPhones on everything from sensor size to megapixel count to zoom levels. One ‘Shot on iPhone’ campaign later, it didn’t really matter

2. Faster Charging

Another aspect OEMs have jumped onto are battery charging rates with the latest jump being to a mind-boggling 150W on the likes of the OnePlus 10R and the Realme GT Neo3. Xiaomi and OPPO are currently working on 200W speeds as well. While still a more meaningful trend to chase than the cameras, I doubt if a customer changes his purchase decision because his phone charges to 80% in 20 minutes instead of 15

3. Everything LG Did

LG deserves a special bullet point because I truly respect that they did try! Sure it didn’t work out, but if there’s one OEM which threw everything at it – it was LG. They did curved phones in 2013 (LG G Flex), A phone with modular accessory ecosystem (LG G5) and finally the T-shaped multi-screen smartphones (LG Wing) . Goodbye, Sweet Prince.

What Next?

Before the obvious answer becomes Musk’s Neuralink chip inside your ear to mind-control your digital life or some crazy XR utopia, let’s look at some short-term options:

1. Multi-screen: Expanding the user-experience beyond the typical smartphone screen-sizes is going to be a big differentiator. Foldables which enable a tablet/desktop like experience on demand is rising above mere feature differentiation and creating a new experience for user. This will be a successful trend once OEMs figure out the right balance of form-factor, performance, battery levels and design fragility
2. Owning the SoC: Apple has shown with their bold bet on Apple Silicon that true product differentiation can only be created by tightly integrating every component of the product. Google has kicked this off with their own Tensor chip in the latest Pixel 6 phone with core innovations on the SoC itself leading to eventual feature-differentiation for the users – for example the camera AI features
3. Cloud Gaming: While still a nascent feature, enabling console-quality graphics for the masses on a smartphone is another huge opportunity. This requires a perfect combination of the right cloud infra and deployments, the right device capabilities, and the right network architecture and right software stack to unlock. An Amazon Luna phone or even an Airtel XGaming phone? Why not 😉