Last September, on the eve of our first Mobilize conference, John SanGiovanni, co-founder and VP of product design at Zumobi, talked to us about the coming era of the superphone. Eschewing the smartphone moniker, SanGiovanni noted how this new class of handsets — led by none other than the iPhone (s aapl) — was starting to become part of our everyday lives.
With vastly better performance, desktop-grade web browsing, and high-resolution displays, a new category is born. I call them “superphones,” and they are achieving tremendous traction with consumers and professionals alike…the next wave of true superphones promises to back up a device’s good looks with deeper platform technologies and more robust back-end services.
Fast-forward to today, and we are standing on the cusp of what will be the summer of the superphone. (For what makes a superphone, please refer to the accompanying table.) Here are some of the devices you can expect to see over the coming months:
These launches come as growth in the overall mobile market is starting to slow — drastically. According to Brian Modoff, an analyst with Deutsche Bank Securities, the increased demand in the first quarter and start of the second lulled people into thinking that the mobile market was back on track. Retailers and carriers restocked. Oops!
In our handset model, we are currently modeling 6% sequential growth, and our sense is that the Street is expecting somewhere in the range of 5% to 7% growth. However, we are seeing increasingly seeing signs that this may be too much to expect. The first dissenting note came from Nokia who on their earnings call said they expect flat to 2% growth. Since then other contacts have told us that a flat or modestly up quarter may be what we should expect, as one of our contacts put it, “Our order improvement is done.”…As we have noted in past reports, there is a difference between not getting worse and actually getting better. We think the industry inventory levels may have reached their new steady state, better than 4Q08 but still well below historic levels. (From DBS research report, dated May 31, 2009.)
In the superphone business, there are none as dominant as Apple and RIM. Their dominance is one of the reasons why they’re able to make a lot more money than their rivals — despite selling many fewer handsets.
As the iPhone entered the market and RIM entered the consumer sphere the profits of the rest of the vendors has declined dramatically. Looked at another way, Apple and RIM each claim a greater share of profits than any vendor except for Nokia and Samsung. (From DBS research report, dated May 31, 2009.)
That said, there is a lot of interest in Palm’s Pre. Same goes for Nokia’s N97. Will that be enough? Or will the iPhone/BlackBerry juggernaut continue to suck the oxygen out of the handset business and ensure that Apple and RIM keep their stranglehold on the superphone business? My bet is on the latter!
PS: If nothing else, the SuperPhones has created a demand for mobile apps, The New York Times says. Increased M&A of these mobile apps is up next, the Times says.
42 thoughts on “The Summer of the Superphone”
Why don’t phone makers & US phone carriers understand we want simplicity & speed? The iphone has a fast GUI and is easy for consumers to get media & entertainment. The blackberry makes it easy for business people to securely get access to email & intranet, but it’s slow GUI limits it’s usability to many normal consumers. You would think the carriers in the US would get the picture. Windows mobile is painfully NOT simple enough for the average consumer and the sheer number of bolt-on GUI enhancements should be a wakeup call that they need to fix it asap.
5 years ago I had phones with the same capabilities as most of the phones on the market today. What real innovation is there in the last 5 years that the carriers didn’t either 1. Charge us way to much for or 2. Try to limit us from using?… (like Verizon crippling GPS & Bluetooth, or AT&T blocking sling player, or every 3G carrier trying to block tethering for years). What’s up with our crappy carriers?
i know that you are logated in california where at&t does not have as strong a network, but in other parts of the country, like the northeast where i live, at&t has as a network that is as fast or faster and more reliable than any of the other networks. both t-mobile and sprint are aweful, and verizon is good but has lost focus.
Is this PRO Research or an article?
We need better processors!
well, my son and i both got palm pre’s and we *love* them – zero issues for us, contrary to the interwebs rumor mill…
what i’d love to see is some “economics of smarthphone apps” research – perhaps on your paid content site? i’m just not sure that skilled devs are tracking growth and adoption of platforms and instead rely on gut instinct (e.g. iphone dominates) when embracing the sdk’s…it would be interesting to see notes about time to develop, complexity of development, issues in delivery (average time to approval/appearance in store/channel and a host of of other things)…a world of 99 cent apps isn’t that promising, and i suspect that many devs and tiny outfits will attempt to port to pre, android and related platforms before blackberry, but who knows…
i guess i just mean the trends within the ecosystem – not the manufacturers, but specifically all of the tools/partners/programs that enable delivery of apps, all the way through payment, app download hosting (amazon?) and so on…
there are certainly ten zillion ways to go about it – but NOBODY seems to be able to predict which platform will dominate, and since we already know that apps sell phones in the smartphone world, getting a handle on dev trends is IMHO a far better indicator of strength in market positioning…
just a thought 😉
Just bought the Pre this weekend. I was fourth in line.
The software is extremely promising. The keyboard is tiny and disappointing. But I think Palm is in a class that with the iPhone.
Hopefully there will be great Apps soon.
I find the term superphone ridiculous! Until the interface and display process moves beyond current limitations, there is no such animal. Particularly in the face of a mobile service provider industry that is actively looking for ways to stifle innovation or at least gouge consumers for service that lags behind the true mobile innovators in the rest of the world. Apple wants to lock users into the tightest DRM driven systemn around and many of its competitors are not much better. Until such time when a Superphone is truly developed, everyone else in the meantime is a wanna be on provider network that wants to overcharge for anything over their crap network.
Although I’ve read nothing but glowing reviews about the Pre, I play the role of the skeptic. I had a Palm Centro and was very unimpressed. I know that they have a brand spanking new OS for it, but the Centro was fairly brutal. Now I’ve switched over to the darkside and am on Blackberry and am loving it.
To be honest, I’m more excited for the HTC Android phone…
Checked out the Pre this weekend and it is a sweet phone. The UI is fast and responsive, browsing is up there with iPhone/Android and the overall slickness makes it a true superphone in my book. I wish that they had done it as a landscape slider with a larger keyboard, preferably 5 row like the HTC Raphael, instead of as a portrait slider with a tiny tiny keyboard. The phone is small and fits the hand well, with the keyboard being small but not unpleasant, although the slide mechanism is somewhat cheap and gritty. Strong candidate for best phone ever for Sprint and one of the highlights of the Summer of the Superphone.
This market – SmartMobile Internet – is bigger than the ‘first’ Internet. If anything, our sense of its growth, proportions, and impact is hampered by our stale vocabulary that has not changed for a decade plus while we suffered the misery termed WAP and the painful consumer experience of Mobile data. With a potential market of 2-5Billion devices over the next 5 years connected over mobile broadband links (current number is about 100million devices), this is bigger than the Internet was in 1995 when a mere 100million PCs going to 200million were online – several at less than broadband speeds. Device capabilities are far stronger (Compute, Memory, Display) than it was in 1995 and Clouds of various sorts are accelerating adoption for complex network connected applications that power these devices and deliver great consumer experience. @dave, 0.99$ apps wont make the math work – the entertainment, gaming primary apps will soon be ad underwritten – rich media video ads for consumer brands.
With 50,000 apps, 5.5 app downloads/day, 1,000,000 SDKs downloaded, and 40million devices (iTouch+iPhones) Apple is showing the way to this hypergrowth marketplace. However, I will bet you a dollar that Android and others accelerate in the next few years to compete and even overtake if Apple continues to dribble out features slowly and strangles its own ecosystem with its restrictions. For HTC, LG, Samsung and several others, Android is the only option and they will develop devices accordingly. Palm, if bought by someone more capable at running a company, will be a factor as well.
Bottom line, this market is one of the largest tech markets since the Web and several companies will succeed here. This is not a ‘winner takes all’ market. My $1, for the 40 cents it is worth these days, is on Android Ecosystem in 5 years much as I like my iPhone today.
I will bet you a dollar that Android and others accelerate in the next few years to compete and even overtake if Apple continues to dribble out features slowly and strangles its own ecosystem with its restrictions. For HTC, LG, Samsung and several others, Android is the only option and they will develop devices accordingly. Palm, if bought by someone more capable at running a company, will be a factor as well.
– Rohit, this is a clueful post. I would suggest, however, that while the likes of HTC have demonstrated an understanding of feature bullet lists and the technical ability to execute against such lists, Apple, seems to understand the user experience and how another bullet on a feature list is not worth anything if in the end it sucks so bad that it is not really useful. In the end, the features matter, but not as much as the implementation/execution against those bulleted lists.
My money is on Android. Let’s just hope they can keep Android from forking into a million sub-platforms and yet still truly keep it an open environment.
I really like the term “SuperPhone.” On key distinguishing feature I believe you missed was consumer driven operating system update. All of the SuperPhones offer developers a simple platform – always develop for the latest version. No need to test you app on multiple versions of the OS, just write for the latest version. Boy does that change the development paradigm!
And 18 months into the SuperPhone revolution, we only have a small clue as to how much they will change our lives.
@Steve – “key distinguishing feature I believe you missed was consumer driven operating system update”
Steve, I agree, but it is not just on the consumer side that this is good news.
There are a couple ways you can update system software on current mobile phones.
The old fashioned way is that the user downloads a ginormous file that contains the entire system image. In the case of the iPhone this is around 300MB. Ouch. Then you use iTunes or a dedicated reflash app to update the firmware. In some cases you are at risk of bricking the device should you disconnect the cable, your pc crash or someone pull the battery.
A more modern approach uses FOTA – firmware over the air, where the old and new versions of fw are compared and a diff file is made with lots of compression and other tricks so that the file sent over the air is but a tiny fraction of the size of the image. You get your cake and eat it too.
Most reasonable FOTA implementations allow for both client initiated (ie the user starts it) and server initiated updates. You can imagine a situation where some new firmware is available but where the operator may not want to do a mass push, in this case it could be available with client initiated FOTA. However, in the case of some sort of critical issue coming up, perhaps a nasty security issue or something that is clobbering other users on the network, well, then you might want to do a mass FOTA campaign and push updates to all the busted phones.
It gets even better. So there is huge pressure to ship phones on time. Phones are a critical differentiator for the mobile network operators so they always want the latest and greatest. Well, when you rush thigns out the door, there is always a chance that you ship with bugs. One approach that we have seen with some of our customers is that as part of the initial activation of the device, a check for updated firmware is triggered. In some cases the first day a phone is out there are already updates waiting. Perhaps the device was knowingly shipped with bugs, but with FOTA everything can be fixed before the device makes it to the subscriber.
Definitely game changing IMO … http://tinyurl.com/luqapc
Stop blathering on about the number of App Store downloads. Give me some hard numbers on how much has been earned by the developers and Apple. I suspect the vast majority of these 1 billion downloads are free apps.
Apple come clean with the figures and the rest look at the real numbers.
Superphone, Smartphone whatever you want to call them do they include full Flash support>
OM you carefully worded that one
“Integrated web browser that supports current desktop development standards” So no flash support on either the Pre or Iphone.