Open Letter to the Smartphone Industry

[Starfleet Captain]

Dear Smartphone Manufactures worldwide,

There is a problem lurking in this industry. Every smartphone manufacturer can feel it. Sales are declining, and too many design mistakes are being made, while the price of smartphones have increased. All of this, while innovation seems to be reaching a ceiling. For example, the new iPhone 11’s are nice, but from an everyday user’s standpoint, how much daylight can one honestly say exists between that device and last year’s iPhone XS(Max)? The same goes for various other Android devices, such as Samsung’s S series. There is a solution. Its one that the entire industry would have to be on board with for it to work properly: that is, instead of releasing a new flagship device every year, switch to a 2-year refresh cycle. I know. I know. What would something like that do your bottom lines? How would you be able compete effectively with the competition? In this letter, I will attempt to make the case for how this would actually benefit both producers AND consumers.

The bottom-line benefits may not be immediately obvious but there are more obvious benefits. First, with a 2-year update cycle, there is a lot more time for research and development. Also, there is a greater window for more thorough testing. Design mistakes like the disaster that was the Galaxy Note 7 or the bendable iPhone 6 would have been more likely to have been detected during the testing phase of R&D if there was a 2-year refresh cycle. The former situation ended up costing the manufacturer billions of dollars as well as a cost to the credibility of the company - which they are still trying to rebuild. Furthermore, a 2-year refresh cycle gives more time for more innovation. More innovation means more distinction between device releases which creates more consumer-minded justification to upgrade. That directly translates to more sales.

Speaking of sales, a 2-year refresh cycle means that devices hold their value for a longer period of time. Most smartphone customers upgrade their devices every two years – in keeping with their cellular carrier. Because not every customer is on the same upgrade schedule, that creates a more sustained sales rate. There is a caveat here – that being year on year sales would be affected. But overall sales over a 2-year period would not be affected – and not only would the individual device sales numbers increase, but the dollar amount generated per device would also increase. Pair that with the DECREASE in overall production costs over the 2-year period. Eventually, the cost of production is driven down with the release of every new device. But the consumer price of those devices won’t be driven down as fast on a 2-year upgrade cycle. This would INCREASE overall profits over a 2-year period. As for that year on year sales comparison, this could be balanced by releasing a new Tablet refresh on the off-years. In a way, this is how Apple operates. They do a whole number upgrade on their smartphones every 2 years, (iPhone X in 2017, iPhone 11 in 2019) with the “s” devices – which are meant as general refreshes in the off-years. Admittedly, that model isn’t the same as what I am proposing.

The benefits to the consumer should be obvious. The consumer gets a more meaningful upgrade for their money. Consider that over the past 10 years, the price of a premium smartphone has literally risen 100%, with consumers being asked to shell out around $1000 for a new device. Theoretically, they would be more willing to pay $1000 for those upgrades if they are getting more meaningful innovation in return. Consider the differences between the Galaxy S8(plus) and the Galaxy S10(plus). While there wasn’t much difference between the S8 to S9 upgrade, or the S9 to S10 upgrade, there is a more meaningful compounded difference between the S8 to S10 upgrade. Consumers also benefit because this allows manufactures to support devices (e.g. OS and security updates) for longer periods of time. This would also allow Android manufacturers to get yearly OS updates to their customers in a much timelier fashion. More years of support means a higher resell value of previous devices. A higher resell value means more customers buying newer devices upon release.

Of course, all of this goodness hinges on all major manufactures being on board. With the current state of things, where producers are constantly trying to “outdo” one another several times a year – often with half-hearted design compromises and sacrifices in functional efficiency. Note how there is no 5G option for the latest iPhones, or how the in-display fingerprint scanner on Samsung’s latest devices is barely usable. I won’t even mention what is happening with LG. While the current state of things makes your year on year sales look good (or not as bad), consider what it’s doing to profits. On the other hand, with this proposal, both producers and consumers benefit.

Sincerely,
Starfleet Captain

 

[Golurk]

Good idea in theory, but that would present a several complications:

1. Currently not everyone has a smartphone that is either relatively new or around the same age. So many would find their smartphones struggling before others and having difficulty finding a replacement.

2. Consumers also tend to replace or buy their devices for different reasons etc...what happens if somebody’s phone shattered or if they want to buy a phone as a gift?

3. Until (arguably) this year, innovation and progress in the mobile phone industry was being made every year. Just look at what new mainstream features came out in 2018-19: reverse wireless charging, in display fingerprint scanners, widespread triple cameras with night modes, waterdrop and punch hole displays and upgrades in charging speeds.

5. A benefit of the current release cycle is simple: more choice is offered to consumers, and as they replace/purchase their phones at different times for reasons already listed, this suits everyone.

6. Samsung’s reputation has already recovered from the Note 7 incidents. And falling sales doesn’t equal less profit.

While I disagree, I do like your thinking...despite thinking that your proposal is too radical. You’ve obviously thought this through and your argument is backed up by facts and solid reason...good post!

 

[anon(10614692)]

There's one basic point. All manufacturers would need to agree it. That's a non-starter. The first to break the agreement would have a considerable advantage. Do you really think competitors trust each other?

 

[Golurk]

There's one basic point. All manufacturers would need to agree it. That's a non-starter. The first to break the agreement would have a considerable advantage. Do you really think competitors trust each other?

No.

 

[L0n3N1nja]

Problem is new phones come out every month as new tech and features are implemented by different OEMs. If any of them decided to wait 2 years for a new device while their competitor is launching new devices and advertising new devices regularly the company waiting to launch something new will see their sales plummet.

 

[anon(9918034)]

What upsets you as a consumer is needed as a manufacture. You see a processor that has a tiny increase in speed as pointless. The maker of that chips sees a technology that they have been able to squeeze even more performance out of. Which is huge down the road for chip makers. Perfecting the 7nm chip and getting max performance out of it means that when the next generation of chips comes out they will be that much better. All a 2 year refresh cycle would do is slow down the process of making better quality chip sets and modems and all the other little things that go into a device. We would get the incremental updates every 2 years instead of one. They manufactures have no idea how the real world use will effect the chip. What if there is a fault in a chip that causes it to short out. Now we have to wait 2 years to get a chip set that doesn't short out.

There would be even less innovation with a 2 year refresh because in 2 years no matter what you put in a phone it will be amazing compared to 2 years ago. The glory days of huge leaps and bounds in the cellphone industry are long gone and will never return. I can assure you that some of these technologies that are being put into the current phones have been actively researched for well over 2 years. Take project soli googles new radar chip they acquired it in 2015 after 4 years of R&D in is now being implemented into a phone.

 

[Mike Dee]

What upsets you as a consumer is needed as a manufacture. You see a processor that has a tiny increase in speed as pointless. The maker of that chips sees a technology that they have been able to squeeze even more performance out of. Which is huge down the road for chip makers. Perfecting the 7nm chip and getting max performance out of it means that when the next generation of chips comes out they will be that much better. All a 2 year refresh cycle would do is slow down the process of making better quality chip sets and modems and all the other little things that go into a device. We would get the incremental updates every 2 years instead of one. They manufactures have no idea how the real world use will effect the chip. What if there is a fault in a chip that causes it to short out. Now we have to wait 2 years to get a chip set that doesn't short out.

There would be even less innovation with a 2 year refresh because in 2 years no matter what you put in a phone it will be amazing compared to 2 years ago. The glory days of huge leaps and bounds in the cellphone industry are long gone and will never return. I can assure you that some of these technologies that are being put into the current phones have been actively researched for well over 2 years. Take project soli googles new radar chip they acquired it in 2015 after 4 years of R&D in is now being implemented into a phone.

The bottom line is the market dictates what the appropriate cycle is and will correct itself if need be.

 

[anon(9918034)]

The bottom line is the market dictates what the appropriate cycle is and will correct itself if need be.

I feel like you are following me from thread to thread

 

[Mike Dee]

I feel like you are following me from thread to thread

No.....I just live here

 

[eshropshire]

The bottom line is the market dictates what the appropriate cycle is and will correct itself if need be.

You are correct Mike. The Smartphone market is maturing. Market Maturing eventually happens to every fast moving market. Also, additional trends can effect markets. Look at the camera market, back in the mid 90's photography was a mature slow and steady market. Digital photography totally disrupted the market. Most major companies with many resources invested a lot, and saw great growth. Other camera companies that were slow to react, still saw some growth. As the market matured, we started to see less big innovation and companies falling out of the market. The rise of good cameras in Smartphones then completely destroyed the Point and Shoot camera market. The camera market today is is chaos, from old school companies not adapting the changing needs and market disruption by many feeling the phones are "good enough".

The Smartphone market is maturing. The days of massive new innovation I believe are over. We start to see a few fringe players struggling and offer goofy ideas. Years ago, you had companies like HTC offering two flagships a year, then down to one and now they are pretty much done. I assume we will see 2-3 companies drop out of the smartphone market in the next two years.

A major disruptor to the NA market has been they way we buy phones. Not too long ago, you might as well upgraded every two years since the cost of a phone was built into most phone plans. As companies have moved away people pay for their phones any don't need to upgrade every two years. Unlike many people on this site a lot of people don't upgrade that often. Some people still see their phone as a fashion accessory and have to have the latest and greatest, but a lot of people have jumped off the fast upgrade cycle.

I don't see anything wrong with companies coming out with new phones every year. Many people are on different upgrade cycles. We will see less major changes in these new models every year, but that is the nature of a maturing market. I personally upgrade about every 2 to 2.5 years. I generally trade in my phone which makes the new model about 50% off retail cost. The system works for me. I know others who upgrade 2-4 times a year. Not my style. I don't see that big of change between phones to get me to want to switch.

 

[Inders99]

So you're asking the industry to cut revenue for a year...won't happen. I'd like to see that idea floated at a board meeting. Just don't buy phones as often and you're good to go. I'm on a 3-4 year cycle, haven't missed a beat skipping a new version or two.

 

[J Dubbs]

I like where the market is going.....big greedy companies are losing money and market share, along with dropping stock prices, and we're getting better and better phones cheaper and cheaper. I don't see a problem here..... except maybe for the fact that greedy, crooked Apple is taking too long to crash and beg for their government bailout lol. Although I'm really enjoying watching their slow demise :-D

 

[Golurk]

I like where the market is going.....big greedy companies are losing money and market share, along with dropping stock prices, and we're getting better and better phones cheaper and cheaper. I don't see a problem here..... except maybe for the fact that greedy, crooked Apple is taking too long to crash and beg for their government bailout lol. Although I'm really enjoying watching their slow demise :-D

Huawei: *Becomes popular and wealthier by providing excellent value for money phones and great new features that work well as well as innovating constantly*

Apple: *Becomes less popular and makes less money by changing next to nothing (iPhone X and XS) while missing out on triple cameras, fast in box charging and charging very high prices*

US Government: “We can’t have that! We must invent/exaggerate some dubious spy claims about their unrelated 5G technology and ban them from cooperating with US companies!”

Huawei: *Due to ban does less well*

Apple: *Due to 2018 being a wake up call and Huawei doing less well, has more success*


If that isn’t unfair political/economic bullying, I don’t know what is. Although they need to improve and change, those companies’ demise isn’t something to be wished for. They employ tens of thousands of people if not more and give us important products, no matter how (un)fair we find their pricing. Calling every single company greedy is a but unfair though...some are, but they are there to make money.

 

[travaz]

I think the market is going to dictate the cycle. As an example my Sister and Brother in law both have 3 year old Iphones. They see no reason to upgrade as both phones work perfectly for they want to do with them. The only time they will get a new phone is when the current one stops working and they are forced to replace. One other thing is that the quality of the current devices is leaps and bounds above the "old days". Devices will last longer and need replacing less often. With the lack of amazing new features people will see less and less reason to upgrade.

 

[tekjunkie28]

I have thought about this too. I have thought about what if there was an 18 month cycle for the flagship devices? I mean the manufactures don’t really give a crap about slowing down phone releases. They want to release something new and as long as they profit from it then that’s all that matters.

I can tell you right now that sales does not equal profits. I work for a company and I do several different things here from everyday maintenance guy to productions even shipping. My main goal is to save money on the maintenance side and see where we can increase efficiency. So far with the way I’ve done things we are at an 11 year high for profit and our sales are actually lower that average. I have made a few strategic decisions in the last 6 months that will save use a pretty huge amount of money as time goes one. The biggest one of those is retrofit LEDs vs T8 lighting. Another thing was to start a preventative maintenance program. That saved a massive amount. Point being that these companies are always changing and molding. Just as I changed out the lights to save thousands a year these companies and negotiate for parts and not alway pass that onto consumers based on markets.

I have to disagree about the whole Huawei issue. Outside of this forum not a single person I’ve ever talked to knew who they were. Another thing about it is that Apple is really only popular here in the US. In Europe Samsung is arguably more popular that in SK, LOL. I think they have something like 84% market share in Europe. They don’t even really target the US either. This is also one reason they have so much of that post processing on their cameras software. That’s a Asian thing where as in America we thing that iPhones and pixels are the best cameras, at least for portraits.

 

[Golurk]

I have to disagree about the whole Huawei issue. Outside of this forum not a single person I’ve ever talked to knew who they were. Another thing about it is that Apple is really only popular here in the US. In Europe Samsung is arguably more popular that in SK, LOL. I think they have something like 84% market share in Europe. They don’t even really target the US either. This is also one reason they have so much of that post processing on their cameras software. That’s a Asian thing where as in America we thing that iPhones and pixels are the best cameras, at least for portraits.

The Pixels rely heavily on post-photo processing. Huawei does use a lot of processing when you turn AI on and partially for its night mode, but a lot of the results stem from them using excellent hardware (40MP, RYYB, RGB + Monochrome etc)