Is the smartphone market about to experience a paradigm shift?

Written by on May 10, 2017 in Guest Blog with 0 Comments

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Denmark was once home to a number of the world’s leading mobile phone manufacturers. The GSM standard agreement was signed in Copenhagen on September 7, 1987. Some of the first GSM phones were developed in Denmark, and a cluster of leading mobile companies were based in Aalborg. After buying AP Radio from Philips, Nokia became one of the leading companies in mobile phone development. Its research and development center was based in Copenhagen, and the Nokia 3330, one its signature and best-selling phones, was one of many products developed there.

Many recall Denmark’s preeminence in the mobile phone world, but very few have considered whether Denmark and other formerly leading countries in the mobile industry, such as Sweden and Finland, could win a top position again. Having followed this market for 22 years, we believe the smartphone market faces a paradigm shift. Put simply, the next major innovation like the smartphone will probably come from a small country like Denmark. The Danes’ approach to design and innovative solutions is important and offers opportunities for Danish companies and entrepreneurs.

Smartphones are as predictable as the Volvo 240

Looking at the smartphone market, little has happened since 2007. That year Apple launched the iPhone in January, and Google launched Android platform in November. The decade since the launch of the iPhone and Android looks similar to the period of 1974 to 1993 in the automobile industry in which the iconic Volvo 200 series set a global standard both for design and safety. The Volvo reigned as a symbol of safety until the emergence of artificial intelligence created the next step change in safety innovation. As for smartphone technology, there was more innovation before 2007 and the launch of iOS and Android than after.

Almost 2 billion phones are sold globally annually, about 1.4 billion of which are smartphones. The market is large, but it is flat. There is little innovation in smartphone technology, an opportunity that companies and entrepreneurs can address. Strand Consult’s research shows that smartphones no longer have the same euphoric appeal they did a decade ago when consumers would be willing to stand in line for hours for the latest model. It takes more today to impress consumers than a new model number or letter on a smartphone.

The smartphone market can learn from the PC market

The PC market already has experienced the challenges that smartphones face today, but was able to birth new innovation. For some time Apple dominated the PC market as the leading maker of laptops with a cool design. Traditional PC makers responded with a new category of PCs to address the “enthusiast segment.”  To compete with Apple, PC manufactures launched a series of cool PCs with good design at an affordable price. Dell’s XPS, Lenovo’s X1, HP’s Spectra, and Microsoft’s Surface are examples of products in the enthusiast segment.

We never believed there would be a large market for extravagant phones, for example a smartphone encrusted with diamonds. Nokia tried the Vertu; Siemens made a phone series that looked like jewelry; and other names such as Sirin, Mobiado, Lamborghini have tried and failed. As such, the intelligent mobile phone maker will not make extremely expensive luxury products but instead will focus on how to add value to products with a similar price point as an iPhone or Samsung smartphone.

The key to the enthusiast segment is to serve those consumers who want something unique without it costing a fortune, and then creating volume in that segment. We expect this segment to grow in the future, though it will probably be more fragmented than the PC market. In practice, the market for phones sold in 20,000-100,000 units will grow. Not only will these phones have nice design, but they will have special features similar to the upscale PCs.

What are the opportunities for small players?

There are many possibilities for small players. One obvious way forward is for phone makers to create new products on top of existing platforms. Another is to develop unique functionality for specific market segments, such as the enthusiast. The challenge is to identify and define the new segments in the smartphone market and to understand its customers.

Around the world, there are a number of companies and entrepreneurs who have the right technological DNA to become a niche player. Those who are “dressed best”, so to speak, and who have the right products on the shelves can address these possibilities.

We have no doubt that the market for smaller mobile phone makers that address the “enthusiast segment” will be successful and grow. The bigger question is how much market share can these players win and which of the existing phone makers today will give up their market share.

The new smartphone players will come from a wide range of technology companies in a number of countries. Some customers may already have an iPhone or Samsung phone and instead of buying the next model will buy an enthusiast phone. Others may purchase an enthusiast model as an upgrade from a lower end smartphone or feature phone.

The conclusion is simple. After 10 years since the launch of iOS and Android, it’s time for something new. There is a market for good design and innovative solutions for the entrepreneurs and companies with the ability and willingness to seize the opportunity. While the future is open for a number of nations, there is no reason why companies from small countries such as Denmark, Sweden and Finland should not lead again.

Case: Lumigon, an enthusiast phone based on a global software platform with Danish design and Danish technology.

Lumigon is a Danish technology company that develops and markets advanced technology for mobile telephones and mobile platforms. The company is best known for the Lumigon enthusiast phone series, an Android phone available in a number of rich materials from steel to gold with the ability for a unique personalization.

Lumigon not only makes a phone with a unique design, but a number of unique and compelling features that allows users to stand out from the crowd, such as NightVision, BackTouch, and MobileVault.

With its Danish DNA, the Lumigon has something extra and special that many Asian mobile phones lack, namely a combination of design, quality, and cool. Danish design is characterized by being user centered and customizable by the user. Consider the world’s leading toy company, Lego. While the toys are sold on a mass scale, every single user can create a unique experience with a set of Lego bricks. Similarly leading jewelry brands such as Pandora allow users to customize their collections with a set of limited edition charms. Companies in the audio space such as Bang & Olufsen, GN, and Oticon also employ this user-centric approach with functional and beautiful design.

Consistent with the notion of a user-centric design is privacy. It is fitting that privacy and cybersecurity entrepreneur John McAfee has launched the Privacy Phone using Lumigon’s platform. As the enthusiast market develops, companies such as Lumigon will innovate and commercialize phones with new features and benefits that customers feel they lack today in the most popular phone, not the least of which is a desire to be different and stand out from the crowd with cool technology.

Conclusion

After 10 years of limited innovation in the smartphone market, people want something new and different. Consumers don’t have the same excitement about their smartphone as they did in the past, so the ability for companies to brand phones in “enthusiast segment” will receive much attention in the coming years.

The market for “enthusiast phones” will have double digit growth and increasing value. HP, Lenovo, Microsoft and Dell have proven this from the enthusiast segment in the PC market.

For enthusiast smartphones, the market will be divided among many manufacturers in which those with the right DNA will take a unique market position.

A certain segment of consumers will move away from the classic brands of smartphones to new enthusiast brands. Many consumers recognize that the latest Apple or Samsung phone is nothing more than the old model with a new number. The growth in this segment will be stimulated by the media eager for something new to write about, as they are tired of writing about Apple and Samsung for the last decade.

The PC has been on that track for some years, launching an series of laptops to meet the enthusiastic segment. It’s time now for the smartphone industry to reinvent itself.

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John Strand

About the Author

About the Author:

John is CEO of Strand Consult. In 1994 John founded Strand Consult. In the early days of Strand Consult the primary focus was on CRM – analyzing and evaluating sales processes and performance for the IT, Telco, Media and Finance sector and helping customers optimize these, enabling them to move more merchandise at reduced cost. He is one of the best-known and most respected consultants in the business.

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