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Shift of consumers' device usage threatens smartphones

Posted: 24 Apr 2014 ?? ?Print Version ?Bookmark and Share

Keywords:smartphone? tablet? wearable devices? Kilopass Technology?

Kilopass CEO Charlie Cheng identifies a paradigm shift towards the adoption of fewer mobile devices, which he believes may well trigger the death of smartphones. The emergence of wearables ushers in the four-device era. The users, instead of going for all four (laptop, smartphone, tablet, wearable), are opting to consolidate the functions they require into fewer deviceswith tablets likely to replace smartphones.

The biggest trend that was not reported at the Mobile World Congress (MWC) in Barcelona at the end of February was that, instead of lugging around four devices, we seem to be headed towards fewer devices.

It's a good thing that Samsung and others didn't get the bulletin, because the handset companies (other than Apple) paid for most of the extravaganzas.

OK, so I may have exaggerated a bit to get your click, but there is something fundamental going on here that will affect handset manufacturers and carriers and in turn will alter the semiconductor R&D agenda that's been set since the 1990s.

I will be somewhat obsessive-compulsive about it. I will roughly divide the smartphone market into three segments: the greenfield new buyers, the value seekers, and the power users.

Handset manufacturers (most notably Nokia) will bring smartphone integration in a feature phone cost structure. This is being enabled by low-cost silicon from companies such as Spreadstrum Communications Inc., which, along with Mozilla, announced a chipset at the MWC for creating $25 smartphones. This will be a growth market, but I'd argue it won't be one of tremendous profit for either the handset manufacturers or the carriers. These feature smartphones will attract the value seekers and yield similarly slim margins back to the ecosystem.

My focus will be on the power usersthose who rush to buy the latest and greatest smart devices and oftentimes pay $500 or more in monthly bills (yours truly being one of them). I argue that these users deliver the most profit to the handset manufacturers and carriers, and they are not going to carry four devices. If anything, they are trying to go down to two.

If we mark the first laptop of 1985 as the start of the one-device era, then we entered the two-device era sometime in the mid-1990s. The three-device era officially got under way when Apple introduced the original iPad in 2010.

As technological advances accelerate, the fourth device (a wearable) will likely hit adoption in 2014. All four device types will let users check email, tweet/chat, browse, play music, and, in fact, take care of most of their daily needs as business professionals.

It's not a difficult argument to make that carrying four devices only leads to more confusion (which app, which device, where is my...), personal maintenance (another non-EU compliant power charger...), and IT support needs. The question would be which device to retire from the fleet.

Ordinarily, one would have guessed that the smartphone would survive. It's the only device that can make carrier-grade phone calls. It's small enough to carry but large enough to read, and it has tried to encroach on the venerable notebook paradigm.

I think it's the most vulnerable one.

With fewer phone calls being made (just check your phone bill), more complex display needs (five inches is still five inches, even at full HD), an ageing population, and now a wearable, the smartphone is quickly losing its place.

With the new paradigm, I want a device that I can wear, so I don't lose it. (Wearable watch?) I want a device that lets me watch something that is specifically me (tablet) and lets me type easily, at least until the next data entry paradigm comes (notebook). If Apple ever made a merged-book, then I'd end up with just two devices.

In the meantime, I am experimenting with turning my smartphone off and forwarding all calls to my tablet. The results have been mostly encouraging.

In the next couple of blogs, I will describe what I believe to be the turning point of my personal experience in retiring the smartphone. I will describe the possible ramifications for handset makers and carriers. Lastly, I will take a higher-level view of this phenomenon and explore where we might focus our creative juices next.

- Charlie Cheng
??President & CEO, Kilopass Technology

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