[Guest Post] It’s the attack of the disruptors

By , 15 September 2013 at 16:45
[Guest Post] It’s the attack of the disruptors
Insights

[Guest Post] It’s the attack of the disruptors

By , 15 September 2013 at 16:45

By Hansmeet Sethi,Ā Founder of Onskreen and 4thpass; speaker onĀ mobility and entrepreneurism and startups advisor (browse his blog atĀ www.sethi.to)

15 September 2013

Software is not just eating the world, it will also eat the hardware margins of the leading mobile vendors and level the distribution of mobile industry profits.

Today’s mobile market has clear winners

Samsung makes more profit from Android phones than Google does from all of their operations [Asymco], while Apple earned 57% of global smartphone industry profits in Q1 2013. The integrated players, Apple and Samsung, are drowning in the profits from integrated production, efficient supply chains and differentiated, well marketed products.

The software and service players are not monetizing mobile in any comparable way….yet. Google, Amazon (and to a small degree Microsoft) – are playing the role of disruptor. Their strategy resides in subsidizing hardware with services (ads) and content, which will eventually reshape the distribution of wealth in the mobile industry. Two reasons this is working:

  • Hardware innovation has slowed – The spec war is over. Capacitive touch screens and cheap sensors were the last major improvements. Some are on the horizon (flexible screens), but in general even the less expensive smartphones are capable for most users. Does anybody really know or care how many computing cores their phone has?
  • Whole product matters – Consumers view the device as a mobile extension of their digital life. So seamless access to the services that support their life (email, maps, search, apps, etc…) are as, if not more, important as any hardware spec.

What’s a mobile goliath like Apple or Samsung to do to keep their monopoly sized profit machine running?

For one, continue to invest in R&D to stay in front of the hardware innovation curve and find the next breakthrough. Second, they need to rapidly round out their digital life offerings, getting more users onto their service and content platforms.

They will do everything they can to fill their software, service and content deficiencies to ensure that as hardware margins decrease, they can make it up in service and content margin. Otherwise they will see their products become less attractive and less profitable. How well they do this over the next few years will dictate how much of the industry’s profits they retain from the attack of the disruptors.

previous article

[Infographic] Just how popular has HTML5 become?

[Infographic] Just how popular has HTML5 become?
next article

Hereā€™s what you could really create with open data

Hereā€™s what you could really create with open data