The smartphone is the most successful consumer device ever: the landmark of a billion upgrades in a single year is testament to this.
Just being in the smartphone industry, however, is no guarantee of success, and the market is becoming increasingly competitive. The challenges for smartphone vendors: retaining loyalty, taking share in a maturing market, maintaining margin, and determining which functionality their customers want at each point in time, are likely to get steadily more acute over time.
In addition to optimizing hardware, vendors will need to increment the range of intangible factors used to enhance their devices’ appeal. These range from the availability of technical support, to the ease of transferring data between the old and new devices and from the perceived security of client data to the caliber of the accompanying app store.
Vendors need to ensure that all functionality addresses current needs and anticipates latent ones. Incorporating superfluous functionality, or technology that is hard to use, will diminish profitability.
Offering cameras with ever-higher resolution may offer quality increments that few owners would be able to discern; whereas incorporating better low-light capability may have wider appeal, as the improvement would be more immediately noticeable.
Smartphone vendors should continue to work closely with carriers. In markets with subsidies and two-year contracts, upgrades have both advantages and disadvantages for carriers. They need to fund the upfront device cost, or offer the ability to pay in installments, but the upgrade also gives them a chance to lock in a customer, reduce churn and perhaps even sell them upgraded service levels. In markets with no subsidies, the vendors need to optimize pricing and features in order to appeal to retailers and consumers.
For purchases of the few hundred million smartphones by enterprises, the selection process can be more complex than for consumers. CIOs are unlikely to care too much about the need for a smartphone optimized for sharing holiday snaps; but the HR department may want to offer such devices to attract and retain staff. In some cases, phones that are more resilient and water proof may be perfect for field workers; and for companies needing additional security, finger print readers and NFC chips may be of particular interest.