5.1 Disruptive Innovation in Smartphones
Marcos Antonio de Lima Filho, PhD.
The Evolution of Smartphone Architectures
The form factor is perhaps the most useful criterion for classifying smartphones. The form factor encompasses the size, weight, and shape of a portable electronic device (Haskel, 2004, p. 14). It is a critical dimension of the conceptual design of any consumer product. The form factor is a descriptor of the basic layout of a product architecture. From 2000 through 2020, the smartphone industry has evolved through 12 distinct product architectures, which are outlined below (Figure 5.1.1).
BlackBerry devices are the best representatives of the keyboard bar form factor. This architecture is based on a physical QWERTY keyboard, and was the dominant design before the introduction of the first iPhone in 2007. Slider and side-slider models rely on a sliding mechanism to house a full-tactile keyboard or numeric keypad. Clamshell designs consist of two sections connected by a hinge. More recently, the industry has seen the emergence of foldable devices, which are based on flexible OLED displays.
Along with these architectural evolutions, the mobile industry’s competitive environment underwent a significant shift during this time. Traditional manufacturers such as Nokia and BlackBerry lost ground to new entrants such as Apple and a number of Chinese competitors. The rise of new operating systems, specifically iOS and Android, came at the expense of established platforms owned by incumbent manufacturers, particularly Nokia, Microsoft, and RIM. The discussion further examines these market shifts (Section 6.4 — Market Disruptions in The Smartphone Industry).
Patterns of Design Selection
Beyond disruption, the graphs presented in this section uncover additional patterns in the adoption of features throughout smartphone evolution. These adoption patterns can be classified into four primary types: market entry (blue), increasing adoption (green), stability (yellow), and decline (red). I discuss in this thesis how these adoption patterns share similarities with evolutionary patterns observed in biology, such as disruptive selection, directional selection, stabilising selection, and purifying selection.
Market entry (Disruptive selection): In this analogy, the disruptive selection in biology is similar to introducing a new feature, component, or technology. Just as disruptive selection can lead to the diversification of species in nature, disruptive innovations in the smartphone industry can result in the creation of new market segments, the obsolescence of older technologies, and the rise of new market leaders and suppliers.
Increasing adoption (Directional selection): In this pattern, a feature gains increasing popularity and becomes more common in the market over time. This is analogous to the concept of directional selection in biology, where certain traits become more prevalent in a population due to a selective advantage. The development of bigger smartphones, better cameras, higher display resolutions, and faster processors is an example of directional selection.
Stability (Stabilising selection): In this pattern, the prevalence of a feature remains relatively stable over time, indicating that it has reached a balanced state in the market. This is similar to stabilising selection in biology, where the population stabilises around a particular trait that offers the highest fitness. An example of this in the smartphone market is the continued presence of physical volume buttons on devices, which have remained a consistent feature across various models and manufacturers in the last two decades.
Decline (Purifying selection): In this pattern, a feature experiences a decline in popularity, eventually becoming less common or even disappearing from the market. I compare this pattern to purifying selection in biology, where deleterious traits are progressively eliminated from a population. FM radio support in smartphones demonstrates this pattern, as after a decade of relative stability, the support for this feature has gradually decreased (Figure 5.1.5).
This variety of patterns highlights the dynamic nature of feature adoption in the evolution of products, illustrating how certain technologies and innovations rise, persist, or fall over time. Therefore, it is essential to recognise that disruption is just one aspect of the innovation selection process. Regrettably, current disruption models tend to concentrate on this single selection pattern, neglecting all others. Such a myopic view of innovation can lead to an incomplete understanding of market dynamics and technological evolution.
Disruptions in Smartphone Design & Form Factor
The slate form factor was a critical design milestone for smartphones. With a touchscreen display, this novel architecture replaced physical input interfaces, such as tactile keyboards and numeric keypads. Its introduction marked a significant disruption to prior smartphone architectures. Since the early 2010s, virtually all smartphones have converged on the slate form factor (Figure 5.1.1).
Since then, the touchscreen slate has become the dominant design in the industry. However, this dominance does not imply that evolution has reached a state of stasis or that disruptive innovations have come to a halt. On the contrary, manufacturers have continued to incorporate a variety of new features and enhancements into the touchscreen slate design (Figure 5.1.2).
Disruptions in Smartphone Components
The introduction of touchscreens in mobile devices was, perhaps, the most significant disruption this market has seen in the last decades. Before touchscreens, physical keyboards were the standard input method for mobile phones. The advent of touchscreens created a divide in the market between traditional mobile phones with physical keyboards and smartphones with touchscreens. This disruption led to a shift in consumer preferences and, eventually, the dominance of touchscreen smartphones in the market.
The emergence of the touchscreen slate as the dominant design in smartphones had a significant impact on the direction of innovation. As this design became the standard product architecture, manufacturers shifted their innovative efforts to lower components in the design hierarchy, such as displays, CPUs, camera systems, sensors, and more. The high complexity of these parts still provided ample room for disruptive selection.
Subsequent advancements in materials and components opened new market spaces for suppliers, necessitating substantial capital expenditures and leading to changes in the industry’s structure. These disruptions at the component level frequently diminished the value of established technologies, resulting in a certain degree of creative destruction. Such market disequilibrium suggests that disruptive innovations occur more frequently than initially anticipated.
The 3G technology, for instance, was disrupted by 4G technology. This new standard did not disrupt the typical smartphone architecture because it just required the upgrade of a modem component. As such, the 4G was a component innovation that essentially preserved and enhanced the dominant design. 4G rollout, however, demanded massive capital investments in carrier network infrastructure. It also diminished the value invested in the established 3G networks.The market has established 4G as the dominant standard since the mid-2010s (Figure 5.1.3). More recently, 5G is again upsetting this state of equilibrium, generating a new wave of creative destruction. Component suppliers unable to develop 5G solutions have found themselves in a severe competitive disadvantage. This was the case with Intel’s struggling cellular modem division, which led to the company’s exit from the 5G smartphone modem business in 2019.
As explained before (Defining Disruption, within Section 4.1), the concept of disruptive innovation adopted in this analysis differs from the one proposed by Christensen. Because 4G and 5G were technologically superior and initially expensive, Christensen’s framework would categorise them as “sustaining innovations” rather than “disruptive innovations.” The issue with this classification is that, instead of sustaining and safeguarding current competence, these technologies have destroyed the value of established technologies. In light of this apparent contradiction between theory and evidence, I argue in favour of a new definition of disruption in the discussion.
The modern synthesis of evolutionary theory understands that disruptive selection operates on multiple levels, from the gene to the group (Gould, 2002). Similarly, the results provided here reveal patterns of disruptive selection working at several levels of a smartphone design hierarchy (components, features, form factors, product categories, etc.). The graphs also indicate patterns of increasing adoption (green), stability (yellow), and decline (red), which are analogous to the evolutionary patterns of directional selection, stabilising selection, and purifying selection. For instance, after a decade of relative stability, support for FM radio has decreased gradually (Figure 5.1.5).
Emerging Disruptions in Smartphone Design
The disruptive innovations outlined in the previous section have already achieved diffusion rates of 40% or higher. This section lists a group of innovations that may reach this adoption level in the future. This 40% rate is arbitrary. This choice was done solely to differentiate successful innovations from those in their infancy. It is conceivable to establish a disruptive, high-margin business strategy below 40% market diffusion. Some components may never penetrate all market segments due to their high cost. For example, the adoption of optical zoom and optical image stabilisation has increased steadily over the past decade, although it has been limited to high-end and mid-range models (Figure 5.1.6).
Other technologies in this group may fail to diffuse and then disappear in the future. For example, the adoption of motorised pop-up front-facing cameras has declined significantly since peaking in 2018. If this trend persists, it will signal that this technology has been rejected (purifying innovation).
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