IT directors following the smartphone market should review the history of smartphones to remind themselves just how fast and how often market leadership changes in such a dynamic industry.
The smartphone form factor was conceived around 10 or 15 years ago - the exact date depends on what one considers a smartphone. As the market matured, and as it became clear that vendors would make money selling all-in-one devices, three types of company got interested:
- Phone manufacturers: Companies who made the phones we now generously call feature phones (instead of just calling them "dumb phones," which is what they are). Leading companies of this category were Nokia and Ericsson. These two companies produced some of the first smartphones, and they based those handsets on the Symbian OS, which was designed specifically as a smartphone operating system.
- Personal Digital Assistant (PDA) Manufacturers: Young companies who made almost all of their money on PDAs. Leading companies in this category were Palm, Handspring, and Psion. RIM had its own niche within this category, because the devices they sold early on were strictly used for messaging, but they later evolved to become PDAs.
- Computer Manufacturers: Companies who made most of their money selling computers or computer operating systems, and then got into making PDAs relatively late. Compaq, HP, and Dell were the big vendors in this market.
Each vendor category approached the market from a different angle, and each had its own set of advantages and disadvantages. In the beginning, it wasn't clear which kind of company would dominate the market.
The phone manufacturers took phones, which they were experts at making, and added PDA features. The PDA manufacturers took PDAs, which they knew all about, and added phone capabilities. The computer manufacturers had already been trying to cram office computers onto a PDA form factor; on top of that, they added phones functions.
Anybody who tried out the first few smartphones remembers how badly each vendor category did when they tried to add components they didn't understand. Palm and Handspring smartphones were very poor as phones; Nokia and Ericsson smartphones were almost as bad as PDAs.
In the beginning, phone manufacturers led the market, because people wanted to make phone calls more than anything else. Once all the vendor categories understood how to make phones, PDA manufacturers took the lead. Users wanted a relatively simple device, and PDA manufacturers understood simple better than all other types of vendor.
As hardware components got more powerful, and smartphones got smarter, it became relatively easy to put a lot of computer functionality on handsets and still make the device user friendly. Once the computer manufacturers figured out how to implement the phone functions, they had the clear advantage. However, the winners weren't the same computer manufacturers who started out ahead of the pack: HP and Dell lost the market to Apple and Samsung.
The PDA manufacturers wound up at the bottom of the food chain. Handspring merged with Palm, who were then bought by HP; Psion were bought by Motorola, who were later bought by Google.
Major phone manufacturers were gobbled up by software companies - Motorola by Google, and Nokia by Microsoft. In case you have trouble seeing the significance of these acquisitions, remember that Motorola was once worldwide market leader when phones were analogue, and Nokia was worldwide market leader once phones became digital. The stocks of both Motorola and Nokia were sky high in those company's respective heydays.
The smartphone industry still hasn't settled. Tablets are getting smaller, and computers are coming in a wider variety of shapes - they can even be integrated with glasses or clothing. While Apple and Samsung dominate the market today, their luck can quickly change as the industry continues to evolve at a much faster pace than its current leaders would probably like.