The end of hardware, everything now is just software

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The equipment rate in smartphone now exceeds 50% in some cities, and, with prices down, commoditization is inevitable. Today there are more people connected to the Internet via mobile devices than via a PC. But what is impressive is that a smartphone exceeds the PC in many ways: always connected, contacts, calendar and e mails are synchronized; exit the Palm and other “organizer”. With the camera, compact digital cameras become superfluous, with the GPS and compass, no more need of Tomtom or Garmin. Smartphones have become “digital Swiss Army knives” which we find new applications every day. The single-task digital devices can be left on the History shelves. The latest victim is the portable game console that is gradually losing the battle with smartphones.

“Power users” are certainly not going to push aside their reflex cameras or their hi-fi system for an iPhone, but for most of the consumers, the iPhone satisfy all their digital needs.

However, smartphones now exist beyond the iPhone and all manufacturers have intensified their creativity to compete with them. Google and Android have been finally providing a real convincing alternative, developed thanks to reliable products, cheaper than the iPhone. Those ones make the market today.

Beyond the smartphones success, what will be the consequences for the mobile handset industry and also for the consumer electronics and the software markets? What services consumers will be provided with?

The end of hardware: everything now is just software

Further integration of components, fall in prices and larger consumer electronics ranges are cause and effect of a mass-product success. This phenomenon has been observed in the personal computing market since the nineties and in the handset market since 2000’s.

Today, from the low end of the mobile phones range, you can find touch screens, cameras and multimedia player. Then you can find mobile phones that have the power of a five year-old top of the range computer, plus high-speed internet, a GPS, an accelerometer, and a TV output. Those devices that used to be very expensive give birth to new consumer use, not necessarily obvious:
What to do with an accelerometer? Not really measure the acceleration of your new car but rather your phone’s angle, opening up new horizons, particularly in gaming, transforming the handset in a sensitive gamepad – what made the Wii a hit.
Is touch screen useful to make a call? Not really – even opposite; but via internet access, it becomes a universal remote control, able to control your multimedia computer from your armchair, get your playlist appear on the screen and pop up any buttons you may need.
Adding up those two previous features, you can make a radio-controlled helicopter fly.
And a GPS, what for ? Everybody already has one in their car, it was the product of 2008, isn’t’ it?
Yes it was, but always-on Internet access allows community applications. Not only to know if you have a friend sitting in the same bar as you, but also to know if a radar has been spotted on your road.
A camera ? To make fine-art? Or rather to identify bar codes, business cards, movements or screening the environment, giving path to place recognition. The mix of screen and captor allows to share with friends pictures taken during the day. It is disposable, but it is nice.
A compass? You don’t practice orienteering race? Maybe, but it is able to know where you point the phone, so it can give you the sky map with the name of the stars you are looking at.
All those features are available to third parties thanks to platforms opened to applications developers that give all their sense to those technological headways.

What will be the effects on the consumer and on the market? The main one is that specific hardware is becoming obsolete.

For instance, in order to benefit from a radar alerting system, you had to buy a special device – the first were sold 700€ – and pay for a contract including communications and service. Now, you just have to download the application. A universal remote control used to cost more than 300€. The application for iPod Touch, iPhone and Android is free…. Today any smartphone processor already has the device; it just needs to get the right service via the applications store. But those usages could only exist thanks to reassuring unlimited contract enabling to be “always-on”: the megabit price dropped from 3€ to 0.5€ with the iPhone launch.

As well as PC has ended the specific industrial automated hardware, smartphones have shifted the issue from hardware to software: the device exists; you just need software and services to use it.

To this point, it is worth paying attention at Apple’s communication: iPod advertisements focus on game and the main part of communication (the famous keynotes) dwell on software and its partners.

Creativity is impressive: with the mix of camera sensor, GPS, Internet access, accelerator, and compass you can go way further traditional use. Augmented reality becomes possible. The screen captures our visions and the smartphone, knowing where you are and where you are looking at, add pop ups, like monuments’ names, restaurants in your neighbourhood, etc.

Even American Army uses iPhones to calculate balls’ trajectories, to translate and to broadcast pictures sent from drones… Many services suppliers gave up producing specific hardware and are just adding software layers on existing devices. Soon, on-board computers and car radios, today developed with specific hardware and software, will be on-board smartphones, playing music and video on demand… Entertaining systems in planes will follow the same way (it is already the case with Windows CE, the grandfather of portable OS). Just as there are today computers everywhere, there will be tomorrow smartphones everywhere, and all won’t place calls.
To be continued!

Morand Studer and the eleven Telecom team