iPhone 3GS: ‘lack of innovation’ hides true assets

Apple’s latest iPhone offered few surprises to those familiar with the iPhone SDK 3.0 – new features are, after all, ultimately constrained by the capabilities of the device’s software. While this might disappoint Apple’s devoted followers, underlying this gradual evolution is Apple’s key contribution to the smartphone space – namely proving the value of firmware upgrades to refresh its devices, whether the new iPhone 3GS, its predecessors or its iPod Touch cousins.

While mobile software management and firmware upgrades (over the air or otherwise) have long been touted as potentially valuable tools for operators and manufacturers, they won’t typically work well across a broad portfolio of devices – too many variations make the creation and distribution of updates hard to manage.

Apple broke this impasse by effectively limiting its device platform to a single variant. While this has the effect of limiting hardware innovation (all iterations of the iPhone are, barring core phone functions, similar), the payback has been the ability to gradually evolve the device through software, while relying on a proven – and still a benchmark – hardware design.

For consumers, the end result is a device that improves over time and isn’t rendered redundant by the next update or uber device from a rival. The opening up of the device to third-party applications is the most visible evidence of this (spawning the billion-plus downloads to date) but the smaller improvements haven’t hurt either. Browser tweaks, touch-screen sensitivity and many other features have all notably improved the device since its first iteration, without having to change the physical device itself. Increased stickiness between Apple and the consumer is the end result.

It’s no surprise to see Google following suit with Android. Indeed, the recent 1.5 ‘cupcake’ release (over the air, to boot) has had similar benefits, and from a lower starting point. This has considerably improved the user experience of the HTC / T-Mobile G1, helping build confidence between buyer and vendor.
Others are also recognising the benefits of such refreshes. Nokia’s 5800 touch-screen phone received a similar upgrade, albeit user initiated. RIM also provides updates for more recent devices, although the upgrade process via a PC is both clunky and nerve-wracking. And there will be more.

True smartness lies in active management of the experience, not the OS

The risk is in operators and makers of mainstream devices attempting to follow suit. As we said above, this is a difficult process to manage and variety, in devices, is absolutely not the spice of life in this instance.

Better, we feel, to see mobile devices in future falling into two main categories, neither of which corresponds neatly with divisions based on ‘smartness’ or ‘featureness’. These are:

– those that are being actively managed by the controller off the software platform on the device, with the active participation of the user. Such devices are likely to remain fairly high end. Planned obsolescence through software becomes a viable means to alter this dynamic in time. Don’t be surprised to see Apple invoke this clause when it’s ready.

– those that aren’t required to be actively managed by anyone. This could easily include many so-called smartphones as well as more basic devices – the emphasis here should instead be on enabling cloud-based applications easily, but with little or no obligation to upgrade the experience over time.
Taking this bipartite approach will help avoid costly mistakes and help all parties in the mobile handset value chain to focus on core competencies.

Ovum expects 171.9 million smartphones globally to be shipped this year, a growth of 23% on 2008, and that smartphones will represent 15% of the total worldwide mobile phone market in 2009. The concepts outlined here are explained in greater detail in the report Of iPhones and Androids: redefining the smartphone and other devices.