The Future of Mobile: Desperate to innovate
By Ajay Bhalla, Professor of Global Innovation Management, Cass Business School
What was the mobile industry like five years ago and what is it like today?
Five years ago, when Apple entered the industry, entrenched players such as Nokia in the consumer segment and Blackberry in the corporate segment had perfected a business model which rested on generating revenues from selling handsets. Mobile network providers such as Vodafone used their power to negotiate subsidies from handset providers, who in turn perfected their business model by scaling up. However, this focused approach left little room for disruptive innovation.
The entrance of Apple and subsequently Google has been a game changer. Both have shifted the industry by first decoupling the handsets and software that powers them, and then recoupling the both parts. Multiple segments have emerged, with the top-tier segment being dominated by Apple and Samsung and the middle segment being dominated by multiple players with Nokia being one of them. The power has shifted from mobile network providers to handset manufacturers in the top-tier.
How important is it to innovate in the mobile industry?
Innovation is key pillar of the mobile industry. Not only is innovation critical in physical design of devices but also in add-on services which really boost the power of these devices. The intertwining of devices in our everyday lives means we are going to see dynamic data driven devices such as watches, phones, and glasses becoming part of everyday life. We will see a fundamental shift and emergence of new service players. It's no longer going to be a mainstay of large scale companies with deep pockets like Apple or Samsung. So watch out for new players, watch out for new devices and watch out for new services in next five years.
What will be the biggest challenge Apple and Samsung face in the next five years?
Apple and Samsung are desperately trying to innovate, and as it stands today we've seen both are priming their resources to launch multiple devices. What is going to come in 2014 is that big question: Is Apple is going to launch a new device which is going to be a game changer? What category Google is going to play in? What we are very likely to see is Apple allocating substantial chunks of its Research and Development budget to new devices. We will also see them trying to acquire smaller niche players, as a new successful entrant may lead Apple and Samsung to lose their leads.