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The Importance of the Smartphone

The Importance of the Smartphone

For a company shipping over half a billion handsets a year you'd think smartphones would be no big deal. After all, despite endless publicity, the iPhone has sold just 50 million units in three and a half years and across four generations. That's a tiny spec on the radar, why should Nokia care?

The answer is the most basic in business: money.

Smartphones currently have by far the biggest margins of any product in the tech sector. TVs, PCs, laptops all pale by comparison. It’s the reason Samsung and LG dived into the sector, why Acer bought E-TEN, HP paid $1.2bn for Palm and Dell has invested heavily to come up with the Streak, Thunder and Lightning. To put this in perspective last July Apple and RIM made just three per cent of the handsets on sale, but raked in 35 per cent of the profits.

Furthermore, while money is a great motivator, fear can be an even better one because smartphones eat into other sectors. Their diverse functionality tears into dedicated product sectors like sat navs and MP3 players. It is the reason Garmin made the nuviphone, TomTom dived into apps and Apple realised it couldn't dine out forever on the iPod. Next on the hit list are point and shoot cameras and video cameras, while smartphone software is branching out into tablets and looking to give the netbook sector a scare.

Fail to bring a competitive smartphone to market and the next sector it swallows could be yours. Unless you make lawnmowers… ...probably.

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