The iPhone is out, so what’s next?

Source: De Tijd (09/01/2019); Author: Marion Debruyne (Dean of Vlerick Business School)

Beginning of 2019, Apple issued a profit warning due to a decrease in iPhone sales. The Chinese market seems to be a hurdle, as well as the fact that almost 12 years after the launch of the first iPhone, our enthusiasm for replacing our current model with the latest one is dwindling. Personally, I have had the same model for three years. In the world of technology that may be an eternity, but I am not alone and that is precisely Apple’s problem.

Actually, it is not just Apple’s problem. Because the underlying question is whether the wave of innovation driven by the smartphone platform in the past ten years is over. And whether a new platform can result in a new, similar wave of innovation. All eyes are on smart speakers, such as Echo by Amazon, Google Home and the Apple Homepod.

What have we learnt from over half a century of research into the development of new product categories on the market? That there are quite a few positive signals indicating that a boom in smart speakers is just around the corner.

First of all, there is the timing. It takes about three to five years for a new product category to reach a tipping point. That is more or less where we are now. The number of competitors is on the rise, which may not be good news for the pioneers, but it typically means that the market is about to start growing rapidly. Almost a quarter of all American households have a smart speaker at home. So we are way past the early stages, where these products attracted the first fans and enthusiasts.

The term ‘smart speaker’ also shows we seem to have agreed on what to call them. That is a breakthrough in the development of a new product category! You should check out Amazon’s first press release about the Echo. The company struggled to describe what on earth it was. “Echo is a new category of device”, it said. However, there was no further explanation as to what that category was. The press release went on to explain the device was designed around the user’s voice and could be used to request information, and listen to music, news broadcasts and weather forecasts. Is it a loudspeaker? Is it a voice-controlled assistant? No, it’s not. It’s Amazon Echo, better known as Alexa.

Typically, in the early stages, new product categories do not really have a name. After all, the first cars were simply called ‘horseless carriages’. And before we all agreed on ‘smartphone’, there were over 280 different names for the device that brings together a phone, apps, e-mails and much more on a pocket-sized screen.

The big question is what smart speakers can be used for. I bet you can talk faster than you can type. That is a first clear advantage of voice-activated devices. However, a platform is much more than a simple device and it is only as useful as the services it offers and the ecosystem it belongs to. 

At the moment, smart speakers tend to be used as nothing more than dumb speakers, to listen to music. If we want to see the same growth curve as that of smartphones, we need to step it up a notch. That growth curve seems to lie somewhere in the fusion of the physical and virtual world, resulting not only in your speaker sharing information, but also allowing you to buy and/or control physical products. It remains to be seen whether or not consumers will jump on the bandwagon. Stay tuned! 

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