Today, there are well over 2bn smartphones in use, and there are between 3.5 and 4.5bn people with a mobile phone of some kind, out of only a little over 5bn adults on earth. Over the next few years almost all of the people who don't yet have a phone will get one, and almost all of the phones on earth will become smartphones. A decade ago some of that was subject to debate - today it isn't. What all those people pay for data, and how they charge their phones, may be a challenge, but the smartphone itself is close to a universal product for humanity - the first the tech industry has ever had.
With billions of people buying a device every two years, on average, the phone business dwarfs the PC business, which has an install base of 1.5-1.6bn devices replaced every 4-5 years. PC sales are a bit over 300m units a year where phone sales are now close to 2bn, of which well over half, and growing, are now smartphones.
That in turn means that the smartphone supply chain is replacing the PC supply chain as a key driver of the tech industry. In the past if you wanted to put a 'computer' in something, after a certain level of complexity that meant a PC - commodity PC components and a commodity PC operating system (i.e. Linux or Windows). Hence, ATMs run Windows XP. Mobile supplants that with a new supply chain. The smartphone wars mean there's now a firehose of cheap, low-power, ever-more-sophisticated smartphone components available for anyone else to use - it's as though someone dumped a shipping container worth of Lego on the floor and we're working out what to make. In parallel, the contract manufacturers that make all of those smartphones can also make other things with those components. These two factors - the components and the contract manufacturers, together the supply chain - are behind the explosion of smart devices of every kinds - drones, wearables, internet of things, connected homes, cars, TVs and so on.
All of this also means that the companies and places that set the agenda in tech have changed. In the past you'd have gone to Seattle, Finland and Japan to see the future, or you'd have talked to Microsoft, Intel, Nokia or NTT DoCoMo. Now, you talk to Apple, Google or Facebook, Qualcomm, Mediatek or ARM, and go to the San Francisco Bay area, or China.
When we ask, then, how many people will own a smart watch, or a tablet or smart thermostat and so on, or how connected cars work, or who will control them or what software they will run, it seems to me that the best way to think of this is as a solar system - the smartphone is the Sun and everything else orbits around it. Those other segments might be big or small and near or far, and there will be moons too. Some will be full of life, some interesting, some important, others boring but worthwhile. Some, like Pluto, might not seem to have much to do with the smartphone at all, really (smart meters, perhaps?), but the pull is always there in some form. Some devices will have their own computing and UI and leverage smartphone components, and others will just be dumb glass, sensors or pipes that are explicitly dependent on a smartphone. But for almost everything, the smartphone industry supplies the components and manufacturers, and the smartphone itself is mostly how you control and interact.
In this light, incidentally, Satya Nadella's suggestion that Xbox is no longer core was as interesting as the end of 'Windows Everywhere' (which I discussed here). Microsoft has been working on adding computing to TV since before phones even had screens. But it turns out that it's the smartphone, not the TV, that's the centre of the experience, and the TV is dumb glass just as the mobile network is a dumb pipe.
With billions of people buying a device every two years, on average, the phone business dwarfs the PC business, which has an install base of 1.5-1.6bn devices replaced every 4-5 years. PC sales are a bit over 300m units a year where phone sales are now close to 2bn, of which well over half, and growing, are now smartphones.
That in turn means that the smartphone supply chain is replacing the PC supply chain as a key driver of the tech industry. In the past if you wanted to put a 'computer' in something, after a certain level of complexity that meant a PC - commodity PC components and a commodity PC operating system (i.e. Linux or Windows). Hence, ATMs run Windows XP. Mobile supplants that with a new supply chain. The smartphone wars mean there's now a firehose of cheap, low-power, ever-more-sophisticated smartphone components available for anyone else to use - it's as though someone dumped a shipping container worth of Lego on the floor and we're working out what to make. In parallel, the contract manufacturers that make all of those smartphones can also make other things with those components. These two factors - the components and the contract manufacturers, together the supply chain - are behind the explosion of smart devices of every kinds - drones, wearables, internet of things, connected homes, cars, TVs and so on.
All of this also means that the companies and places that set the agenda in tech have changed. In the past you'd have gone to Seattle, Finland and Japan to see the future, or you'd have talked to Microsoft, Intel, Nokia or NTT DoCoMo. Now, you talk to Apple, Google or Facebook, Qualcomm, Mediatek or ARM, and go to the San Francisco Bay area, or China.
When we ask, then, how many people will own a smart watch, or a tablet or smart thermostat and so on, or how connected cars work, or who will control them or what software they will run, it seems to me that the best way to think of this is as a solar system - the smartphone is the Sun and everything else orbits around it. Those other segments might be big or small and near or far, and there will be moons too. Some will be full of life, some interesting, some important, others boring but worthwhile. Some, like Pluto, might not seem to have much to do with the smartphone at all, really (smart meters, perhaps?), but the pull is always there in some form. Some devices will have their own computing and UI and leverage smartphone components, and others will just be dumb glass, sensors or pipes that are explicitly dependent on a smartphone. But for almost everything, the smartphone industry supplies the components and manufacturers, and the smartphone itself is mostly how you control and interact.
In this light, incidentally, Satya Nadella's suggestion that Xbox is no longer core was as interesting as the end of 'Windows Everywhere' (which I discussed here). Microsoft has been working on adding computing to TV since before phones even had screens. But it turns out that it's the smartphone, not the TV, that's the centre of the experience, and the TV is dumb glass just as the mobile network is a dumb pipe.
by Benedict Evans | Read more:
Image: Andreesen Horowitz
