What’s wrong with smartphones today? They’re boring

AT&T is getting nervous, and so are its competitors in the cellular business. Growth is slowing, upgrades to new phones by subscribers is sluggish, and there are signs that the smartphone market is approaching saturation. What’s a carrier to do? Make it easier to upgrade.

People have long been unhappy about being locked into two-year contracts and the concurrent lenghty waiting period before being allowed to upgrade to a new phone at a subsidized price. In America, that is — in most of the world, people pay full price for their phones, in exchange for being able to use them on any network. Contracts exist, but they’re about locking in discount usage rates, not getting subsidized phones.

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So AT&T, the second-largest American phone carrier, yesterday announced a new service wrinkle that will allow customers to upgrade a phone after just one year. T-Mobile offered a similar plan last week, and Verizon, the No. 1 U.S. carrier, launched a similar plan toay.

It’s not going to work.

Whatever the virtues and failings of those plans from a buyer’s point of view (there are many, not least of which is that AT&T and Verizon are effectively double-charging for devices in their new plans), they won’t address the core of the problem: Innovation in the smartphone market is simply slowing. It hasn’t reached the level of stagnation we’ve seen in the PC industry, where you simply can’t tell one box from another, but it’s very real. From the perspective of Apple, Samsung, and the rest of the bunch, it’s a very dangerous trend.

Upgrades are important because they keep users locked to the specific carrier’s network longer, reducing customer turnover, which saves money — plus, customers who upgrade tend to use more data, and thus spend more, as they take more advantage of their new devices. So smartphone innovation is critical to spurring sales of new devices for upgraders to buy.

But there is innovation happening in mobile hardware, and it’s coming from companies like SAP, IBM, Epson, and Plantronics that are developing wearable products with real business use in factories, medicine, and the office. It’s not sexy stuff, but it’s terribly practical. I bet they’ll even make money before too long.

Upgrading from iPhone 4S to 5: Why bother?

Consider my own experience as a smartphone user. Even though I make a living writing about technology, I’m not an earlier adopter, and my budget is limited. (Hey, I’m a writer, what do you expect?) In many ways, I’m probably fairly representative of the technology-buying public.

When I moved from a cellphone to an iPhone 3G S some years ago, I was astonished by how much my use of technology changed as a result — for the better. I no longer needed to run home to check my email, I had a camera in my shirt pocket, my calendar and contacts synced with those on my laptop, and if I wanted to go online while sitting in a café, the Web was right there.

I remember sitting in a café reading the chapters in “War and Peace” on the Battle of Austerlitz. Not knowing much about Napoleon’s great victory, I pulled out my iPhone and looked it up. A great 21st-century technology improving the experience of reading a great 19th-century novel while sitting outside on a pleasant afternoon — how cool is that?

Fast-forward a few years: Now I use an iPhone 4S. I like it a lot — it’s certainly an improvement over my old iPhone, but has it changed much about how I use technology? Not really. When the iPhone 5 came out, I might have upgraded, but it wouldn’t have been worth another $200 or $300 because it’s simply not that different from the 4S.

This isn’t just about Apple. Samsung’s Galaxy line of phones really stood out as an alternative to the iPhone a year ago. They did some things the iPhone couldn’t do, and they did them rather well. Moving to the Galaxy S III from earlier models was compelling. But upgrading to the Galaxy S 4? Not so much. In fact, Samsung tried so hard to make the S 4 different that it actually made the Galaxy S 4 worse, as my colleague Galen Gruman wrote a while back.

What’s true of Samsung and Apple is doubly true for Microsoft and BlackBerry. The new Windows Phone doesn’t offer anything individuals or business buyers really want. As to BlackBerry, sales of its new BlackBerry 10 smartphones are disappointing, to say the least.

The wireless carriers can fiddle all they want with user plans, but unless the technology vendors come up with compelling new products, their financials will continue to suffer. AT&T’s most recent quarter illustrates that point. Ma Bell’s revenue fell from last year’s $31.82 billion to $31.36 billion for the same quarter this year. Even worse, the company lost nearly 70,000 subscribers. Today, Verizon will report its earnings. From analyst reports, I think the quarter will be decent, but then there’s this: It looks like Verizon, which has a deal with Apple, is falling far short of its commitments to buy iPhones over a number of years by as much as $12 billion to $14 billion, according to some accounts.

Forklifts and pumps: More innovative than the Galaxy S 4 It’s a long way from smartphones to wearable computers for industry. But the technologies that SAP and Epson are close to (separately) pushing out the door remind me how exciting technology can be when it is applied to real business needs. Both companies are working with various partners to bring wearable technology to industry.

In SAP’s case, a forklift driver, for example, could see a heads-up display that tells him or her what item to pick up, where it goes, and what’s left in inventory. Epson has a wearable app that could allow a mechanic working on a pump to see a schematic that shows how to repair the equipment while he or she is working on it, then records the mechanic’s actions and beams that information back to a supervisor for review.

OK, forklifts and pumps aren’t sexy or very much fun. But they have the potential to change how important work gets done.

Likewise, IBM’s development of flexible semiconductors that could be implemented as monitors in the body could have enormous medical benefits, and a Plantronics headset that can pull data out of a Salesforce.com application makes real sense in a sales environment.

I’m not bemoaning the lack of innovation in the technology industry as a whole — there’s plenty. But we’re not seeing much of that in the realm of the smartphone. Beating on Apple CEO Tim Cook, a popular pastime in the blogosphere, won’t solve that reality. Technology doesn’t advance on a steadily rising curve. Sometimes it plateaus for a while, and vendors and carriers will simply have to deal with.  

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

This article, “What’s wrong with smartphones today? They’re boring,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.