Been following what’s been happening in the smartphone race lately?  If you haven’t, well it’s no longer about updates that are leaps and bounds ahead of the competition. It’s all about making small changes that make the product just good enough to outsell the competition. In many ways the smartphone race has turned into a race of incremental evolutionary changes, after Apple’s revolutionary iPhone reshaped the category in 2007.

It’s evident in the figures that Apple, Samsung and other manufacturers have been publicly sharing but also what carriers are doing to maintain profit margins (more


on that below).  Samsung and Apple both have made minor changes to popular phones in the last two releases (iPhone 5 and Samsung Galaxy S4). Both didn’t have much to offer in terms of the look and feel of the phone, letting software take the limelight. While both companies say the two phone are top sellers and probably their best sellers of all time, it’s evident that consumers are realizing that it’s no longer worth it to buy the latest and greatest since the manufacturers are no longer making the revolutionary changes to hardware and software.  Apple looks like it will continue this trend with the upcoming iPhone 5S.

But is this a surprising trend? I don’t think it really is.  Smartphones have hit a sweet spot where it’s difficult to introduce new hardware designs every year without upsetting consumers but also making too many changes to software that it becomes too difficult to use.  It’s a very similar trend that took place in the PC space.  For years, consumer upgraded PCs with new software without ever considering new devices until the trend changed to slimmer and more powerful machines (Macbook Air). Even when Microsoft or Apple did, consumers were upset with the changed.

These days, incremental change is the name of the game but as a result, the wireless carriers are suffering big time.  To solve the problem of consumers not upgrading on an annual basis, carriers like AT&T have introduced plans that allow consumers to upgrade every year for a monthly fee. While it seems like a great concept on paper, AT&T makes a ridiculous amount of money with this plan.  T-Mobile has a similar plan.  Carriers are hoping to get consumers to upgrade every year with the new plans. This is quite the contrast to the days when AT&T let iPhone customers upgrade every year (when I upgraded from the original iPhone to the iPhone 3G, AT&T let me upgrade in a heartbeat and tacked on an extra 2 years to my contract). 

As the fall holiday season comes around in a few months, don’t expect game changing devices to hit the market from the biggest smartphone players.  Apple will likely introduce a new iPhone, along with Motorola (Droid X) and Nokia but it won’t be the game changing devices their predecessors once had the honor of holding.  Instead, consumers will have the honor of picking from a variety of companies, with unique devices to satisfy their style. 

Do you upgrade your phone every year? What kind of smartphone do you have now?


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