On January 9, 2007, Steve Jobs stood before an audience of some 45,000 people in San Francisco and announced a “revolutionary and magical product”: a slight slab of expansive black touchscreen with only a single button.
Compared with the ugly, cluttered devices of the day, the iPhone was revolutionary. It also was hugely influential. A Technicolor pageant of rival designs—the clamshell, the slide, the banana, the candy bar and the Blackberry—resolved into a uniform black mirror. Nearly every smartphone on the planet still looks like the device which Jobs revealed that day.
Nor is that similarity to be found only in hardware design. Nearly a fifth of smartphones sold in 2015 operate on Apple’s iOS software. The rest run variations of Android, an open-source operating system provided by Google. Only two companies—Apple and Samsung—accounted for more than 40 percent of smartphones sold in 2015, according to CCS Insight, a research company. Huawei came in a distant third with 8 percent.
In this bland and uniform market, some producers spy an opportunity. One of those is Kodak, which invented the digital camera that led to the loss of its lucrative film-and-chemicals business and to its own demise. Kodak emerged from bankruptcy protection in a much-reduced form in 2013 and now is taking aim at the way most people today snap pictures: on their mobile phones. The company has launched the Ektra, a heavily customized Android phone with features designed to appeal to photography enthusiasts.
Kodak’s phone is made for it by Bullitt Group, a small British company that also produces Caterpillar-branded “rugged” phones. In May Bullitt tied up with Jaguar Land Rover, a British carmaker, to make phones which are supposed to reflect the endurance of its go-anywhere four-wheel-drive vehicles. Sonim, an American company, also churns out rugged phones.
In China, Snail Mobile produces a phone purely for gamers, one which has side buttons of the sort usually found on hand-held gaming controllers.
A Russian mobile network makes the Yotaphone, which has two screens, one similar to a regular smartphone and a second black-and-white, low-power display like those used by e-book readers. This setup extends the phone’s battery life.
Vertu, a British producer once owned by Nokia, manufactures high-end luxury smartphones with high-end prices to match.
Niches are not only found, but also made: This year AG Mobile, a South African company, launched a range of inexpensive, Nelson Mandela-branded phones and tablets. Another AG phone is branded in the name of a local rapper.
Xiaomi, a Chinese company that now competes with global phone-makers, got its start in niches and gained plenty of attention by offering users a say in new software features.
Peter Stephens, Bullitt’s CEO, reckoned that the various niches bundled together account for maybe 4 percent to 5 percent of the entire smartphone market. That is tiny, but with some 1.4 billion smartphones shipped last year, it is still a substantial chunk. Moreover, while the overall market for smartphones notched annual growth of 7 percent in 2015, the “other” category, which excludes most big makers, grew at twice that rate.
Profit margins should be better, too—if the niche operators can stand the pace and if the big boys don’t move in on some of their patches.
© 2016 Economist Newspaper Ltd., London (November 5). All rights reserved.
Reprinted with permission.