Smartphone Commoditisation

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In business literature, commoditisation is defined as the process by which goods that have economic value and are distinguishable in terms of attributes end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition and from monopolistic to perfect competition. It is a space where lowest price wins.

In 2010, with Apple and Samsung dominating the smartphone and tablet market, you would have struggled to conceive that in the very near future the glamorous and innovative feature rich devices produced from these 2 giants would have any competition. After whipping Nokia’s market share out from under their feet in 2007 Apple first, and then Samsung, moved quickly over a 3-5 year period to what seemed to be an insurmountable level of domination. And then Boom! In 2015 we find smartphone and tablet hardware pretty much commoditised. So what happened, what is the current landscape and what does it mean for the consumer?

Android happened! A universal, open source and powerful mobile programming platform and operating system emerged allowing manufacturers to focus on hardware alone. The gap quickly narrowed, as you would expect when you take companies like Sony, HTC and LG and half the amount of work they need to do to push equivalent functioning devices out into the wild. More recently no-name brands have leveraged Google’s little green robot’s skill set and there has literally been a flood of highly functioning smartphones and tablets pouring into the West from China and India. Costs are down and competition is up. As your options grow towards infinity the choice tends towards zero on the scale of onerousness (meaning that your choice of hardware has little to no significance in your final decision making). This simplifies life tremendously and as the gap between manufacturers grows ever closer, mobility solutions can become truly hardware agnostic! Awesome we say!

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