This article was written by David Wood and published on the Symbian corporate website in April 2006

Insight 8: Convergence comes of age

Future historians of the progress of consumer electronics are likely to identify the date of 20th April 2006 as a significant landmark.  On this date, Nokia released news of its results for the first three months of 2006.  A remarkable highlight of these results is the fact that, out of the many scores of Nokia phones on sale, covering many different families of product, the Symbian-powered N70 was the highest revenue generator for Nokia during these three months.

Based on Symbian OS and running S60, the N70 is arguably the world’s most successful smartphone to date.  However, the extent of its sales confirms that it has vividly surpassed the comparatively narrow market segment originally characterised by the phrase “smartphone”.

In describing the N70, Nokia’s press release uses the phrase “multimedia device”, rather than either “phone” or “smartphone”.  Later in the same release, http://press.nokia.com/PR/200604/1045813_5.html, the N70 is also described as a “multimedia computer”.  If the word “smartphone” perhaps fails to adequately describe the wide appeal and huge scope of the N70, the word “phone” is equally lacking.  The N70, along with other recent Symbian OS devices, goes way beyond being a “simply great phone”, by providing a powerhouse of additional valuable functionality to end users.  This is a substantial step towards the vision of mass-market converged devices.

Converged devices similar to smartphones have long been foretold.  Characters in the science fiction Star Trek series made frequent use of intriguing contraptions such as “tricorders” and “communicators”.  The term “PDA”, standing for “Personal Digital Assistant”, was coined in January 1992 by ex-Pepsi executive John Sculley, during his ten-year stint as CEO of Apple Computers.  Sculley was delivering a keynote speech at the annual Consumer Electronics Show at Las Vegas – in fact it was the first time for the keynote speaker at the show to be the CEO of a computer company.  Sculley went so far as to describe the PDA as heralding a “trillion dollar mother-of-all-markets”.  At the time, Apple was busily developing the Newton PDA – a handheld computer with pen input, handwriting recognition, and a “built-in intelligent assistant”.  In his keynote, Sculley drew attention to the growing convergence of computing and consumer electronics, and also spoke about multimedia, communications, and increasing miniaturisation.

Much of what Sculley predicted in general terms has now come to pass.  Computers have transcended their earlier usage in industry and government, and are now widely bought for entertainment and home purposes.  But Sculley’s hope for PDAs turned out to be premature.  The first Newton went on sale in 1993, under the name “MessagePad”.  Five years later, with original company founder Steve Jobs back at its helm, Apple discontinued the Newton.  Sales had been extremely disappointing.  Although journalists had at first wanted this imaginative new concept to succeed, opinion had fairly quickly turned against the Newton.  A series of episodes in the popular American “Doonesbury” cartoon strip lampooned the quirks and foibles of the Newton, and the device even made a guest appearance on “The Simpsons” – where, again, it was the butt of ridicule (the Newton in the cartoon misinterpreted the memo “Beat up Martin” as “Eat up Martha”).  An expensive price tag deterred many would-be purchasers, as did the fact that the technology failed to fulfil many of its promises.  Sculley’s idea of an “intelligent assistant” was great – but Newton did not deliver.  Instead of triggering a trillion-dollar market, there were so many unwanted Newtons that 30,000 were bulldozed into a California garbage landfill site.

Sculley’s predictions for the Newton turned out to be as unconnected with turn of the century reality as the tricorders and communicators used by Spock and others in Star Trek.  But here’s what’s different about Symbian smartphones – reasons why increasingly powerful and useful smartphones are spreading ever more widely in the real world (and not just in science fiction):

• Smartphones are an evolution of an existing device that is already highly popular – the mobile phone.  Smartphones can therefore take advantage of what’s been called “the power of the mainstream”.  Mobile phones are ubiquitous, and people are well accustomed to using them
• Mobile phones have been steadily improving in functionality, while (on the whole) retaining their core simplicity and utility.  There’s never any doubt as to the usefulness of mobile phones.  As such, they continue to appeal to the mass market, whereas devices like the Newton only really appealed to technology aficionados
• The lower purchase cost of mobile phones to end users means they are much more affordable than the Newton.  One reason for the lower cost price is a business model that was never feasible for a device such as the Newton: operators frequently subsidise part of the purchase price (sometimes entirely, so that the cost at point-of-sale is zero), recovering this subsidy through subsequent monthly telephone call charges
• The huge size of the mobile phone industry means that strong learning effects and economies of scale operate, driving down costs even further

Symbian and smartphones have one other very significant advantage over Apple and Newton – the benefit of around another dozen years of advances in technology, software, networks, and industry alliances:

• The amount and sophistication of the technology in a smartphone far exceeds that in a Newton
• High-speed networks handling the efficient wireless transmission of meaningful quantities of data took longer to mature than expected
• A complex value chain involving many inter-connecting pieces has slowly been assembling
• Companies such as network operators, phone manufacturers, and providers of hardware and software components, needed time to learn new ways of working together effectively

Although Apple failed in its expectations for the Newton, it has of course done much better, more recently, with a different kind of mobile device – the iPod portable music player.  The iPod owes its success to a combination of factors: simplicity of design, stylishly executed, and great connectivity to the iTunes music library software.  However, despite appearances, the iPod is facing extinction, as all the music playback functionality it contains becomes increasingly available on smartphones.  Because smartphones do a great deal more than an iPod, there will be many reasons for users to stop carrying two separate devices with them (their mobile phone and their iPod), to switch to carrying just one (their smartphone):

• A single device takes up less pocket space than two devices
• A single electrical charger takes up less travelling space than two chargers
• If you’re listening to some music on your iPod and your phone starts ringing, you have to perform a complex dance to find the iPod in one pocket to pause it, remove your iPod headphones from your ears, find your phone in another pocket, and answer that call (quickly – before it diverts to voice mail!).  All this happens much more smoothly when the devices are combined into one
• Smartphones have built in music wireless download features
• The open programmable character of smartphones means that it is easy for new navigation and control mechanisms to become available, improving the UI for different use cases.  (Let’s face it – the iPod UI has its troubles when navigating long lists, among other problems)
• The open character of smartphones also means that innovative on-device music editing and music messaging applications continually emerge, addressing diverse user needs

The iPod is one of about thirty categories of device that smartphones are likely to supersede, ranging through games consoles, messaging terminals, music players, digital cameras, electronic train tickets, security badges, credit cards, digital diaries, data loggers, health monitors, alarm clocks, navigation guides, interactive newspapers, and so on.  All this functionality will be held together and enhanced by the low-cost high-performance core computing intelligence at the heart of a smartphone.  This is an unprecedented convergence, bringing multiple opportunities for ground-breaking new products and services arising from the overlaps of these previously separate devices.

Here’s one more example: the music storage and playback features of smartphones can be re-purposed to store and play back audio books, such as those which you can download from audible.com.  So you can catch up on your favourite reading during (for example) your walk to the train station, easily carrying with you a choice of many more books than would comfortably fit (in traditional book format) into your briefcase.

I can’t say that the smartphone market will be the “mother of all markets”.  But there’s a good case that it will be a “mother of all markets” – with the potential for many hundreds of companies to soar in value through active participation in this market.  The striking revenues from the N70 are a sign of more to come.

The results for Sony Ericsson for the first three months of this year fit in the same trend.  Their profits tripled from the corresponding time last year, boosted by demand for phones containing Walkman-branded music players and cameras.  Thee forthcoming W950 smartphone will be the first in the Walkman series to combine music playback features with the richer all-round capability of Symbian OS and UIQ functionality.

The smartphone industry has come a long way since the very first Symbian-powered phone model, the Ericsson R380 back in 2000.  The commercial giants who are now deeply engaged with Symbian, planning and executing numerous fascinating forthcoming devices, make it very likely that convergence will spring forth many welcome new surprises in the months and years ahead.