Nokia Multimedia EVP Anssi Vanjoki said recently that he expects replacement cycles for phones to lengthen as people increasingly use smartphones to run software.
Link: The shift from talk to music and imaging
I think these products will be used longer because it is not just a phone anymore, it's a real computer. I call it a multimedia computer with great telephony functionality. The difference is that that in a mobile phone, even one with high-end features, you don't have an operating system that can be naively [sic] programmed - it just has embedded software. A mobile computer has great functionality at the time of purchase. But during the ownership cycle you add new software, so at the time of giving it up, the functionality is vastly different than at the time of purchase...
Therefore, the content that you have - the different software that you're using - will be used for a longer period... So I think with multimedia computers it's very clear you don't change them every year - there's no need to.
I see an alternate vision of the future.
Let's look at the PC world for inspiration. In PCs, we have taken perhaps 20 years to move from stand-alone machines to networked machines and finally to services running on the internet with individual PCs as mere "windows to the world". We've also moved, at least in consumer applications, from closed systems (whether client-based or network-based) to open, standards-based, multi-platform systems (based on the Internet).
Take email for example: 12 years ago, my only email account was provided to me by my ISP and could only be accessed by Pine on a PC client. Today, I use Gmail, which I can access using the web interface, my mobile device and my RSS reader (PC-based & Internet-based).
Games are another good example, particularly "casual", arcade-type games, which are easily delivered via Internet browsers. Even traditionally client-based tasks such as word processing can move onto the web as demonstrated by services such as Writely.
The trend towards Internet-based services has also moved into the corporate arena, although arguably slower than progress in consumer applications. Some examples: project management (Basecamp), CRM (Salesforce.com), business intelligence (Cubot by Robust Designs)... you get the idea.
All of this means that, as this trend accelerates, users will care less and less about where they access their data and applications from. Therefore, the PC is really only a "window" or an access point, not a truly value-adding device in itself.
My argument is that the same sort of shift will happen on mobile devices, only faster. We have already learned the benefits of network-based or, more broadly, Internet-based services. We also know how to implement such systems. Furthermore, we know what user preferences/needs are when it comes to network-based services. All of these will help accelerate the trend of network-based services for mobile devices.
With mobile devices, we have an opportunity to start with what is essentially a blank slate and yet have the benefit of lessons learned in the PC era. It will therefore be easy to show users how to store data on the network and also demonstrate the benefits of doing so. The mobile device is then used simply for editing/working with data (a term used in the broadest sense, encompassing email creation, sharing pictures, editing documents...) or as a "consumption device" (for music, games, shopping...), while also generating its own data/content (primarily photos, I would guess, at least initially).
The major benefit of this architecture, similar to the PC world, is that data and, more importantly, services will be portable across devices, systems, whatever.
If and when all of this were to fall into place, (perhaps a big if, given that Internet-based services will take a while to take hold), accessing new functionality, services, software, data or whatever will become independent of the device. Therefore, replacement rates will not be affected a jot by new functionality "added" by the user. Replacement rates will continue to be affected by the usual factors of price, "phone features" (like screen size, UI, looks, etc as opposed to "software features"), fashion fads and all the rest.
There are implications here for operators and this is where my argument begins to converge with that of Mr Vanjoki. He suggests that as markets continue to mature, subsidies provided by operators on phone prices will gradually fade away, making phone prices more transparent. Operators will instead compete on the services they offer to consumers. He says:
We will probably see that rather than competing at who has the lowest cost device, operators will start to compete on the cost of the actual service.
I say: operators will need to compete not just on the cost of the service but also on the value delivered. Make the service sticky and people won't shop around for other operators. Here, sticky does not mean closed data systems or walled gardens. Sticky equals compelling services.
And what of phones? Vanjoki:
So I think with multimedia computers it's very clear you don't change them every year - there's no need to.
Murli: the question is irrelevant. The advent and adoption of network-based services for the mobile will mean that I may change my "multimedia computer" every day or every decade, but the reasons for changing it will have nothing to do with services, and everything to do with the usual reasons I outlined above.
