Smartphone has proven their smartness by causing destruction through the profit-making competition of creative ideas. It has established its dominant position through a trail of creative destruction. Hence, Prof. Schumpeter would have been thrilled by observing his theory of creative destruction in forceful action. Indeed like a powerful storm, it has been leaving a swath of destruction. However, it did not show up as a dominant force at the beginning. Like many other disruptive technologies, underlying technologies emerged in primitive forms. Moreover, the smartphone also kept changing the technology core in gaining the creative destruction force. By the way, smartphone evolution in attaining destructive force is a long one. In fact, a century-long evolution of mobile phones has continued to reach the Smartphone’s Creative Destruction. Therefore, the trail of smartphones’ evolution as a creative destruction force appears worth looking into to draw lessons from the unfolding reality.
In search of ideas to get communication job done better
Communication is one of the major jobs that human beings are desperate to get done. They have been generating ideas to find increasingly better means to communicate with each other. As early as 200 BC, people used smoke signals along the great wall of China. In 150 BC, Historian Polybius devised a system of smoke signals for making visual representations of the alphabet. Along with the creation of many other means, the human race reached the success of Samuel Morse’s first telegraph message from Washington D.C. to Baltimore Maryland in 1844. Afterward, in search of telecommunication ideas, Alexander Graham Bell received the master telephone patent on March 10, 1876. This development led to the establishment of the global infrastructure of the land phone network.
By the way, human history is full of creative ideas for improving the means of communication. Apart from Morse’s telegram and Bell’s telephone, other notable ideas emerged during that time.
Between 1667 and 1875, the world witnessed the emergence of over a dozen ideas, including Robert Hooke’s invention of the string telephone that conveyed sounds over an extended wire by mechanical vibrations.
Like natural law, the emergence of the next creative idea also caused destruction to innovations, jobs, and firms around the previous one. However, each previous idea often forms the foundation for the next, often better idea to emerge. Such observations have also been found recurrently in ancient philosophical writings, which is known as Praxis. Which has been true till today. For example, at the dawn of the 21st century, we witnessed the death of the telegraph. However, there’s no doubt that it laid the groundwork for the emergence of successive better ideas like the telephone, fax machine, and the Internet.
The primitive emergence of mobile phones initiated smartphone’s evolution as creative destruction
Upon succeeding with the land phone or wireline telecommunication, the human race moved to the idea of wireless communication. Wireless communication appears to be a more suitable means as human beings are often on the move. This quest led to the issuance of a US Patent in 1908 in Kentucky for a wireless telephone. AT&T’s work on cell phones led to the development of cells for mobile phone base stations in the 1940s. It was like two-way radios but useful people like taxi drivers and emergency services to communicate.
In 1956, Sweden introduced the first automated mobile phone system for private vehicles. To avail of this service, vehicles had to install a vacuumed tube technology-based device weighing 40kg. It occupied significant space and offered limited service. People like taxi drivers and emergence service providers found it useful nevertheless. However, the invention of the Transistor made it possible to replace vacuum tubes for drastically reducing both the size and weight of mobile devices.
At last, the journey of ideas of making wireless communication innovation better and also cheaper led to the release of Motorola’s Dynatac 8000X. It had the nickname “the brick”. This mobile handset weighing two pounds was priced at $3,995. It was extremely primitive in comparison to today’s smartphone. Nevertheless, it was the first handheld mobile phone, which truly triggered the beginning of a new era of the next phase of mobile phone evolution.
The aesthetic design caused creative destruction to technology superiority.
In the 1990s, mobile handsets started to get smaller and also less costly. People, particularly women, started to feel it as a fashion item, as opposed to technology gadgets. They started feeling proud of holding a nice-looking handset. Nokia took this as an entry point to establish dominance in the growing global mobile phone industry. As opposed to fine-tuning wireless communication technologies, Nokia focused on the aesthetic part of the mobile handset design. Its design teams started to release aesthetically appealing designs, often targeted to particular customer groups. For example, they had designs for creating appeal from different users groups like Women. Their aesthetically pleasant designs were so powerful that they started causing destruction to market shares of technology icons like Motorola. Through this creative destruction, Nokia emerged as a dominant player.
For example, Nokia’s success of selling 126 million units of Nokia 3310 still stands as one of the biggest-selling phones of all time. In addition to success in a feature phone, Nokia was also a forerunner in the early emergence of smartphones. Moreover, to fuel the innovation pipeline, Nokia had also built a large global network of R&D centers. However, Nokia’s remarkable success could not withstand the next wave.
Mobile Phone caused destruction to the land phone industry
Mobile phones emerged as a complement to the land phone. It was meant to serve non-consumption. It was supposed to be used while people were walking or driving. Even in the 1980s, it was primitive. The cost of making a phone call over the mobile network was far higher than the land phone call rate. Moreover, the handset was bulky and costly. On top of it, talk time was very little. But the underlying technology core like battery and wireless communication gears started rapidly improving. Such growth of underlying technology cores led to the release of successive better versions at a decreasing cost. Particularly, people in developing countries found it the only option because they did not have access to land phones. As a result, the adoption of mobile phones started rapidly growing. As opposed to serving non-consumption, people started using it as a substitute to land phones.
Even in the USA, which had close to 100% land phone penetration, the number of mobile phone users surpassed the number of conventional land-based phone lines in the second half of 2004. And this trend continued all across the world, causing destruction to the dominance of the land phone industry. Notably, mobile phone penetration in developing countries, reaching over 100%, appears to be a remarkable success.
Failed attempt of the emergence of smartphone
The evolution of smartphones started to unfold in the middle of the 1990s. To keep increasing utility, designers not only focused on improving existing features like the battery. Most importantly, they focused on adding new features. This trend led to the design of mobile handsets with features like touch screens, pop-up graphics key-pad, icons, stylus, and many more. With all these features, in 1994, IBM released the first smartphone—Simon.
Notwithstanding these new features, which later on found high attractiveness, Simon failed to witness expected sales. As opposed to the sale of millions of units of feature phones produced by Nokia or Motorola, IBM recorded the sale of just 50,000 units of Simon within the first year. As a result, IBM terminated the product. In retrospect, IBM’s such a move appears to be premature.
Gathering momentum by accumulating design features
Just after one year of the termination of IBM’s Simon, Jeffrey Hawkins released PDA, PalmPilot. It was a remarkable success. It had a number of applications like Date Book, Address Book, To-Do List, Memo Pad, Calculator, Security, and HotSync. Nokia took many features from PDA designers and released an internet-enabled mobile phone, the Communicator, in 2000. On the other hand, PalmPilot was attached to phone call-making capability, making it a highly functional smartphone. Designers also started adding features like FM Radio, Music players, and cameras, among others. However, it was struggling to grow as a creative disruptive force. Such developments were used as inputs to power smartphones’ evolution as creative destruction.
By the way, this is a natural characteristic of the uprising of creative destruction force. They keep gaining momentum from the growth of related innovations and technology cores. However, smartphones in its adulthood caused destruction to many of them. Among them, PDA is a notable victim.
Apple’s desperation to cope with the smartphone’s evolution as creative destruction
The debut of the iPod saved Apple from filing bankruptcy. It was shy of relief for Apple’s management, employees, and shareholders alike. However, Steve Jobs saw the emergence of a dark cloud in the sky of the success of the iPod. He felt that smartphone designs were evolving to have comparable music, as well as video player, features built-in. Therefore, he wanted to cause destruction to his own baby by giving birth to the iPhone—having three main features such as phone, iPod, and Internet browser. This desperation led to the emergence of the iPhone in 2007. It was a fully grown-up smartphone. Steve took advantage of multitouch technology to have a keyboard and stylus-free designs. In retrospect, Steve Jobs’ idea scavenging, refining, and fusing approach paid off.
Finally, the iPhone emerged as a destructive force. Within just two years of emergence, industry leader Nokia suffered bankruptcy. It caused destruction to thousands of jobs. The destruction force was so powerful that it even rattled the economy of Nokia’s host country Finland. Along with its uprising, it also caused destruction to the keyboard-centric design of smartphones like PalmTrio and also iPod. However, the success of the iPhone has also fueled the race of smartphone innovations, often entering through imitations though. Among others, Samsung, Oppo, Vivo, Huawei, and Xiaomi are major smartphone makers. The competition among them is leading to ideas of additional features, subsequently strengthening the destructive force.
Evolving disruptive technology cores powering smartphone’s evolution as creative destruction
To power the force of creative destruction of smartphones, a number of disruptive technologies played an important role. The first one is the battery. To support computationally intensive applications, the continued growth of lithium-ion battery technology played a vital role. In addition to it, the rapid growth of the mobile Internet played a vital role. In the absence of rapid growth in speed and cost reduction of mobile data packs, there could have been far less utility for smartphones. The next one is multitouch technology. Of course, this is the most powerful one. However, none of these disruptive technologies grow all of a sudden. Like mobile phones, they also started to emerge from the embryonic stage.
By the way, defense R&D has been the source of many of these core technologies. For example, battlefield communication fueled the initial R&D of mobile phones. Moreover, technologies like lithium-ion batteries and Apple’s Siri have roots in defense.
Caused destruction to an array of consumer products
Smartphones did not only cause destruction to their rivals like feature phones, and makers of them. It has also caused creative destruction to an array of consumer products and their industries. The notable victims are digital video and still cameras. It caused destruction to PDA, music player, record labels, watch and alarm clock, calculator, and even torchlight. The voice recognition capability is also posing a threat to the jobs of office secretaries. It has already started to replace plastic cards with the support of Near Field Communication. Currently, it has been leaving a swath of destruction.
Moreover, the uprising of smartphones kept demanding increasingly high-density batteries at decreasing cost. This has led to the possibility of making a battery as a better substitute to power automobiles. Along with the uprising of renewable energy sources, smartphone nurtured battery technology is also a threat to the massive oil industry and oil-based economies.
Prof. Schumpeter’s creative destruction fueling the growth of the market economy appears to have no parallel to the smartphone’s evolution as creative destruction. Despite being such a powerful destructive force, it started the journey in a very primitive form. Competition among firms to profit from ideas has been the fuel of the growth of such a powerful wave of creative destruction. Moreover, the development of complementary technologies like very large-scale integrated circuits to fuel the growth of PC, and electronic image sensors, as well as lithium-ion batteries for digital cameras, played a vital role in the uprising of smartphones. It’s quite ironic that smartphones also caused destruction to digital cameras. The accumulation of knowledge and ideas in the market economy is at the core of creative destruction. Therefore, public investment in R&D is a key input to drive economic growth through the profit-making competition of private firms.