Despite the remarkable success, to our surprise, smartphone invention began the journey at loss. Hence, within one year of its release in 1994, IBM discontinued the first smartphone–Simon. Smartphone invention is the fusion of two important products—cell phone handset and personal digital assistant (PDA). As a result, both cell phone and PDA makers were after upgrading their products to a smartphone. However, this fusion journey reached a new height with the unveiling of Steve Jobs’ iPhone in 2007. It was a fusion of PDA, iPod, Internet browser, and cell phone. Subsequently, 3rd party apps started fusing many other devices turning smartphones into a powerful force of disruptive innovation.
In 2020 alone, vendors sold 1.38 billion smartphones worldwide. By the end of 2020, in a world of 7.8 billion population, there were 6.4 billion smartphone subscriptions. From productive usages to addictive associations, smartphones have become an indispensable part of our lives. Due to technology progression, it has been diffusing as growing progressive waves. Perhaps, no single invention has witnessed such a success. But unlike many other great inventions such as the telephone, the smartphone invention did not take centuries or even decades. Upon being born in 1994, it did not take much time to grow as a creative destruction force. The obvious question: what is the secret of this magical invention? Who is the creative genius credited for smartphone invention?
Furthermore, the smartphone has emerged as a disruptive innovation force. It has caused disruption to many great products. Starting from camera to stopwatch, the list goes on. It has destroyed many jobs and firms, once engaged in making those products.
Scope of unification opened the door of smartphone invention:
After more than 75 years of invention journey, in the early 1990s, the mobile phone started becoming an indispensable gadget. Initially, busy professionals showed interest in mobile phones. Over time, cell phone penetration reached as high as 100 percent, in some countries, in the 1990s. There was also a growing interest in personal digital assistants (PDAs), handheld computers, pocket computers, and palmtops in the early 1990s.
Among the early PDAs, Apple Newton is notable. The first PDA was the Newton MessagePad. Apple developed and introduced Newton in 1993. In addition to having character recognition capability, this PDA had many useful apps. Some of them are a calculator, clock, and calendar. Besides, with a 336×240 pressure-sensitive monochrome display and stylus, Apple introduced a keyboard-less new user interface for pocket computers. However, before the launch of Apple’s Newton, a British company Psion defined the PDA in 1980. Subsequently, it released the first organizer or pocket computer in 1984.
For sure, Apple’s Newton was a revolutionary product. Although Apple succeeded in selling only 80,000 units in 1993, it attempted to create an entirely new market. Interestingly, in 1992, IBM’s engineer Frank Canova envisioned a new possibility in blending cell phones and PDA—giving birth to smartphones. Subsequently, IBM introduced the first smartphone in 1994—Simon Personal Communicator.
The first smartphone had many of today’s popular applications. Some of them are the address book, calendar, appointment scheduler, calculator, world time clock, electronic notepad, and handwritten annotations. It had standard and predictive stylus input screen keyboards.
Loss-making emergence of smartphone invention:
BellSouth Cellular initially offered the Simon for USD 899 with a two-year service contract. Without a service contract, users had to pay USD1099. Despite having a very bright future, IBM Simon’s faced lackluster sales. Over a year, IBM succeeded in selling only 50,000 units. Indeed, it was far less than the sale of 100 million units of iPhone 12. Such a poor sales record disappointed IBM managers. Hence, within just one year after the launch, in 1995, IBM discontinued Simon.
For the first smartphone, the timing was not right. Simon weighing 510 grams was not suitable as a portable device. Furthermore, mobile internet service did not take off. Instead of retracting from the market, perhaps, IBM had to keep refining significant components, including the battery pack and chipsets. Furthermore, to benefit from externality factors like the rollout of mobile internet, IBM had to wait.
Simon’s failure due to timing error:
Simon’s fate underscores Bill Gross’ observation that timing is the most crucial factor for succeeding in taking ideas to market. It’s far more important than the idea, team, business model, and funding. In retrospect, Simon was a great idea. IBM had the money and team to support the idea. But its smartphone failed to take off due to a timing error. As a result, the fusion of two great rising waves could not produce a stronger one.
For sure, at the launch in 1994, Simon failed to meet desirability, feasibility, and viability tests. At that moment in time, customers did see enough value in Simon. Indeed, it was not easy enough to use; it was neither affordable nor portable. Technologies like the internet, wireless data, speed of microchips, weight, and performance of the battery pack, the operating system software, and the friendliness of user interface were not feasible to deliver significant value to customers. On the other hand, IBM could not come up with a viable business model to sustain the journey by adding additional value and finding ways to offset costs.
Growing popularity of PDAs and formation of smartphone undercurrent:
Despite the poor sale of Simon, the popularity of PDA kept growing. Among others, in 1996, Nokia introduced a PDA with digital cellphone functionality. This was the 9000 Communicator. The advancement of silicon chip design and processing technology kept supporting increasing software-intensive features. The refinement of lithium-ion batteries opened the door to having lightweight, high-energy-density energy sources for computationally intensive PDAs.
Palm Pilot PDA, with a sale record of 1 million units by 1998, hinted at the latent demand. Besides, professionals started getting used to using PDAs to send e-mails. Upon predicting the increasing popularity of the fusion of mobile phone and PDA (smartphone), Nokia began to focus on the operating systems-Symbian. Hence, from 2006 onwards, Nokia started producing consumer-focused smartphones, making Symbian the world’s most widely used smartphone operating system until 2010. NSeries was Nokia’s popular smartphone.
On the other hand, PDA makers started adopting phone features in their products, making them smartphones. For example, as successor to Blackberry 850, an email pager, Research in Motion (RIM), introduced 5810, the first of a generation of devices marketed as phones with email capability. Like RIM, Palm also updated its popular PDA with Palm Treo’s phone feature. Besides, Nokia, RIM, and others kept upgrading their handheld device, having the fusion of PDA and mobile phone features. Most of these devices had a fully qwerty keyboard. This fusion device also started having a camera, MP3 player, and radio.
The emergence of iPhone—ultimate smartphone invention:
Despite the remarkable success of the iPod, Steve Jobs predicted the uprising of the smartphone to take over the portable music player. Hence, he embarked on the reinvention of the iPod, having phone and internet browser features. Subsequently, Apple released iPhone in 2007. The fusion of iPod, PDA, internet browser, and multitouch user interface emerged as the ultimate smartphone invention. That is the iPhone. Upon sensing the potential of the iPhone-type smartphone, among others, Samsung rapidly started to redesign its mobile handset product line, making them smartphones. However, despite attempts, Nokia, RIM, and many others failed to cope up with the disruptive force of the iPhone like smartphones.
Rise of a disruptive innovation force:
Smartphone has become a compelling force of creative destruction leading to disruptive innovation. It has caused disruption to many products. It has also caused disruption to makers of feature phones and first-generation smartphones. For example, Nokia, RIM, and many other mobile handset makers suffered from the effect of disruptive innovation. Eventually, they had to leave the market. Besides, among others, PDA makers became extinct due to the disruptive innovation force of the iPhone like a smartphone. For this reason, PDA maker Palm, having a valuation ($53 billion) higher than Apple, Google, and Amazon combined in 2000, disappeared. Furthermore, due to the continued rise of smartphone invention, several products like the digital camera, portable music player, and video recorders suffered from creative destruction force.
Scale, Scope, and Network externality effects:
iPhone-like smartphones are highly software and mobile data-intensive. The performance of most of their features depends on the richness of software technology core and mobile broadband infrastructure. Hence, zero cost of copying software in replicating each unit offered a very high scale advantage for the smartphone. The ease of implementing features of discrete products like an MP3 music player or video player with software apps created a very high scope advantage. Besides, the growth of mobile internet service infrastructure played a vital positive eternality role. Furthermore, the app store concept adopted by smartphone makers added further externality force by the apps’ developers.
Smartphone invention is the fusion of two major products: (i) Cell Phone and (ii) PDA. Subsequently, it also fused many other products. Consequentially, it grew as a strong force of disruptive innovation. Strong focus on customer preferences, rising technology feasibility, and growing externality factors played a substantial role in making smartphone invention a great success, within a very short period. By the way, the delegation of roles from hardware to software, software-centric feature development, and fusion of features as well as products partly deals with the scarcity of ideas.