Smartphone winners, the car and the home

Last week, I prepared a presentation on the connected car and smart home for one of my clients and I had the opportunity to present the resulting slides on Monday this week. I wanted to elaborate on one of the ideas that came up during the presentation and the resulting discussion and something that, while appealing on the face of it, I believe is ultimately wrong.

It’s becoming clear who the smart phone winners are

It’s becoming increasingly clear who (at least some of) the biggest winners in the smart phone market are. Google and Apple own the two dominant ecosystems, with Apple gaining majority share among premium users and Google mopping up most of the rest. Samsung has been a significant winner among the OEMs, while Xiaomi, Lenovo and others are rising rapidly in the category. Although it’s possible we’ll still see new OEMs emerge to capture significant share, I don’t think any other platforms will rival iOS and Android in scale in the next five to ten years.

Smart phones are at the core of smart home and connected car experiences

Further, smart phones are not just a lucrative category in their own right. They’re increasingly the hubs and controllers for many of the new areas technology is moving into, including the connected car, smart home and wearables. Essentially, none of these new experiences would be possible without a smart phone at the centre and those who control the major smart phone platforms and OEMs are in a strong position vis a vis these new opportunities. It’s no surprise three of the most promising smart home ecosystems are owned by Apple, Google and Samsung.

This doesn’t mean that smart phone winners will be home and car winners too

There’s a natural conclusion that can be drawn from all of this — these smart phone winners will also be the winners in the smart home and the connected car market. While I think it’s actually quite likely this will be true in the wearables space (a topic for a future column), I don’t think this is necessarily true in the connected home or connected car space, for a few reasons.

Connected car and resistance by OEMs to Android Auto and CarPlay

One of my focuses at CES last week was the connected car space and I took as many briefings and visited as many booths connected to this topic as I could. I’ll talk in more detail about my findings in a future post and an in-depth report for my clients, but one of the most interesting conclusions was that the car OEMs are terrified of Google and Apple and their potential to take over the in-car technology and entertainment experience. For all that Google and Apple like to talk about the car as an extension of the smartphone, car OEMs see things very differently. The technology aspects of the in-car experience are key areas for OEM differentiation and they want to own both the experiences and the associated revenue opportunities. They see what Google and Apple have done to smart phone OEMs and they’re desperate to avoid the same fate. As such, there’s a strong opportunity in the car for players that will support OEMs in building differentiation in the technology and infotainment stack rather than simply enabling the takeover by Apple and Google.

Smart home fragmentation won’t be entirely overcome by single ecosystem approaches

I’ve written before (here and here) about the huge fragmentation in the smart home space, and CES last week brought even more announcements from a plethora of different vendors about their new solutions, devices, and ecosystems. Among these players, of course, are three of those smart phone winners we discussed earlier: Apple, Google, and Samsung. Apple’s efforts around HomeKit have been very slow to get off the ground, with both the chipsets and the certification process taking a long time to get into the hands of device vendors. Google’s efforts were jumpstarted by the acquisition of Nest, but Google’s ownership has engendered some skepticism and wariness on the part of would-be smart home adopters who are worried about Google’s long term intentions. Samsung’s strategy is the only one of the three designed to create a truly open ecosystem somewhat separate from a specific smart phone platform or OEM. I think there’s a clear role for this kind of strategy, especially one backed by a major player. While I think some consumers will absolutely gravitate to an all Apple or all Google/Nest approach to the smart home, I think others will want to buy devices from a variety of vendors or simply avoid lock-in to a specific ecosystem. Those consumers will welcome platforms and ecosystems which are inherently open and interoperable and, as such, I think some of these may well thrive alongside the platforms owned by Google and Apple in particular.

The role of the smartphone, and the rest

None of this is to say the smart phone is irrelevant in these two domains – far from it. Those who control smart phones and smart phone platforms are in an enormously powerful position, but I don’t think it’s the only position of power. I think there’s room for players focused on the apps and services layer in particular to build experiences around interoperability and cross-platform development which enable consumers to be more flexible in their technology buying choices and to mix and match technology from multiple vendors. As such, despite the strong position the smart phone winners hold in the connected car and smart home spaces, these markets are still so immature there’s plenty of room for both established and new players to innovate with new approaches to the market and take both significant share and revenue as these markets evolve.

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Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

4 thoughts on “Smartphone winners, the car and the home”

  1. Typo: “While I think some consumers will absolutely gravitate to an all Apple or all Google/Nest approach to the smart phone” should be home, not phone.

  2. “…one of the most interesting conclusions was that the car OEMs are terrified of Google and Apple and their potential to take over the in-car technology and entertainment experience…”
    It is hard to see how that is not going to happen. The user interface of the built-in navigation/radio/cd-player in my car is a sad throwback to the 1990s and of the same calibre as my cable set top box. Selecting the letters of an address using a scroll wheel is just hopeless, asking for a 7 digit UK postal code and still not knowing the street name is beyond believe, updating the maps (make sure to have a few hours free time).
    I can only suspect that the software development groups at large car manufacturers are just hopelessly understaffed and outclassed by the software industry.

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