Smartphone advances may hit a plateau, analysts suggest
With the last week's introduction of the Moto X smartphone and the LG G2 arriving in another week, the pace of smartphone releases has reached a fever pitch.
Countless models of smartphones have emerged since the first iPhone appeared six years ago, but it now seems there's a new "hero" or "flagship" smartphone announced almost weekly.
Apple is expected to unveil an updated iPhone in September, along with a low-cost $99 version called the iPhone C, with the "C" likely referencing different colors for its plastic case. A few images of the rumored colors have started to appear on the Web, showing the C in yellow, white and lime.
With the fast pace of smartphone releases, the real question becomes: Is this new phone really that much better than the last one? And given all the features and functions that a manufacturer can possibly cram into a new smartphone, how could the next one be that much better?
Early adopters aside . . .
There will always be technophiles who love the latest hardware. But the pace of smartphone innovations over the past year or so has been undoubtedly slower than it was five years ago, analysts said.
New devices are being marketed more on frills, not fundamentals. Colors for smartphone cases and software that watches your eye movements have become a bigger part of the marketing hook, ahead of screen size or battery life or price. Many recent innovations pale in importance when compared to, say, a much older technology to make a 911 emergency call, and to have a rescuer find your location through GPS.
"What we tend to see in any industry that matures [including smartphones] is a regression towards the mean, where the technology laggards catch up to the leaders, " said David VanAmberg, director of the American Customer Satisfaction Index (ACSI). "We now have smartphones that can do amazing things for us compared to five years ago, which makes it more challenging for Apple and Samsung and others in that group to capture the 'wow' factor again and again. We already have such high standards that we are going to see more incremental changes over time without the huge splash when compared to the first iPhone."
The ACSI released data last week showing that of the top-selling smartphones in the U.S. in the past year, customers rated two Samsung smartphones higher than the last three Apple iPhone models.
Features around the fringes
In the coming months, "it will become harder and harder to push that innovation envelope because our smartphones are already like small PCs in our pockets with a phone attached," VanAmberg added. "We'll see innovating around the fringes, with bells and whistles."
VanAmberg said the color of a case is in the group of "features around the fringes"—especially since buyers can already get add-on cases to add color.
"But a new case with a color, that's not the radical 'wow, here's something totally new' that's going to blow away the iPhone 4S," he added. "It's tweaking around the edges and is easy to do, but it's also very challenging, given customer expectations of how to reinvent a product and to capture everyone's imagination."
VanAmberg suspects that an iPhone C costing $99 and differentiated by lime and yellow cases is intended to appeal to young buyers who will be important to Apple for years to come.
He and other analysts consistently rate Apple at the top for its iPhone quality, but even Apple has taken a hit in the last year on customer satisfaction. ACSI's survey of thousands of U.S. customers have found a 2 percent decline in customer satisfaction for Apple iPhones over the past year, while satisfaction with Samsung's phone portfolio has increased 7 percent.
Satisfaction ratings steady
In its latest survey of more than 4,000 users, the Samsung Galaxy S III and Note II received higher customer satisfaction ratings than the iPhone 4, 4S,T or 5, ASCI found.
Notably, the difference in ASCI customer satisfaction ratings between any of the three iPhone models was small, while there was a sizeable jump in satisfaction from the Galaxy S II released in 2011 to the Galaxy S III released in 2012, VanAmberg noted.
"The Galaxy S III was perceived as having much higher quality than the S II, with more cool features and more of a wow factor," VanAmberg said. "When the iPhone 5 came along, Apple was not perceived with that to be a game changer in terms of innovation, as compare to the 4 and 4S."
Even for Samsung, innovation will be difficult. VanAmberg said the Galaxy S4 might not see a big jump in customer satisfaction in next year's ASCI ratings, given that reviewers have noted it's not that much different from the Galaxy S III. Some reviewers have dismissed the S4's Smart Scroll and Smart Pause eye tracking features and Air Gestures as added frills that don't always work well.
ASCI asked its survey group to rate 30 different factors in smartphones from 1 to 10. Customers were asked to rate factors including overall product quality, service, pricing, ease of use, battery life, navigation of menus, design features, audio and video and more.
VanAmberg freely admitted that customer satisfaction ratings are both objective and subjective. "Part of what customers say is objective, and there's also a perception of what a customer is supposed to feel about a phone based on what the manufacturer wants us to feel about a phone," he said.
Marketing campaigns and big, splashy smartphone launches can have an impact on customer satisfaction. Apple has long held a reputation for high quality and stylish iPhones that are depicted as such in TV ads and other marketing. "Because they haven't had an iPhone lately, Apple has retooled its latest commercials so they are more about loyalty to Apple, with a focus more on developing a relationship with the customer, rather than the latest, greatest iPhone feature," VanAmberg said.
Generally, customers in the ASCI ratings do tend to like the bells and whistles and little tweaks and innovations in smartphones, but are still more impressed with the basics overall. "What's more important to customers is more fundamental: Is it easy to navigate; does it have a good battery; is it durable; does it have the right screen size; is it good at making calls and of nice quality?
"Customers will say that it's nice to have the latest features, but more weight is put on getting the fundamentals right," VanAmberg said. "We already have such a high level with smartphones that we are going to see more incremental changes over time."