Smartphone innovation is slowing, so what's next?

Improvements are less significant, leading makers to explore wearables and connected 'things'

In the last year or so, there has been a noticeable slowdown in innovations in new smartphones -- with both hardware and software.

In a five-year smartphone forecast through 2018 released last week, research firm IDC noted: "It has been widely acknowledged that the pace of innovation on smartphones has slowed down, even reached a plateau. Indeed, many of the new innovations launched in 2013 appeared to be incremental improvements on a theme, and it was questionable whether many of them would have lasting value."

With smartphone innovation flattening, the next direction seems to be making the smartphone the hub -- connected via Bluetooth, primarily -- to emerging technologies. These systems include smartwatches, other wearable devices and everything in the much larger ecosystem of home appliances, cars and other products that, when connected, would comprise what's being called the Internet of Things.

While this slowdown in innovation has been widely recognized, marketers for smartphone vendors still trumpet their devices' new features at large-scale events where the latest products are unveiled amid hype that overstates the new capabilities. Samsung, for example, hired a live orchestra to play on an elaborate stage for the launch of its Galaxy S5 smartphone at the Mobile World Congress trade show in Barcelona in late February. The event was attended by thousands. The Galaxy S5 will ship April 11.

Tuesday's launch of the expected HTC One M8 has been preceded by online videos and plenty of hype touting a phone that has a 5-in. full HD screen (larger than the one on last year's HTC One), two rear camera sensors for taking better photos, a Snapdragon 801 processor and 3GB of RAM for greater speed.

The day before the phone's release, some analysts questioned whether those improvements would be enough to have much of a market impact, even if HTC is able to put the HTC One M8 on sale this week, before the Galaxy S5 goes on sale.

The question many analysts are now asking is, essentially, "Where's the beef?"

IDC said vendors should be positioning the smartphone as the "center of innovation to other devices and not necessarily [maintaining] the smartphone as the end itself." In that world, smartphones would act as remote controls for appliances, products and services, including security systems. "This is only the beginning of how innovation can and will evolve further," the IDC report concluded.

Ramon Llamas, one of the IDC report's authors, said in an interview Monday that slowing innovation is affecting every smartphone operating system. "The iPhone 5S had a 64-bit processor and a re-skinning with iOS 7, which sets a tone. Everybody likes a new engine. But are those new features on par with Apple's earlier Facetime or Siri? I would say no."

Llamas continued: "I can pick on the Galaxy S5. They said to check it out because it was waterproof and that was one of the big things Samsung touted. OK -- waterproof, huh? Right."

Llamas said some of the innovations featured in last year's Galaxy S4 were a disappointment, including the ability to insert your image into a photo captured on the camera, functionality that let you scroll through Web pages with your eyes, and a feature that pauses video when you look away.

"That kind of thing didn't exactly ignite the market, and it didn't work for me all the time," he said. "Pausing the video by looking away -- why is that better than pressing pause on the screen?"

Carolina Milanesi, an analyst at Kantar WorldPanel, agreed that smartphone innovation has slowed over the past year. But "it's more a case of incremental innovation than revolutionary innovation. Improvement on existing products is certainly there," she added, noting that Android users replaced their earlier models in mature markets like the U.S. throughout 2013.

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