Distilling the Perspective of Prediction

I was passed a link via email recently which spoke (lightly) about smartphones in the coming years. I disagreed with the sentiment that it was a worthwhile prediction as the article-interview left no context behind the person’s statement. Still, I think it was a healthy exercise to pay attention to in the coming weeks as many will be predicting much, and there needs to be some way to get through the noise.

This is what was sent to me:

Marc Andreessen [speaks to CNet] about what the major technology trend(s) will be in 2012 & beyond. In a nutshell, it boils down to smartphones.

My response to that email was simple – his “prediction” has nothing to stand on as it contains no context.

Let’s look at what Andreesen says specifically in that inteview regarding smartphones:

Q: Let’s start with smartphones.
Andreessen: I think 2012 is the year when consumers all around the world start saying no to feature phones and start saying yes to smartphones. Feature phones are going to vanish out of the developed world and over the course of five years they’ll vanish out of the developing world.

That’s a big deal because?
That’s a big deal because that’s the key enabling technology for software eats the world broadly. Because that’s what puts the computer–literally puts a computer in everybody’s hand.

In a way that the PC industry couldn’t?
Most of the people in the world still don’t have a personal computer, whereas in three to five years, most people in the world will have a smartphone…. If you’ve got a smartphone, then I can build a business in any domain or category and serve you as a customer no matter where you are in the world in just gigantic numbers–in terms of billions of people.

Does that mainly help existing players, or also open opportunities for new businesses?
Both. If you’re an Amazon or a Facebook or a Google or even a startup, the fact that you can potentially address 2 billion smartphones in the developed world or 6 billion in three or five years, in the entire world, it’s just a huge expansive market.
But it also opens up new kinds of businesses. The big thing that happened in 2011 was sort of the rise of the verticals, and e-commerce was the hotbed of that. We saw the rise of a whole category of e-commerce category killers in verticals that 5 or 10 years ago couldn’t support high growth companies because the markets weren’t big enough.

My reply to that email was spoken as follows

He identifies nothing that distinguishes smartphones from feature phones. His prediction assumes the “magical” sub-$100 price point for smartphones without also assuming the much higher than normal cost for actual use (more frequent charging, mandatory data plans, and empty default setups requiring the purchasing of applications to “make it work”). And lastly, there is nothing in his comments (nor commentary about his comment) which refers to the (implied) declaration by carriers to move their customers to smartphones because of the higher ARPU from these users. With current replacement rates of getting back to about 18 months, and no carriers countries outside of SK and Japan making wholesale moves towards eliminating feature phones (for example, in SK Japan, you can’t purchase a non-3G mobile), it is going to take a long time to refresh the installed base of current mobile phones to be a majority of smartphones. And this is said even taking the current 17-21% smartphones *purchased* numbers into account.

Don’t get me wrong, there’s a correlation with Andreesen’s comments with activity in the industry (for example, it was Nokia, LG, and Samsung who figured out prior to2005 that to move their mobile phone activities to smartphones and connected services). However, there is nothing that he said in his comment that should warrant any extra attention until factors like I explained above are also considered into such matters.

[end of that email reply]

Now, I’m not saying that Mr. Andreesen doesn’t have insight, nor that he didn’t consider these factors. But, I am considering (a) the context of the interview, and (b) the inferences that should be made when looking at predictions like this. On one hand, it is helpful to have someone who has been in the IT industry very long speak towards these kinds of matters, trends-spotting, and (if their biases are noticed) giving direction to those leaning/looking. However, these comments are dangerous, and suitably make their way into missappropirated strategies and perspectives that simply aren’t sustainable in light of facts.

First of all, feature phones aren’t going to “just vanish.” Sure, they might not be sold as prevelantly when/if networks gain the capacity to both contain data heavy devices while also offering superiors cost-value propositions. Smartphones have to be sold in order to have merit, and as I speak to in my email-response comment above, the replacement cycle hovers around 18 months. 70-80% of the mobiles sold this yearr were feature phones. It will take a long time for them to go out of service.

Second, his comments place some sort of intrinsic need for a personal computer, while ignoring the fact (observed and documented) that mobiles are and always will be personal computers. Whether you have a 2.2in screen or a 22in screen, internet connectivity or SMS, the information you need to most connect to you will always use with the tool(s) that are closest to your context. For 4+ billion people, the mobile is their personal computer. The vast variety of makers, form factors, and functions within them (beyond apps, arrgh) means that mobile will always fit that need, regardless of a cultural context that wants to impose another perspective. Andreesen’s comments don’t speak towards a person looking at how personal the tech is now, but has remnants of “getting his software on a base set of hardware” kind of perspective.

Lastly, his view of smartphones (at least within this article) centers on the control off services by network-platforms (ecosystems) and the addressing of functionality by vertical means. This works for commerce, but not so much for education, health, entertainment (that’s not iTunes that is), and in markets where channel domination is not the normal course of operations. Ecommerce is the point of his comment (rightly so given the ARPU, app store, and usage stats in developed nations), and his comments on smartphones need to be distilled throughout that stream.

So, simply put. There will be a lot of folks saying things about what will be and what can be. But, you’ve got to do the work of distilling their comments through the right filter. Else, you end up looking as misguided as any media who would propigate such comments as law, missing the world that’s already happening far around and beyond them.