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May 02, 2012

The widening gulf between consumer and vertical market handhelds

Almost everyone has a smartphone these days. Smartphones are selling by the tens of millions every quarter. In Q1 of 2012, Apple and Samsung sold over 30 million smartphones each. Smartphones have become part of modern life. Everyone is tapping, pinching and zooming. Everyone except those who need a rugged smartphone. Because there isn't one.

Now to be fair, there are rugged smartphones and any number of ruggedized handhelds that add phone functionality to a handheld computer that can also scan and do all the things people who work in the field need to do on the job. Except, they really aren't smartphones. Not in the way consumers have come to expect smartphones to be. Why is that?

Because ever since 2007 when Apple introduced the iPhone, there's been a widening gulf between consumer phones and the devices people use at work. Before the iPhone, cellphones had a bit of rudimentary web functionality and a number of basic apps. Nothing was standardized and everyone rolled their own. Professional handhelds almost all ran Windows Mobile, which had had very good phone functionality as early as 2002. But Windows Mobile never really took off in the consumer market.

Why did the iPhone change everything? Because it introduced a fluid, elegant way of using and interacting with the phone that resonated with people and made total sense. Almost no one wants to first pull out a plastic stylus to then operate a clumsy mini version of a desktop OS. But just lightly tapping at a screen, drag things around, and effortlessly zoom in on what was too small on a tiny phone display, that's an entirely different story. One that Google quickly copied with Android, and one that Microsoft did not, or not until it was too late.

As a result, smartphones took off on a massive scale, one much grander than anyone had anticipated. And it was the sheer, simple elegance and functionality of just having to lightly tap, swipe, pinch and zoom that did it. Which, in turn, came from Apple's primary stroke of genius, that of using capacitive multi touch.

The rest is history. Since 2007, Apple's sold hundreds of millions of iPhones. And there are hundreds of millions of Android smartphones, with vendors selling Android-based smartphones combined having a larger market share than Apple.

With all of this happening and perhaps half a billion handhelds being sold in just five short years, how did the vertical market respond? How did it benefit from the riches, the opportunities, the breakthrough in acceptance of handheld technology that the vertical market had been waiting for?

It didn't.

Ruggedized handhelds still run Windows Mobile in a form virtually unchanged from the days before Android and the iPhone. There is no multi-touch. There is no effortless tapping and panning and pinching and zooming. There is no apps store (there was one, but Microsoft closed it).

And worse, there is no upgrade path. Windows Mobile, which Microsoft merged into its embedded systems group a while ago, seems frozen in time. But isn't there Windows Phone 7, that's now Phone 7.5 and is currently heavily promoted with the launch of the Nokia Lumina 900 smartphone? There is, but Windows Phone is totally different from Windows Mobile. There is no upgrade path. And even if there were, it's a market where there are already half a billion iPhones and Android smartphones, and people who know how to use them and who expect nothing less. Not in their personal lives, and not on the job.

That is a definite problem for those in the market of making and selling ruggedized handhelds. And the problem is not demand. With the world now pretty much convinced that handheld computing and communication devices are tremendously useful and will only become more so, no one needs to be sold on the merits of handheld technology on the job. Everyone knows that already.

The problem is that the business market now wants smartphones that are a little (or even a lot) tougher than a consumer phone, and perhaps can do a few things consumer phones don't do so well, like scanning. But the market wants that extra toughness and those extra capabilities without giving up the elegant, effortless user interface, the bright high-res displays, and the ability to take pictures and HD movies so good that consumer smartphones are now replacing dedicated digital cameras.

And that's why it is becoming increasingly difficult to sell handhelds that offer technology and functionality that is by now very dated by consumer smartphone standards. Sure, the technology and functionality of most ruggedized handhelds are as good and better as they were six years ago, but the world has changed. Sure, the vaunted Microsoft leverage argument ("You use Microsoft in your business, so Windows Mobile fits right in and you can leverage your existing investment") still applies. But that is no longer enough. Businesses who need to equip their workers with rugged handhelds now want more.

But isn't the mere popularization of handheld technology enough to make rugged technology vendors make a good living? Perhaps. It all depends on the type of business and its inherent profitability. But is basically standing still a good business strategy in a technology boom measuring in the hundreds of millions of consumer handhelds? And are the largely flat financials of rugged handheld makers not a warning sign?

There are many possible scenarios. For example, perhaps we're seeing a total separation of consumer and vertical markets, one where consumer handhelds get ever more powerful while much more rugged vertical market computers pursue a small niche where they simply won't ever be challenged by consumer technology. And perhaps Microsoft will manage to somehow leverage a successful unified Windows 8 Metro-style user interface into handhelds that can become the true successor of Windows Mobile, with whatever benefits customers see in remaining within the Microsoft fold. And perhaps there really is an insurmountable challenge in making capacitive multi-touch suitable for rugged applications (this is often voiced as a reason, though I can't quite see it).

But there are also darker scenarios that bode less well for the verticals. If consumer phones aren't tough enough or don't have certain peripherals, third parties may simply make rugged cases and enclosures to make them tough, and sleeves and caddies to add whatever functionality business customers want. Without losing the performance and capabilities of a consumer smartphone. In that case, what could and should have been a golden opportunity for vertical and industrial handheld makers might simply vanish as consumer technology eats their lunch.

As is, it's become somewhat painful to see vertical market companies struggle, companies that know so well how to make products that hold up under trying circumstances, products that don't leak, products with displays that can be read in bright sunlight, products that will last years rather than months, and products that are tailor-made so well for very specific needs. Those companies have a lot of valuable expertise and so much going for them.

But will all that be enough to mask and make up for an increasingly wider gulf between vertical market and consumer market technology? Only time can tell, and it may be running out.

Posted by conradb212 at May 2, 2012 04:59 PM

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