InsightaaS: Across the Net regularly highlights posts from Horace Dediu’s ASYMCO blog, an important source of information on issues pertaining to Apple and to the smartphone and related markets generally. In this post, Dediu uses his deep understanding of the smartphone market as a point of departure for a different type of analysis: an examination of how mobile devices have affected existing supply chains in cameras, music and advertising. Drilling down into advertising, Dediu shows that mobile is not actually taking dollars away from established media; instead, it has captured all of the growth in the category – as Dediu points out, “Mobile is creating new consumption of ad spending…if Mobile was not an option, ad spending would probably remain flat. Mobile is capturing all the growth but it’s also the creator of this growth.” This point is echoed through the overall thesis of the post: that because mobile device manufacturers “focused on a job to be done that was not done well by alternative products they created consumption. They then used that additional consumption to expand into obvious adjacent use cases. The result was disruptive.” He concludes by showing that this creates a “no escape” scenario for incumbents in affected industries; it would be impossible to recast “an amplifier into an iPod.” By addressing areas of non-consumption, makers of products in new categories can pull share and growth away from established market leaders. As Dediu shows, mobile devices have achieved this already in at least three market segments. How will new devices such as wearables, and new software options in the cloud (which are already upsetting established segments – see Uber for an example) affect other industries in the future?
New market disruptions take root in non-consuming contexts. For instance, mobile phone photography began not because early phone cameras were good. They weren’t good at all but good enough when a camera was not within reach. The quality was poor but the photo taken would not have otherwise been taken, making a lousy photo better than no photo.
The result is that the total number of photos taken this year will be ten times higher than the total number of photos taken before the advent of mobile phone cameras.
This rush to use the phone as a camera has meant that phone makers are keen to improve their product (so as to compete effectively with it against each other) and as a consequence they overtake the incumbent camera makers in quality as well as quantity.
The same phenomenon was experienced by fixed component “Hi-Fi” audio products…