This article is one half of a point-counterpoint with Ville Vesterinen, whose response is entitled "The Angry Birds Moment."
The promise of the smartphone is incredibly compelling, as my co-Spark Salonist Ville Vesterinen points out. Here is a device that can take the features of some of the most popular personal devices and aggregate them into a single package that costs about the same as each costs individually—feature phones, GPS devices, PDAs, and portable media players. The smartphone has eclipsed and largely displaced each of these devices, but so far, handheld game systems have managed to maintain control of their niche in the smartphone era.
I’ve lately been pitting Sony’s new PlayStation Vita against a variety of smartphones. The Vita arguably sets the bar as the best handheld game system in-market, and it also sets a bar that is higher than smartphones can currently achieve. (Of course, smartphones set high bars for handheld game systems too, albeit in areas that are ancillary to core gaming functions.)
I see three core advantages that handheld game systems have over smartphones: user interface, focus, and economic model. To close the gap and fully eclipse devices like the PlayStation Vita, smartphones need a better universal user interface for games, a more robust gaming ecosystem, and opportunities for premium content creation and sales.
Let’s start with user interface. Games require a very reliable, low-latency interface. Particularly when you are playing competitively, latency or a lack of reliability in the interface can cause the player to lose or make the gameplay frustrating. Game systems have dedicated controls that have been designed to address this issue, while phones have soft controls which often overlap phone command structures; players can accidentally exit a game or not get a reliable result from their interactions with the controls.
While Sony Ericsson did create a phone with a built-in controller, the controller largely replaced a keyboard and added a lot of extra thickness to the device. And even so, it represented the best effort to embrace this shortcoming. The best path to good controls without making the phone too thick, complex, or heavy, is to find a way to make the screen interface more reliable. Right now even casual games can be painful if the calibration isn’t tight enough or it doesn’t capture the entire gesture. This might be possible through a combination of haptics (which give better user feedback) and a more reliable touch interface.
A Robust Gaming Ecosystem
The most popular games on game systems tend to be priced above $20, but on smartphones, they are often free and increasingly supported by advertising. Free is great for users, but generally doesn’t work for developers who are struggling to understand and execute on a mobile ad model profitably.
Success on a game system is generally a combination of gameplay, gamer advocacy, and marketing. On phones, where mobile developers tend to shy away from costly marketing and intricate gameplay, success is largely driven by advocacy (something that traditional game makers are struggling with, by the way). For a smartphone ecosystem to generate compelling games, it must embrace a revenue-intensive model that will fix existing practices and get consumers accustomed to paying real money for games. The other option is to create a new class of game developers that can be profitable in the smartphone’s advertising-based ecosystem. (And I would definitely count Ville among the new class of developers.)
At the core of these problems is focus. While several mobile hardware vendors have efforts that are tied to gaming on smartphones, those efforts are not aligned, and rather than focusing on building game value are more focused on technical differentiation.
But when building a growing market, as opposed to competing in a mature market, the more successful initial approach is to partner to create a lucrative one. Then, once that market is mature, the players can compete for it. If competition enters too early, the lack of a common approach can and does cripple what would otherwise be compelling growth. In those areas in which the smartphone excels (PDA, entertainment, and phone features), the carriers forced high commonality through mandates. But in smartphone gaming, even Sony hasn’t stood out as a driver, because Sony favors its handheld game effort over that of its phone division. Without a tight focus on truly surpassing handheld game systems, smartphones and their manufacturers are unlikely to reach their true potential and cross that last bridge to become true gaming powerhouses.
Wrapping Up: Massive Potential, Increasing Risk
The smartphone market is starting to emulate the PC market in terms of commoditizing hardware and locking down a cost-based model largely tied to carrier subsidies. In short, its evolution path is on a trajectory towards a model that has tight margins and where innovation is increasingly discouraged, much like the set-top box in the cable market. The biggest weapon the cell phone technology providers—from those that build parts and platforms to those that build complete phones and ecosystems—have to keep this from happening is gaming. The future promise of ever better peer-to-peer and augmented reality games seems exciting and it could prevent this commoditization while ensuring that the future market is controlled by the vendor with the best performance. Much like Apple drives many of these markets today.
Success on this path would make both software and hardware more profitable, and help maintain the high-churn environment that currently supports both the successful handset builders and the technology vendors that support them.
Driving this effort should be the top priority for those that want to optimize on profitability and avoid the cost-optimized model of a commoditized set-top box market, which has been optimized for the lowest-cost hardware and software providers.
In the end, if we don’t want the smartphone market to become commoditized, we need to make sure there is a premium component that assures an aspirational quality. Gaming, particularly augmented reality and peer-to-peer gaming, could be core to that magic formula that ensures the margins are rich enough to continue to make this segment interesting and attractive.
This article is commissioned by Qualcomm Incorporated. The views expressed are the author’s own.