By Charles King, Pund-IT, Inc. May 7, 2014
On its surface, Google’s Project Ara seems pretty interesting: an integrated smart phone frame supporting modular components that aims to make handsets simpler and cheaper to make and easier for customers to choose, customize, fix and upgrade. What’s not to like? Google is certainly behind the idea, as its self-congratulatory announcements and blog postings attest. Plus, the rash of largely positive media stories on the effort suggests that the company’s PR organization doesn’t plan to make the same missteps with Project Ara that it did with Google Glass.
But while there may be dumber ideas than Project Ara in the tech industry, it’s hard to think of one offhand. Why? Because it is largely a visionary engineering strategy that’s been tactically retrofitted to appear beneficial to consumers. That’s not terribly unusual in the IT industry, but Google goes a step further—claiming to have solved with technology problems that aren’t particularly technical so much as they are cultural. As a result, the biggest challenge Project Ara faces is that it asks smart phone manufacturers to discard decades of competitive positioning and customers to abandon years of personal preferences. All for the sake of Google-determined and defined manufacturing efficiencies. In what world will that idea fly?
Let’s consider Project Ara from the user side. On its surface, the flexibility Google posits is pretty enticing. After all, shopping for a new phone can be painful, and who hasn’t found many or even most of the available handsets wanting? Display size and resolution are widely variable from model to model. Processors are often picayune and memory and storage capacity are usually fixed (or upgradable at a premium cost). Camera features/capabilities are all over the place. Plus, only a miniscule number of smart phones offer replaceable batteries.
With those points in mind, you’d think users would be hungry for a phone that could be configured however they want. But you’d be mostly wrong. Since Apple launched the original iPhone in June 2007, consumers have been conditioned by vendors to consider phones as they would any other appliance; devices with fixed features and capabilities that, like toaster ovens, do a few things pretty well and are easily disposable/replaceable. As a result, most people learn to appreciate what a phone excels at, work around its shortcomings and dump it when a new/better model comes along.
So while Project Ara is an intriguing approach to “fixing” handsets, consumers who have learned to live with their phones’ shortcomings seem unlikely to care. If that is the case, Google faces an uphill battle. Project Ara may well become a darling of the technical elite, but if that comes to pass, its days as a viable mass-manufacturing process will be extremely limited.
The Case for Choice
Limiting choice for consumers has a storied history. A classic example is Henry Ford’s stubborn refusal to expand beyond the Model T to offer different body styles and colors (reportedly saying customers could “have any color they want, so long as it’s black”) brought his company to a crisis point in the mid-1920s. In point of fact, Ford’s near-fatal business error led to the successful development of the Model A and the company’s subsequent adoption of GM’s annual model change strategy (which is still with us today).
The tech industry offers similar examples, including Apple, which has experienced a pair of its own Model T-like moments. In 1998, two years after Steve Jobs returned to the company, Apple launched the candy-colored iMac line as an antidote to cookie cutter, beige Windows PCs. That event effectively kicked off Apple’s remarkable comeback, the “i” branding methodology and its focus on appliance-like consumer electronics.
But Apple’s attempt last year to similarly energize its iPhone sales in emerging and overseas markets with the multi-color iPhone 5C delivered mixed results and considerably lower sales than most analysts expected. That could have been partly due to some confusion over Apple’s marketing strategy, but I believe it may also have been affected by the very different dynamics in the phone and PC markets.
It isn’t that consumers don’t want choice—they clearly do—and the beige boxes that dominated the PC market two decades ago gave Jobs and Apple an inviting target. But the “any color you want as long as it’s silver, black or white” attitude is one shared by virtually every smart phone maker, including Apple. Plus, that blandness has spawned a massive ecosystem of smart phone cases, covers, skins and other accessories that allow owners to easily and cheaply personalize their handsets.
Google aims to take the control of those personalization options out of the hands of ecosystem vendors and put it into the hands of handset makers. Whether they or their customers desire that shift is unclear, but we expect many ecosystem partners will actively resist Project Ara.
Google’s success depends on supplanting years of vendor, consumer and market preferences and adaptations that, despite their various inefficiencies, don’t cry out much for replacement. But that also ignores competitive issues. In order to fully achieve its potential, Project Ara modules should be interchangeable so a customer would be able to choose from a variety of options when configuring their phones or replace modules with third party devices (cameras are likely to be a prime target) as they like.
But even if Google were to offer the technology freely to its Android partners (which seems a likely strategy), how willingly would Samsung, LG, HTC and others embrace a design standard that could well reduce the differentiation of their products or open them up to additional competition? And if those vendors used Google’s efforts simply to reinforce their own proprietary technologies, then what’s the point? This also ignores that numerous vendors—with Apple and Microsoft/Nokia obviously leading the pack—won’t want anything to do with Project Ara due to Google’s involvement.
Interesting though it may be, Project Ara seems little more than yet another IT solution in search of a problem.
This isn’t to knock industry standards. The fact is that without standards, modern manufacturing would be pretty much unrecognizable. Consumer and industrial goods would cost more to produce and buy, and be less accessible. As a result, shifting to standardized, modular components can potentially benefit manufacturers and their customers. We say “potentially” because the size and impact of those benefits aren’t the same or even similar across all parties.
While the economies of scale can result in massive improvements for businesses, the benefits individual customers enjoy are far more modest. That point is doubly complex in handsets where marketing and financing schemes, such as carrier subsidies, mean that the final price consumers pay for most smart phones has little if anything to do with their MSRP or actual value. Plus, the standards model can be turned on its head if a vendor is big and influential enough. Apple’s continuing insistence on using its own Lightning connector rather than the otherwise ubiquitous MicroUSB standard is a good example.
So considering whether people want or need modular phones depends on who is being addressed. If it’s a manufacturer looking to improve efficiency and profit margins, perhaps so, but only if the standard in question doesn’t upset existing market dynamics or arise from a feared or untrusted source. So far as consumers go, some or even many be intrigued by modular phones and attracted by increased choice, but we believe most simply won’t care.
As a result, despite the considerable energies and resources Google and its marketing organization are pouring into Project Ara, the notion of modular standards for smart phone manufacturing seems unlikely to succeed.
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