In the last year or so, there has been a noticeable slowdown in innovations in new smartphones -- with both hardware and software.
In a five-year smartphone forecast through 2018 released last week, analyst firm IDC noted: "It has been widely acknowledged that the pace of innovation on smartphones has slowed down, even reached a plateau. Indeed, many of the new innovations launched in 2013 appeared to be incremental improvements on a theme, and it was questionable whether many of them would have lasting value."
With smartphone innovation flattening, the next direction seems to be making the smartphone the hub -- connected via Bluetooth, primarily -- to emerging technologies. These technologies including the whole range of smartwatches, wearable devices and the much larger ecosystem of home appliances, cars and other devices that would be connected in an Internet of Things scenario.
While this slowdown in innovation has been widely perceived, marketers for smartphone vendors still trumpet the latest improvements with large-scale events announcing new devices that overstate the new features. Samsung, for example, provided a live orchestra and elaborate staging at the launch of its Galaxy S5 smartphone. The event was attended by thousands at the Mobile World Congress trade show in Barcelona in late February. That phone will ship April 11.
Tuesday's launch of the expected HTC One M8 has been preceded by online videos and plenty of hype that describe a phone with a 5-in., full HD screen that's larger than last year's HTC One release, has two rear camera sensors for taking better photos, a Snapdragon 801 processor and 3GB of RAM for greater speed.
The day before its release, some analysts questioned whether those improvements are enough to have much of a market impact, even if HTC is able to put the new smartphone on sale this week in advance of the Galaxy S5's sales.
Many analysts are now asking, in a version similar to an old Wendy's hamburger ad, "Where's the beef?"
IDC called for making the smartphone the "center of innovation to other devices and not necessarily [maintaining] the smartphone as the end itself." In that world, smartphones act as remote controls to appliances, products and services including security systems. "This is only the beginning of how innovation can and will evolve further," the IDC report concluded.
Ramon Llamas, one of the IDC report's authors, said in an interview Monday that slowing innovation is affecting every smartphone OS. "The iPhone 5S had a 64-bit processor and a re-skinning with iOS 7, which sets a tone. Everybody likes a new engine. But are those new features on par with Apple's earlier Facetime or Siri? I would say no."
Llamas continued: "I can pick on the Galaxy S5. They said to check it out because it was waterproof and that was one of the big things Samsung touted. Ok...waterproof, huh? Right."
Llamas said some of last year's Galaxy S4's innovations were a disappointment, including inserting your image into a photo captured on the camera, scrolling through Web pages with your eyes, and pausing a video when you look away.
"That kind of thing didn't exactly ignite the market, and it didn't work for me all the time," he said. "Instead of pausing the video by looking away, why is that better than pressing pause on the screen?"
Carolina Milanesi, an analyst at Kantar WorldPanel, agreed that innovation has slowed with smartphones over the past year, but added, "it's more a case of incremental innovation than revolutionary innovation. Improvement on existing products is certainly there." She note that Android users replaced their earlier models in mature markets like the U.S. throughout 2013.
She noted that manufacturers and wireless carriers count on customers to replace their smartphones every couple of years. Consumers are replacing their phones, but not necessarily because the latest devices are revolutionary improvements over their predecessors. While even incremental improvement have their appeal, customers are also lining up for the new iPhone 5S and pre-ordering the Galaxy S5 in response to revolutionary changes in pricing for wireless services and hardware.
T-Mobile US, for instance, in 2013 took the lead over other major wireless carriers to offer customers the chance to pay in monthly installments for the full price of a smartphone without a carrier subsidy. Meanwhile, data sharing plans from all the major carriers have often been accompanied by short-term discounts on new hardware pricing and trade-in options.
As innovation with smartphones has slowed, a number of other factors are weighing on carriers, which control the market more than manufacturers would like to acknowledge.
"We've already reached a point in the U.S. where smartphones are a majority of the phones sold, and smartphones are all starting to look alike," Llamas said. Carriers are not selling smartphones exclusively nearly as much as in the past (as AT&T did with the first iPhone) and will be evaluating each new device to see which has a breakthrough in innovations or is just playing catch-up. There is only so much room on store shelves, and carriers want to choose winners.
"Carriers can now be more selective about which smartphone will receive a subsidy and which won't," Llamas said. "Manufacturers are aware of this and are trying to stay in line with carriers."
However, that doesn't necessarily mean that smartphones with the highest quality features will drop in price much below that magic $200 pricetag with a two-year agreement, the price most carriers are charging for the Galaxy S5, Milanesi said.
Llamas said he was encouraged by the generally available $179 price plus two-year agreement for the Moto G. "Spec for spec, it's very robust and can hold its own," he said.
Aside from the control that the carriers exert on smartphone makers, big brand names like Apple and more recently Samsung will continue to matter, maybe even more so, going forward.
"If everybody has a smartphone that looks the same, how much does brand count?" Llamas said. "Just look at the marketing spin that Samsung goes through. I do want competition and I want the vendors to push each other."
HTC's declining sales and profits have brought the company itself more attention than its devices, which have been widely regarded for their impressive styling. One overlooked feature in the original HTC One was front-facing speakers, which meant a user could watch a movie on the device without having to lay it on a table to enhance the sound as other smartphones require users to do, Llamas said.
Yet, nobody would buy the HTC One for that single feature alone, which illustrates the problem of a decline in innovation.
Patrick Moorhead, an analyst at Moor Insight & Strategy, said there are still opportunities with innovations that smartphones can try to perfect, including voice command software or beaming the contents of a smartphone to a large display.
"Neither Google, Apple nor Microsoft has yet delivered on the promise of voice commands you can rely on," Moorhead said. "Siri and Google Voice are improving but just aren't reliable enough to be used by many consumers for multiple requests."
Likewise, Moorhead said, "It is still too hard and unreliable to wirelessly connect or beam the contents of your smartphone to display on a large display like an HDT or PC."
What's happening in early 2014 with smartphone innovation is about the same as what happened with desktop computers, and many other electronics products, in their early days.
"As with any maturing marketplace, it gets harder and harder to make any significant innovations that others can't also make or at least quickly copy," said Jack Gold, an analyst at J. Gold Associates. "This applies not only to to HTC, but also Apple, Samsung and others."
This economic innovation cycle is what Gold calls the innovation curve. "When you are trapped by this innovation curve, you have to find a way to break out, but it's not easy to do without abandoning your entire ecosystem and to some extent, displeasing your client base."
The general industry move to the Internet of Things and wearables will help break the constraints of the innovation curve " to some extent," Gold added. "Those markets are not fixed or mature and many experiments are going on. It's very early in the innovation curve for wearables."
And who will be big in that emerging space? "It's only the bigger vendors with some sustainability that can venture to produce devices that may fail, or at least not be very successful," Gold said. "They will continue to try until something works. It's harder for startups to do this in a sustainable fashion as they need quick hit successes."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is email@example.com.
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