Disrupting mobile


This post is by Benedict Evans from benedictevans - Benedict Evans


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Until pretty recently, the PC ecosystem was the centre of gravity of the tech industry: it was where the investment and innovation was centred. It took that role away from mainframes, minicomputers and workstations slowly and in stages over the previous 30 years or so. Crucially, though, PCs didn’t start out selling to customers of mainframes, minicomputers or workstations – rather PCs were able to access a new and much larger pool of customers, and that gave PCs scale that, a decade or two later, allowed them to replace almost everything else. PCs could be sold to so many more people that their economies of scale became overwhelming. Eventually, there was no way that, say, the workstation industry could match the investment of the PC industry, and Sun and SGI were overtaken. And today, even a ‘data centre’ just means millions of ‘personal computers’. Ecosystem scale won.  

Much the thing is happening now as the mobile ecosystem supplants the PC ecosystem. In a few years’ time, annual unit sales of ARM/iOS/Android computers will be around 10x the unit sales of PCs – over 2bn versus sales of perhaps 200-250m PCs. The install base will be 3-5x larger – 1bn to 1.5bn PCs versus 4-5bn ARM/iOS/Android devices. So, this is now where the economies of scale are and where the investment is focused. Today, if you are innovating in sensors or cameras or radios or pretty much any other component, you are far more likely to target ARM and mobile. And over time, these economies of scale (amongst other things) mean that mobile will supplant the PC just as the PC supplanted everything before it.

But again, the first step is that the new ecosystem gets scale from a new and much larger customer base, and only afterwards can the new ecosystem start supplanting the old one. 

(This of course won’t happen quickly – the Apple II shipped in 1977, the IBM PC in 1981 and the Mac in 1984, yet IBM’s install base of mainframe computing was still growing through the 2000s. But the centre of gravity moves.)

This process prompts a question, though. The process observed is that the next ecosystem first goes out and gets scale by addressing a new, untapped customer base, and that it’s that scale that lets it overtake the old ecosystem’s performance and so supplant it later on. But mobile is everyone on earth. So what’s the next untapped market, that the next ecosystem after ARM/iOS/Android would use to get to scale? We can’t get to more human customers, because mobile will already have reached them all. 

IoT will result in many more individual ‘things’, but a lot of that will actually be using components from the same smartphone supply chain, a lot will be controlled from smartphones, and a lot (gas turbines, railway locomotives, toasters) don’t really look like a distinct new platform at all. VR is clearly a subset of the PC world now and the smartphone world (and perhaps the console world) soon. 

One could propose AR (and having had the Magic Leap demo, it is indeed part of the future), but I don’t know if that’s more of an entirely new platform than VR – it’ll still be smartphone CPUs, for example. On the other hand, one could also argue that the shifts to PC and then to mobile were as much about interface technology as about ecosystem, and AR is certainly a new step in computer interaction, just as multitouch succeeded the mouse-based GUI and that in turn succeeded the command line. 

However, one could also propose another kind of shift. Microsoft’s moment of victory was in 1995 with Windows 95, yet that was also in hindsight the end of its dominance of tech, as the agenda moved to the internet. It never again got to decide what programming languages, document formats or network protocols everyone would use. And yet Microsoft sold a awful lot of copies of Windows after 1995, because after all, how else were you going to get online? Windows mattered less and less, but sales grew and grew. 

Equally, today we are starting to see an explosion in AI, as it leaves research labs and universities and turns into products and companies, that could have a similar scale and effect. Just as the web didn’t replace Windows, but made it a commodity, AI might shift our attention away from mobile.