The iPhone as a gadget gateway drug

With the next iPhone launching tomorrow, on Sept. 10, the tech world is agog as usual over what Apple’s latest gadget will or won’t do. Will it have a fingerprint scanner? Will it let you control your car? Will it come in gold?

Speculation aside, it’s a good time to instead step back and appreciate an interesting effect the iPhone, and the smartphone revolution it inspired, is having on the larger world of gadgets and technology. While conventional wisdom holds that smartphones – which are converged devices that do a lot of different things – are disruptors that destroy other categories of electronics, that’s not really the whole story. In fact, the opposite may be true: the iPhone and its kin may be a sort of gateway drug to other devices.

The conventional wisdom is easy to understand. It’s pretty clear that the steadily improving cameras on smartphones, for example, are dramatically killing off the regular camera market. Tracking firm IDC saw compact camera sales decline by almost a third in 2012, which is the sort of drop that indicates the bottom is falling out of the market. The iPhone, interestingly, is responsible for a good chunk of this – Apple’s phones typically have the best cameras, with the arguable exception of Nokia.

Exhibit B in this line of thinking is usually Nintendo, which has been in trouble since the rise of the iPhone and Android devices. Smartphones have caused the casual, mobile games market to explode and that has “crushed” Nintendo’s portable 3DS device. The halo effect might be even larger, with Apple’s influence possible extending into the living room. With more and more people playing simple games on their phones and tablets, they may have less inclination to buy a Nintendo home console, which typically specialize in the same.

Yet, lost amid these examples is the likelihood that smartphones are actually fueling demand higher up the food chain. Nikon, for one, shipped more cameras in one month last year than it did in the same month nine years earlier, in 2003, when camera phones were still new. How’s that possible?

It’s simple. As far as cameras go, smartphones look to be introducing people to photography. And, as I recently argued, smartphones have physical ceilings in terms of the picture quality they can deliver, simply because they can’t pack large lenses. When users discover that ceiling, they’re upgrading to higher-quality cameras with detachable lenses, which is why SLR sales are booming. This is important because smartphones are acting as first cameras for millions, if not billions, of people who never would have thought of picking up a regular camera.

The same goes for games. The average age of gamers, according to the Electronics Software Association, has been creeping upward over the past few years, largely thanks to adults reporting playing casual games on their smartphones. While that may be decimating Nintendo’s traditional market, it is also creating a potentially much larger addressable market for the so-called hard-core console makers. People who may never have considered buying a Sony or Microsoft console in the past may indeed be open to upgrading their casual hobby into something more complex and immersive now.

The same goes for GPS devices. Many observers are wondering how the likes of TomTom and Garmin are still in business, and the answer seems obvious. While smartphones come with pretty good GPS chips and Maps apps, they’re still not as good as the optimized devices, especially those that are integrated directly into cars.

I recently spoke with Wayne White, executive vice-president and general manager of devices for Toronto-based Kobo, about how that company is seeing this same gateway drug effect with its e-ink readers. While many analysts have written these single-use devices off because of tablets, White says the opposite is happening as newcomers to e-reading upgrade to better, dedicated experiences.

“There’s a suggestion that there’s a really attractive loop that’s going to occur as tablets create demand for e-readers,” he says.

The examples are worth considering in the rush to proclaim the iPhone and its converged ilk as the killers of all competing electronics. Smartphones are certainly transforming and eliminating certain categories, but the nature of all-in-one devices inevitably leads to trade-offs. While one gizmo that does it all will be good enough for most people, there are still a lot of consumers out there who will be looking for the very best tool for the right job. The iPhone, therefore, isn’t a destroyer of gadgets – it’s an enabler of them.