Why Aren’t There 21st Century Flip Phones?

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Apparently by the 23d century, we’ll have returned to flipping flip phones. We know this because in the current blockbuster Star Trek Beyond, the intrepid crew of the USS Enterprise employs communicators with lids that have to be flipped up to operate—subspace radio gear still must be pretty bulky in 2260.

A couple of years ago, there were stories about a short flip phone chic amongst the glitterati that never trickled down to the mainstream. More recently, Motorola unintentionally ignited a flip phone frenzy when it released a nostalgic promo video entitled “Moto 06.09.16,” which teased a re-introduction of a smart version of the company’s iconic RAZR flip phone from the pre-iPhone 2000s.

Instead, the company announced a more pedantic Motorola Z slab smartphone.

But the video stimulated gear head salivation over the possibility of something new and shiny and different. Motorola reportedly apologized for unintentionally churning up anticipatory furor about a potential rebirth of the RAZR.

What’s puzzling is why Motorola/Lenovo doesn’t get the flipping hint, or why some other smartphone company hasn’t actually gone retro, reintroducing a new 21st century flip phone as a hip counter-culture accessory.

Why would/should they? Because it’s harder and harder for most smartphone makers to make a profit on the devices.

Where Have All the Profits Gone?

According to Fortune, compared to other smartphone suppliers, Apple and Samsung are the two making the most profit.

The profit problem is three-fold. First, there’s the fierce competition. Android phone buyers are notorious for buying cheap (hence Apple’s strong profit position through owning a large part of the high-end market), which means prices—and profits—are constantly being driven down.

Then there’s the global competition from Chinese makers, such as Xiaomi, Huawei, ZTE and even Motorola owner Lenovo, challenging the established brands, adding further pricing and profit pressure. Chinese brands smartphone makers took over 35% of the global market in 2015 and the percentage was only single digit back in 2011.

Finally, there’s been a slowdown in compelling technological advancements. After only eight years, smartphones have kinda reached the top of their technological bell curve. Screens have gotten as big as they can get and still be held in one hand and fit in your pocket, camera technology is reaching its resolution and “good enough” qualitative zenith, and phones are increasingly more resistant to drops and drink, making damage replacement even less frequent.

For instance, on Aug. 2, Samsung is likely to unveil its next-gen Galaxy Note 7, rumored to add a curved screen a la the company’s Galaxy S7 Edge. Not uncoincidentally, Apple is due to unveil its next iPhone on Sept. 12. Except, instead of an anticipated all-new iPhone 7, Apple is more likely to make another intermediate step-up with an iPhone 6SE, encompassing only some minor feature upgrades: a two-lens optical zoom camera, improved antenna and a Lightning jack instead of a separate 3.5mm headphone jack.

In other words, these flagship upgrades may interest primarily geeks and tech writers aching for something different to write about more than actual consumers.

In reaction to slowing technological advancements, consumers are becoming less willing to trade up to a new phone each year. This slowing upgrade rate gave rise to the carrier leasing movement, which essentially forces buyers to artificially upgrade to new hardware sooner than they might otherwise naturally. But consumers are increasingly content with the phones they have, slowing replacement rate and shrinking profits even more, even for Apple.

And, of course, overall smartphones sales are shrinking. Sure, the smartphone market is still growing, but the days of hockey-stick growth are gone. According to DTC, global smartphone sales have gone from nearly 90% annual growth in 2011 to a projected 14% increase this year.

Innovate or Die

In the consumer technology business, the typical reaction to juice shrinking margins and slowing sales is to introduce a new, higher-end format—VHS to DVD to Blu-ray to UHD Blu-ray, tube TV to rear projection TV to flat screen TV to HDTV to UHD, etc.—that pushes us to buy a new, expensive, high-margin version, just to keep up.

In the smartphone business, this new “format” opportunity for mass market high-margin hardware replacement comes with an upward network technology shift—2G to 3G to Edge to HSPA/3.5G to 4G to LTE. Except, like all smartphone technology, network technology growth also has slowed. The next shift to 5G isn’t likely to happen for a few years, not until 2020, some folks say.

This leaves smartphone makers with no viable short term way to boost sales or their bottom lines—except maybe by creating demand for a new generation of premium-priced, or at least higher-margin flip phones. A 21st century flip phone could still include some/most smartphone attributes, only in a new, retro form factor. Someone call Rudy Krolopp.

Designed, priced and marketed cleverly enough as a cool, must-have, high-end, elegant, urban accessory a la Beats headphones, or even as something less bulky than a 6-inch smartphone, they could generate higher margins and boost an innovative smartphone company’s lagging profit.

And we know flip phones will be popular. Motorola’s RAZR return imbroglio gives us one clue. Plus, after all, flip phones are going to still be used 200 years hence by Capt. Kirk, Mr. Spock, Bones and the rest of the crew of the USS Enterprise. Beam us up, indeed.

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