Ted Muething is a PR and marketing consultant at Jones-Dilworth Inc., a boutique agency in Austin focused on bringing early-stage technologies to market.
Every day we vote with our dollars how we want the world to be. By deciding what to buy, and what not to by, we shape strategies in the boardroom and control the fate of large corporations.
Tech companies know this well, and it’s why they fight desperately to predict what the next big trend to sweep the industry will be.
Smart watches. Fingerprint sensors. Max-sized phones. Mini tablets. More than seven years after the debut of the iPhone, the hardware giants are scrambling to find the next killer feature to capture consumers’ attention – and dollars.
But the next big trend in mobile will not come from the R&D departments at Apple, Samsung, or Motorola. Conscious consumers have begun asking more questions about where things come from, and it’s changing the way they look at electronics and the companies that sell them.
It’s no longer enough for a device to be “magical” or “revolutionary”. People want to know that their phone wasn’t produced in a way that harms the environment, exploits workers, or fuels civil war. People want to do business with a company they trust.
It’s because of this changing tide that transparent hardware startups are set to become the next major disruptor in mobile – and Apple and Samsung better be on alert.
The transparency wave
We have some idea about how the demand for transparency will affect mobile, because we’ve already seen this trend sweep across other industries.
The change to America’s food supply over the past few decades is a prime example of a market turned upside down by shifts in consumer attitudes. Forty years ago, Chez Panisse in Berkeley, California was a radical in the culinary scene, introducing the American dining public to the modern concepts of organic and locally-sourced food for the first time.
Today, the organic food and beverage market (which didn’t exist at the time) is valued at over $30 billion per year. Organic snack company Clif Bar tops $500 million in annual sales alone.
Meanwhile, Hostess Brands, makers of the hyper-processed Wonderbread and Hostess Cupcakes, went bankrupt for the second time in 2012 after first trying to withhold pension funds from its employees.
We are seeing a similar change right now in the clothing industry. Thanks to the growing popularity of the Made in USA movement, consumers are getting in the habit of asking where their clothes originate.
When a garment factory collapsed in Savar, Bangladesh in April 2013, leaving more than 1,100 dead, the outpouring of concern was immense. Years ago, sweatshops were an abstract concept to western consumers. Today, we see the faces of families affected by these tragedies streaming on our social media, and we demand better for them.
Conflict minerals & eWaste: Our digital footprint
The mobile and computer hardware industries have largely avoided this level of consumer scrutiny, until now. A host of scandals at Apple supplier Foxconn drew our attention not too long ago, but Apple assured us everything is better now. Is it really?
The truth is that the problems in the electronics industry go much deeper than low wages and long hours at assembly plants. Just this past year, Bloomberg reported that Apple and Samsung were linked to a supplier accused of buying tungsten ore from illegal mines controlled by Colombian rebels.
Although Apple insists it’s doing what it can to purchase conflict-free minerals, it’s not enough anymore to say, “We didn’t know.” We need brands we can trust, and a trustworthy brand does its homework.
Humanitarian and environmental concerns don’t stop at illegal mines. At the complete opposite end of the product lifecycle, eWaste presents a growing crisis for developing nations that import our discarded devices.
It may be good for Apple when we buy a completely new iPhone every 12 months, but this culture of disposability is no longer sustainable. We need to be more conscious about the footprint our devices have on the environment and communities around the world.
Calls for reform from watchdog groups grow more aggressive every year, but at the end of the day it’s the consumers that the hardware giants listen to.
It pays to be transparent
Right now several hardware startups are emerging that represent a bold new future for the mobile industry. Most notable is Fairphone, a Dutch company founded on a single principle: radical transparency.
Instead offering a better camera or slicker operating system, Fairphone sells mobile devices by simply telling customers what goes into them.
This accounts for every single screw, screen, and circuit board that goes into handsets. Fairphone assures you that its products are free of conflict minerals, but just in case you want to see for yourself, it’ll show you video from its trips to the mines.
The Fairphone may not have the long feature lists of the iPhone 5s or Galaxy S5, but consumers don’t seem to mind. Fairphone sold out of its first batch of 25,000 pre-orders, and just announced it’s ramping up production again. And that’s without selling a single device in the US.
Some 25,000 smartphones might be a drop in the bucket to a company like Apple, which sold 150 million iPhones in fiscal-year 2013, but the Fairphone should worry the folks at Cupertino more than anything Samsung, Motorola, or Nokia might have up their sleeves.
The problem for the hardware giants is that radical transparency is like Pandora’s Box. Once a company like Fairphone brings up long-ignored issues like illegal mines, poor working conditions, and planned obsolescence, Apple and Samsung can’t say, “We don’t care.”
Consumers are demanding to know more about where the things they buy come from. If the current mobile heavyweights aren’t willing to open up and show them, they’ll take their dollars – and loyalty – elsewhere.