Dollars and Sense: In smartphones, can you follow innovation to the bank?

Best New Smartphone InnovationsImage Source: Zach Epstein, BGR

What on Earth is going on here? Earlier this month as the annual Mobile World Congress trade show kicked off, we saw more smartphone innovation in a single week than we had seen all year last year. Perhaps in the past few years, even. Making things even more interesting is the fact that we’re seeing innovation not just on the software side of things, but on the hardware side as well. From small smartphone startups to longtime industry giants, companies are putting their R&D departments to work and coming up with some truly impressive new tech.

But does innovation sell phones?

We didn’t even have to wait for MWC to begin this year to see some serious innovation hit the market. On February 18th, three days before the Spanish trade show would begin, a startup called Nextbit released its first smartphone, the Robin.

In my Nextbit Robin review, I focused largely on a nifty new software feature that Nextbit developed as one of the central selling points of the phone. People hate running out of storage space on their handsets, and while the Robin only includes 32GB of physical storage space, users get another 100GB of cloud storage.

The Robin learns which apps owners use most, and it pushes unused apps and their data off the device in the event that available local space is running low. This makes room for new apps, photos and more, and then cleared data can be restored at any time with a single tap.

It really is a clever solution, and you can read more about how it works in my review.

Then MWC 2016 kicked off on Sunday, February 21st, and we saw even more innovation hit the smartphone industry.

LG was the first big company to unveil its new flagship phone on Sunday, and it may very well be the most novel smartphone we’ve seen in years as far as hardware is concerned. The LG G5 sports a nifty new modular design that lets users attach all sorts of new hardware using an expansion slot.

The company announced a camera attachment and a high-quality audio player attachment alongside the phone, but we can expect plenty of additional modules in the coming months.

Next came the industry’s top smartphone vendor by unit volume, Samsung. And while the new Galaxy S7 and Galaxy S7 edge look a great deal like their predecessors, looks can be deceiving. Just as the iPhone 6s was Apple’s biggest iPhone upgrade ever despite looking just like the prior year’s model, Samsung’s new flagship phones are hiding tons of new tech under the hood.

In my hands-on preview of the Galaxy S7 and Galaxy S7 edge, I covered plenty of new features and I wrote about how powerful these new flagship smartphones are. There is one feature that outshines the rest by far though, and it’s Samsung’s new camera.

Samsung packed a number of exciting innovations into the Galaxy S7’s camera, all while getting rid of the Galaxy S6’s annoying “camera bump” almost entirely. The S7 and S7 edge camera features a bigger aperture and brighter pixels that result in much clearer low-light photos.

Even more impressive is the new dual photodiode pixel autofocus mechanism that comes over from the world of DSLRs and makes an appearance on a smartphone for the first time in the Galaxy S7. Make no mistake, this is a huge innovation. There has never been a smartphone camera that focuses anywhere near as fast as the S7, and it captures photos that are staggering in their quality and clarity.

But does innovation drive smartphone sales? I’m not so sure.

In the holiday quarter in 2014, Apple reported the most profitable quarter in history driven by astronomical sales of its new iPhone 6 and iPhone 6 Plus smartphones. And what sent shoppers racing to stores to buy all these iPhones? Bigger displays. As we all now, there was absolutely nothing innovative about a smartphone with a big screen in 2014.

Apple’s holiday quarter in 2014 would remain the most profitable quarter in history until exactly one year later, when Apple went on to top its own record — thanks again to sales of its new iPhone lineup. What remarkable new features drove Apple’s narrow iPhone unit sales increase this past holiday season? China.

Over the past two years, it could easily be argued that Samsung out-innovated Apple at the high end of the market. The Galaxy S6 was a ground-up redesign with revolutionary new components like an Exynos chipset with FinFET architecture and UFS 2.0 flash storage that outperformed all other mobile flash modules. The S6 and Note 5 also marked the first smartphone generation where Samsung’s smartphone cameras clearly surpassed Apple’s.

Meanwhile, Samsung’s smartphone profits continued to slide each quarter.

The only meaningful growth in the industry over that period was enjoyed by Apple at the top of the market and Chinese Android companies at the bottom. As exciting as these new smartphone innovations have been over the past few weeks, and as much as they’ll be enjoyed by consumers who do end up purchasing these phones, it remains to be seen whether or not they’ll lead to any real sales momentum.

Dollars and Sense is a recurring column by BGR Executive Editor Zach Epstein. It offers insights on subtle changes in and around consumer electronics with the potential to have a broad impact on companies that drive the industry. Contact the author at z@bgr.com.

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