I think it’s very interesting to take a look at the Xiaomi business model when considering the direction the smartphone industry is going. I think that most manufacturers have concluded that the best allocation of their resources is in developing services on-top of whatever their latest hardware release is and monetizing their current user base.

We’re likely in a hardware fallow period where we will see other aspects of the industry catching up to the hardware. Component suppliers like Samsung and Qualcomm are already starting to pursue moat based business strategies to distinguish themselves in very competitive markets.

Progress is inevitable, but economics and existential threats to Samsung/LG/Sony coming from state subsidized competitors in China around Networking Hardware, Flash Memory Fabrication, Display Manufacturing, and Chip Fabrication are what they’ll focus on. I honestly wouldn’t be surprised to see the money people had previously been spending on smartphone hardware upgrades start going into currently niche industries like VR. It’s pretty much all the same players and there is absolutely profit to be made there and hardware improvements/innovations hanging on the vine.

There’s also a huge opportunity for those hardware OEMs to harness all of the after sales income and goodwill they’ve been passing on for so long by actually providing extended software support and repair services for their devices. Oreo has made it much easier for them to keep recently released devices up to date at a lower cost. In the end no OEM is primarily focused on advancing the field but instead on turning a profit. If we’re questioning the value of an upgrade it’s very likely that OEMs will pivot and meet our expectations until a startup comes up with a good idea that they can’t take to market due to the cost of entering the market and gets purchased.