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Between COVID-19 and 5G, the smartphone world will never be the same

With stores closed, an ongoing financial crunch and a key new technology, customers are changing how they buy phones — and which ones they buy.

Google Pixel 4a

Midrange phones like the new Google Pixel 4a are about to become all the rage.

Image: Google

Google wanted to ship the Pixel 4a months ago. The phone — a high-end device at midrange prices, and the successor to Google's most successful phone yet, the Pixel 3a — was originally rumored to land at Google's I/O developer conference in May. But when there was no conference because of COVID-19, there was no launch.

Besides, the phone wasn't ready anyway. "Our supply chain got hit really hard, and we had to continually adjust and readjust our launch timelines," said Sherry Lin, a product manager at Google who worked on the device. Even now, as the 4a actually launches, its rollout has changed. It'll launch in fits and starts around the world, and, as Lin put it, "we will be optimizing for online sales, given … the nature of the world."

The nature of the world, shut down by a pandemic, has forced the U.S. smartphone market to change in a big way. For years, Americans were an anomaly: Unlike most of the rest of the world, they didn't like to buy phones online. They preferred to walk into a store 24 months after their last purchase, talk to a salesperson, play with a phone or six, and then walk out with a new device and a new two-year contract.

With all those stores closed, buying a phone online is suddenly many people's best option. (Though Walmart's seeing record smartphone sales, too.) Brad Akyuz, an executive director at the NPD Group, told me that the percentage of smartphones bought online has roughly doubled in some places this year, from about 13% to 26%. (Compare that to the Census Bureau's finding that around 12% of overall commerce is done online, and smartphone buying looks like a fairly digital-first activity.) That puts the U.S. roughly in line with the rest of the world: a Strategy Analytics study found that 28% of phones will be bought online globally, up from 24% last year.

In some ways, Akyuz said, this is great news for carriers. "This increase in online sales has given carriers an opportunity to rethink their retail strategy," he said. No, they don't get a half-hour while people wait in line to sell them on accessories and upgraded plans, but they do get to stop bearing the giant costs of physical retail. Some carriers are already embracing the trade: AT&T announced it won't reopen 250 stores closed during the pandemic, and T-Mobile is closing thousands of stores after merging with Sprint. "Losing that retail touch with the customer is not something that they want," Akyuz said. "But at the end of the day, they don't necessarily need to have five stores within a 10-mile radius."

That's only the beginning of the change, too. A litany of changes may be coming to the smartphone world in the next few months. The Pixel 4a has a fingerprint reader instead of facial recognition, for instance, which might ordinarily seem like a downgrade from the newest available tech. But when everyone's wearing masks, Google sees it as a strategic advantage. Akyuz also predicted that eSIMs will become more popular, letting people activate a device without needing to get a physical card from a physical store.

Post-pandemic, though, the smartphone market is headed for a wild collision of market forces. On one hand, more people are more comfortable buying more things online, and that clearly includes smartphones. And when people buy online, they buy slightly differently. On the other hand, as 5G phones become more popular, the American phone industry seems destined for a few years of confusing carrier lock-in, where an unlocked device might only work in a couple of places. Maybe people will simply give up, go back to the carrier store, and make sure that their phone actually works.

There's also the question of price. Smartphones have for years resisted the downward-spiraling prices that come for virtually every other piece of technology. In fact, especially as people hold onto their phones longer, they're willing to spend even more to get the right device. It's roughly the same sales pitch as buying a mattress: You're going to be on this for eight hours a day, might as well get one you love. But now, there's a much larger contingent of price-conscious buyers, and Google and others have noticed. Selling the Pixel 4a for $349 was always the goal, Lin said, but a few months ago "it became nonnegotiable, given the economic climate. We were going to hit that price point one way or another."

For years, the American smartphone-buying process went like this: If you can afford the flagship phone, you bought the flagship phone. If you couldn't, you bought last year's model on sale instead. There was little room in the market for anything else, Akyuz said. And by bundling devices with contract upgrades, offering trade-ins and hiding the price inside users' bills, even high prices were easy to disguise.

That trend has been shifting for a while, though, led by cheaper devices like the Pixel 3a, the new OnePlus Nord and the iPhone SE. On Apple's earnings call last week, Tim Cook said that "the combination of a smaller form factor and an incredibly affordable price made the iPhone SE very popular." The iPhone 11 — also not Apple's flagship device — is its most popular phone, Cook said, but the SE "definitely helped our results."

5G is going to push that trend even more. As 5G gets more popular, every phone that doesn't support it becomes instantly obsolete, and carriers will be pushing users hard to upgrade. "Carriers really want to get as many 5G phones on their networks as possible," Akyuz said, "because there's a huge ROI question there." So phone makers will need to make devices that support 5G but don't come with flagship-phone price tags.

That may help explain Google's most enticing announcement around the Pixel 4a: that there's a 5G variant coming later this year for $500, alongside the Pixel 5 (which will also support 5G). Apple's reportedly announcing 5G-capable phones this fall, too, and Samsung has an event this week to launch its own new lineup of 5G devices. The flagship models will get most of the attention, as always. But as shopping habits, economic pressures and tech standards all simultaneously upend the industry, the midrange smartphone may be about to have its moment.

People

Google’s trying to build a more inclusive, less chaotic future of work

Javier Soltero, the VP of Workspace at Google, said time management is everything.

With everyone working in new places, Google believes time management is everything.

Image: Google

Javier Soltero was still pretty new to the G Suite team when the pandemic hit. Pretty quickly, everything about Google's hugely popular suite of work tools seemed to change. (It's not even called G Suite anymore, but rather Workspace.) And Soltero had to both guide his team through a new way of working and help them build the tools to guide billions of Workspace users.

This week, Soltero and his team announced a number of new Workspace features designed to help people manage their time, collaborate and get stuff done more effectively. It offered new tools for frontline workers to communicate better, more hardware for hybrid meetings, lots of Assistant and Calendar features to make planning easier and a picture-in-picture mode so people could be on Meet calls without really having to pay attention.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

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The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
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Google wants to help you get a life

Digital car windows, curved AR glasses, automatic presentations and other patents from Big Tech.

A new patent from Google offers a few suggestions.

Image: USPTO

Another week has come to pass, meaning it's time again for Big Tech patents! You've hopefully been busy reading all the new Manual Series stories that have come out this week and are now looking forward to hearing what comes after what comes next. Google wants to get rid of your double-chin selfie videos and find things for you as you sit bored at home; Apple wants to bring translucent displays to car windows; and Microsoft is exploring how much you can stress out a virtual assistant.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

People

Citizen’s plan to keep people safe (and beat COVID-19) with an app

Citizen CEO Andrew Frame talks privacy, safety, coronavirus and the future of the neighborhood watch.

Citizen added COVID-19 tracking to its app over the summer — but its bigger plans got derailed.

Photo: Citizen

Citizen is an app built on the idea that transparency is a good thing. It's the place users — more than 7 million of them, in 28 cities with many more to come soon — can find out when there's a crime, a protest or an incident of any kind nearby. (Just yesterday, it alerted me, along with 17,900 residents of Washington, D.C., that it was about to get very windy. It did indeed get windy.) Users can stream or upload video of what's going on, locals can chat about the latest incidents and everyone's a little safer at the end of the day knowing what's happening in their city.

At least, that's how CEO Andrew Frame sees it. Critics of Citizen say the app is creating hordes of voyeurs, incentivizing people to run into dangerous situations just to grab a video, and encouraging racial profiling and other problematic behaviors all under the guise of whatever "safety" means. They say the app promotes paranoia, alerting users to things that they don't actually need to know about. (That the app was originally called "Vigilante" doesn't help its case.)

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

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