How battery markets can learn from smartphone disruption

The rapid uptake of smartphones over the last 10 years can hold some valuable lessons for those involved in emerging battery markets.

While some participants may still feel battery technology is not good enough to play any pivotal role besides its uses today, the reality is portable and stationary batteries will have an ever increasing presence in our lives.

There is still a question of scale and speed of uptake for what are entirely new markets of electric vehicles and utility storage. To gain some insight into this, one only has to look back as far as 2005 and the advent of smartphone.

The graphic below compares the race to one million handset sales.

Nokia, once the world’s leading (and almost untouchable) mobile phone producer, was the first to sell one million handsets of the N70 model in 2005. It took the company one year to reach that number with the uptake primarily in western and northern Europe and the US.

A little under two years later, Apple released its first foray into the smartphone market with the iPhone. The company took just 72 days to sell one million handsets, capturing a new market with customers not only seeking a mobile phone but also replacing their iPod music player, a feature that was now integrated in the handset.

In 2014, the disruption of Apple’s entry into this market was all but complete with the launch of the iPhone 6. The company took just 7.2 hours sell one million handsets.

Symbolically, in the same year, Nokia’s demise in the mobile phone handset sector was complete as it sold what was remaining of the once dominant business to Microsoft. The software giant saw value in its R&D and patents rather than its portfolio of mobiles on the market.

“Nokia as a brand will not be used for long going forward for smartphones,” Stephen Elop, Nokia’s CEO said after the sale.

Download graphic here

Three lessons from history

In an attempt to foresee in what way battery applications in electric vehicle (EV) and utility storage will take-off, Benchmark Mineral Intelligence has outlined three lessons from smartphones, the first major, mass scale battery market, that could provide some insight.

  1. Speed of disruption

Perhaps the starkest lesson from the first phase of the smartphone era is its speed.

While Apple’s entry into the market has risen to dominance in 2014 together with Samsung, it only took two years and its first release to truly disrupt the market and a handful of years to turn it on its head.

In 2011, four years after its smartphone debut, Apple overtook Nokia in global handset market share at the 20% mark.

  1. Demise of the untouchable

The second stand out fact, is the demise of what was a truly dominant mobile phone maker.

In 2005, Nokia sold its one-billionth handset. In 2007 before the iPhone release, the company was listed as the world’s fourth most valuable brand.

Last October, Microsoft dropped the Nokia brand completing its demise in the handset business.

  1. Scale of growth

The third takeaway point is the scale of growth in the smartphone market.

No longer are mobile phones, mobile phones. They are portable computers with ever increasing uses thanks to application (app) based software that can make your handset more useful over time.

No longer are mobiles depreciating assets and as a result sales topped 1.2 billion in 2014 accounting for 66% of the mobile phone market from little over 1m in 2005.

The smartphone uptake took the battery supply chain by surprise.

Such was its unprecedented nature, leading lithium suppliers of the key battery raw material continually underestimated the speed of growth in demand which ranged from 8-12% each year in that period.  Lithium saw a supply squeeze and its price spike three-fold between 2004 and 2009 as a result.

And with EVs and utilities, the batteries are bigger… much bigger. For supply chain disruption, EV sales would not need to be in the billions or millions, global annual sales of over 200,000 would force significant change.

Should the take-off in these markets replicate even a fraction of the smartphone success, then the landscape for batteries and their supply chains, as experienced with smartphones, will look very different ten years from now.