Beyond Privacy, Data-Harvesting Evolving Smartphones

The smartphones of the future will be data harvesters.  They will harvest data on the activities we perform with them, in order to improve them and make them smarter. The path to artificial intelligence (AI)-anchored smartphones world cannot happen if smartphone makers do not use users’ data. They need the data to improve the navigational systems, recommendation engines and also build some core features on what we have as apps as part of the phone functions, right at the operating system level.

Most people will see the data collection as invasion of privacy. I disagree. Over the years, the smartphone companies have been lackluster on the ways they manage data flowing through their pipelines. Google knows most things about you as you use their search engine, relying on that data to improve its products. The world has come to understand that Google needs that data to do business, more efficiently. Few people worry that searching on Google will reveal to the big algorithm what they are thinking in their minds. The only alternative, of course, is not to use the product because you know that Google search has a memory.

For the AI-first world, now is the time for smartphone companies to participate in that data competition if they want to make products that will win markets. User privacy cannot be left only for software companies to decide. Just as Facebook harvests our data, Tecno can do the same to make better products, provided it is the metadata that is aggregated at population level, instead of at individual level.

We cannot call the hardware devices “smartphones” if the smartness cannot use data to evolve. The only way to make that happen is to utilize the data from users to continue to perfect and improve them. What makes a smartphone smart is not that it can do Facebook, it is that the hardware and operating system can have elements of memory and do many things beyond what the typical feature phone does. But to continue to elevate that engineering vision, phone companies need data. And finding a balance to tap into the data coming from the solutions running on the phones will help them.

The Coming Change

Consider a scenario where you have a smartphone and the phone can harvest all the activities in what you are doing on Facebook, Google, WhatsApp and more. The hardware company will use that data to improve how it makes processors and other elements of the phones including the operating system that powers that phone. At the moment, the hardware companies have avoided that, leaving the software companies to be ones harvesting the data. I do think in near future, they will see the immense opportunities to improve products and will then look for data to do just that.

Data harvesting power cannot just rest with only software firms. The future competition is going to be driven by data because the more data, the better algorithms. Phone companies may decide to have two versions of their products and price them differently. For people that want the status quo, the price will go higher. For those that do not care, the price should be lower. They must not collect people’s private and personal data, rather aggregated metadata of activities.

Also, they cannot sell the data to any third party. For example, Tecno cannot sell data it has collected to Konga which can help the e-commerce company to improve its business by understanding what users are searching, discussing and more. Simply, the data can only be used within Tecno to improve its products.

We need to see this from the same lens as Google (maker of Gmail) which used to harvest users’ data to improve its products. Hardware makers need to do the same. If Google could do that legally (it was doing so until it decided to stop), a phone company could also glance through user data to see how it could make its systems to make that process better.

The Paradox of Ford and Windows

As I have written in the past, the brilliance of Microsoft Windows is not just the product, but also the pricing model. You buy a software and you never own it – you must keep paying for license to own it legally, especially if you are company.

Microsoft is one of the finest technology companies in the world. It has IPs and it is a respected innovator in the technology world. But for me, I respect Microsoft, not just for Windows, but for perfecting Licensed Pricing of its products. When it scaled the constructs that buying a piece of Windows does not mean absolute ownership, it shaped the software industry.That singular vision was one of the most consequential factors that transformed Microsoft into a global icon, and rewarded the founders with tickets into the billionaire club. Not many people like paying licensing fees; unfortunately, that is the default strategy of modern software pricing.

With this strategy, you cannot resell most software. That model has generated huge returns  for software companies. Now, imagine if Toyota, GM, Ford and other car companies never allow you to own your cars. You must return every 4 months to service the car in their outlets.  You have to pay for that service. If you do not, you have ceased to own that vehicle legally. Also, you cannot resell your car. The reality is that hardware firms have not been stellar in their pricing models; software firms have always been smarter. So, that is why Tecno cannot collect data while Facebook is allowed to do so, even though Facebook runs on Tecno. That has to change and hardware companies need to modernize their constructs.

The Balancing Act

Making phones is not necessarily a great business unless you are Apple, Samsung and Huawei. But when data is embedded into these phones, they can do more. Bringing AI which does rely on data can see more smartphones perform better thereby pushing the phones from where they are at the moment, providing tools and pipelines for Facebook and Google to reap huge benefits, to where they need: deliver more value to users on their own terms. This is one of the reasons why Apple is peerless – it differentiates on hardware to deliver industry-leading experience via software. It has all under its construct, using the data from iOS to improve the Apple A microprocessors.

Using the Smiling Curves, I explain why phone companies need to get into the data business. By using more data and improving the solutions, they can abstract more things into the hardware, giving themselves opportunities to compete in the higher value areas which are at the edges.

The Evidence is Here

Do not think my argument is a mere theoretical construct: the fact is that my points are here. Our smartphones will be data harvesters. From Fortune newsletter and WSJ, we have the case of Huawei collecting data of WeChat users and Tencent (the owner of WeChat) is not happy. But understand that Tencent is not saying users’ data should not be collected, its point is that only Tencent should be the one collecting the data.

Huawei and Tencent’s data dispute. Chinese phone maker Huawei has been collecting data from users of its Honor Magic smartphone to bolster its artificial intelligence functions, but Tencent contends that unauthorized use of information seized from their WeChat app infringes on the privacy of WeChat users, and has asked the Chinese government to intervene

This is going to be a huge fight as we move forward. As the constructs of privacy erodes, the software companies like Facebook and Tencent may be surprised that phone makers like Samsung and Tecno could decide to feed on their data. While a user is a Facebook customer, Facebook is a customer to a phone maker which means the phone maker can claim rights to user’s data as well. I personally believe that if Facebook can collect it, the phone companies should also collect provided they make it VERY clear to users that they will collect data on their activities (they already partly do), to improve the smartphone development. Understand that as you use your phone, it understands you, that means it is keeping data about you. Samsung phones will know when you are driving to work and can predict how long it will take you to get there. They know the words you use a lot and will suggest to auto-fill. So, they do collect. But in the near future, they will start harvesting deeper data which the social media firms are already collecting from us.

All Together

Anyone that thinks of assured privacy once he/she is on Facebook, Twitter and LinkedIn is certainly wrong. Over the years, the phone companies have been dumb terminals relaying data which help software firms like Facebook and Tencent to improve their products. But as modern phones evolve, phone makers will need some data insights to make phones of the future. I do think they have the rights, if properly disclosed to users, to have access to some limited data going through their ecosystems. We need smartphones of the future to be smarter and we will be unable to have that without data. That explains why they need to have a framework so that between the social media firms and the phone makers, they use this data without hurting the user. For the software companies to think that only them should have access to the data implies that the only way phones can improve is through software. Making better microprocessors and improved operating system can only happen with better data insights. So as you use Facebook, expect in near future for Samsung, Tecno, etc to collect metadata on what you are doing to help make better phones of the future.

Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.