Look for the smartphone's future in the PC's past

If you take Andy Rubin at face value, one of the smartest technologists of our day is having a tough time accepting the implications of his own creation.

In Barcelona, Google's Android chief was talking up the latest activation numbers at the Mobile World Congress today when he mentioned that Android wasn't "being built to change the dynamics of the industry."

Pardon my sarong?

Rubin clearly is not giving his team a big enough pat on the back. About 850,000 Android phones and tablets now get activated daily, compared with 550,000 activations per day in November. That's nothing short of remarkable.

But reading him less literally, the subtext is to promote Google's technology as the underpinning of a flourishing tech ecosystem where carrier manufacturers will be able to innovate to their heart's content. Google's not trying to "commoditize a bunch of people and make all their products look the same" he declared.

That may be the party line but the recent history of the technology industry suggests a very different outcome. Here's why.

It wasn't so long ago that personal computers were high-margin items and users were all too happy to pay top dollar to take home one of these magical devices. Manufacturers and retailers could get away charging a bundle because of the hand-holding that users supposedly needed. "Autoexec.bat. What the hell is that?"

I'll pay whatever the list price
We were all too willing to pay for a digital wizard who could translate tech gibberish into something approximating English. That helped foster boom times for corporate-focused resellers like Businessland and chains like ComputerLand, which gorged on walk-in traffic, as well as for the hundreds of independent dealers who hung out a shingle at just the right time.

But the emergence of clonemakers offering better prices and features changed everything. And as more people learned to use computers, shoppers had increased access to alternatives. New mail-order offerings from the likes of Dell and Gateway 2000 among others further accelerated the commodization of a product that was mysterious no longer. Savvy consumers saw through manufacturer marketing pitches and knew they were buying a collection of wires and boards, where one model was virtually indistinguishable from the next.

Watch this: Samsung Galaxy S Advance

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The real value remained in the realm of software and services but most traditional retail or reseller companies were unable to make a successful go; when it turned into a game dominated by price and delivery, most closed down or sold out. The details obviously were different, but a similar process of commoditization wreaked havoc in the work station and server markets.

Fast-forward a couple of decades and the issues informing the debate about smartphones have a familiar ring.

Hardware fan boys understandably get infatuated by new bells and whistles but spec differentiation has a short shelf-life. So, for instance, the day's big news has Huawei boasting that its Ascend D Quad is faster than any smartphone out there. Great. That will last only until HTC gets its turn at the podium. And then Samsungwill trot out its latest and greatest, followed by LG or (fill in the blank here with your favorite handset maker.)

So who wins?
Dylan was right about not needing a weatherman to know which way the wind blows. Lower prices are on the way and as always, users are going to decide the outcome by voting with their wallets. A new research report predicts that more than half of all smartphones sold globally will be priced under $300 by 2016. For comparison's sake, consider that only 5 percent of handsets now sell for less than $200. That is going to put a margin hurt on a lot of hardware makers and, if past is prologue, many will decide to pack it in.

As always, software is where you find the most lasting differentiation. With the exception of the large and loyal cohort that use Apple's (fantastic) iPhone--and to a far less degree those who will try Windows--we're living in an increasingly Android-dominated smartphone world.

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