Thoughts on Canadian Technology Startups and Innovation: Have We Hit a Wall?

Posted by Dan Verhaeghe

The total number of Apple and Android smartphone users is expected to grow 40% year-over-year in North America this year. That makes 2012 the largest growth year for the two operating systems over the next four years, according to Strategy Analytics in a location-based mobile stats report put together by TheWhereBusiness

Still, Toronto Star reporter Michael Lewis came out with a slightly absurd article on Good Friday, citing the fact that the latest crop of smartphones and tablets offered in a post-Steve Jobs era has people asking whether or not innovation has hit a wall.

Toronto is the fourth-ranked tech startup ecosystem in the world, according to the Startup Compass. I remember waking up Christmas Day and opening the Globe and Mail after 17 days in Australia in December to find an article with the Governor General of Canada saying that we aren’t very innovative and shaking my head in disbelief. And there’s another article from March where David Johnston says exactly that again. I quote: “Our biggest lacking feature in Canada is the receptor capacity of Canadian industry for good ideas.”

Yes, much of the tech talent is down in the Silicon Valley in California—there are as many as 350,000 Canadians working down there—but Canadians certainly do not have a shortage of ideas if we're the fourth tech startup ecosystem in the world (Vancouver and Montreal also cracked the top 25).

Perhaps a wall has been hit on the hardware side, but perhaps not. Samsung has stayed innovative in releasing a number of devices, including the large screened Galaxy Note. And either this year or next, a bendable smartphone will also be available to the public.

Further, Qualcomm’s recent “around the world in one charge” video demonstrates the next generation of battery life that should provide more relief from the fear of a dead smartphone while out and about. An executive of Qualcomm was present at the Canadian Innovation Exchange last December, and they did believe that their stock price could rise substantially in the next few years as they have a lot of patents and great technology to move forward with in mobile.

It’s easy to miss some of these great hardware achievements coming to a retailer near you when you have the world fixated on Apple’s incredible stock price. Plus, there are so many hardcore fans willing to tell anyone that they live and breathe Apple on a daily basis.

It’s becoming more likely that Apple’s ever-surging stock price may eventually fall, though, as they continue to lose worldwide tablet market share, which was once as high as 95% (RIM currently owns 15% of the market in Canada). Meanwhile, Android is projected in TheWhereBusiness report to do substantially better than Apple in the North American smartphone user race—just as they’ve been leading globally for quite some time.

One cannot overlook the popularity of mobile apps, though, as 29 billion were downloaded in 2011—over three times as many as 2010, when just nine billion were downloaded.

And there is also great innovation in the mobile app space where augmented reality is stealing much of the buzz recently, especially after Google’s release of “Project Glass." TheWhereBusiness report expects augmented reality to be the highest source of advertising revenue in mobile by 2015 to go with search ads and location-based ads. Location is especially a bright spot for North America compared to the technological advances in the Far East, where in 2010 65% of North America was GPS compatible compared to just over 10% of Europe.

North America is predicted to be 90% GPS compatible by 2015, while Europe should be around 40% compatible. That makes North America the largest location based services market until at least 2015.

Further, ABI Research had said by October 2011 that Android had already overtaken Apple in terms of app downloads by the second quarter of last year, with 44% of downloads to Apple’s 31%. Not to mention they dethroned Apple worldwide last year in terms of smartphone device penetration. What’s to say that won’t happen with tablets?

There are low-end tablets like the Kindle Fire tablet, Montreal’s Datawind tablet for $62, and smartphones that run on lower Android operating system versions. Reports suggest that low-end Android smartphones and whitebox vendors priced at $75 and lower will also capture a decent chunk of the market by the end of 2012. We also may see the Windows Mango Phones and Nokia Mango phones take some market share as well because of how easy some of the devices are to use.

Innovation has hit a wall? I think not. Also maybe perception of the word “innovation” beyond devices should become the new norm in mobile.

Famed Internet tycoon, Shark Tank star, and owner of the NBA’s Dallas Mavericks, Mark Cuban has said to look in places where few other people are looking. That means look beyond the obvious trends like building an app and looking into the other side of mobile. You might find a little hidden gold in the side of a mountain, if you catch my drift.

For example, Canada is becoming a worldwide leader in social and mobile media middleware. There are companies like Hootsuite and Pinerly. Further, Ryerson University’s incubator known as The Digital Media Zone has taken the approach of building middleware startups rather than mobile apps, so the country seems to be well on its way. I’ll cover that in detail soon along with a couple other similar startups not associated with the DMZ.

For now, I’ll leave you with this quote on leadership, which can also be put forward about innovation, by Harold R. McAlindon, the author of the Little Book of Big Ideas: “Do not follow where the path may lead. Go instead where there is no path and leave a trail."

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Dan Verhaeghe

Dan Verhaeghe

Dan Verhaeghe focuses on marketing, mobile, major technology players, entertainment, and new media. Dan has a dozen years of online experience that dates back to the turn of the millennium where he dominated a now non-existent online RPG game for a couple of years at the age of 15. He would eventually become a Toronto Blue Jays blogger who earned his way into Toronto's CP24 studios six years... more



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