I would argue that we are indeed standing on the summit of peak "phone as hardware": While Apple's newest iPhone offers some impressive hardware features, it does not represent the beginning of the next 10 years of the smartphone, as Apple claims.
The better question, then, is where do phones go from here?
To understand the future of phones, it helps to look at the history of phone innovation. We have seen this movie before. When focal dimensions of innovation change, incumbents often get left behind. More specifically, as we shift from hardware-based innovation to differentiation around AI-driven technologies, market leaders like Apple should be on high alert.
Innovation in technology product categories tends to proceed along a specific dimension — a “vector of differentiation.”
Players pursue innovation along a vector of differentiation until the vector runs out of steam. This happens for two reasons: limits to innovation along the vector of focus and the ability of competitors to catch up with market leaders. When that happens, the focus of innovation shifts to a different vector and new market leaders emerge. We have seen this pattern several times in mobile phone innovation over the past three decades.
