The next must-have smartphone upgrades: Components you can swap yourself, and a conscience

Fairphone has launched its first camera upgrade module as well as announcing a €6.5m funding injection.

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Fairphone 2 owners can now both repair and upgrade their devices by swapping out modules.

Image: Jo Best/ZDNet

Fairphone, the Dutch smartphone startup that began life in 2013, has made a habit out of doing the sort of thing that even some of the biggest hardware manufacturers in the world haven't been able to pull off.

Make a smartphone that uses fair trade components? Check. Make sure the factory workers that make those phones get treated well? Check. Get consumers to pay upfront for a phone from an unknown brand? Yep, check.

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This year, Fairphone managed to do something else that the smartphone industry's biggest players haven't yet managed: make a truly modular device.

Fairphone's second-generation handset, which was released in 2015, made a virtue of having components that could be easily swapped out by the device's owners, even if they had no technical skills to speak of. By making a device with simple-to-replace parts, Fairphone hoped it could extend the lifetime of its smartphones: rather than buy a whole device when the screen breaks, you just buy a new screen instead.

Now, two years on, the company has taken the idea further: at this year's IFA trade show, it launched its first upgrade module. The Fairphone 2 shipped with an eight-megapixel rear camera and a two-megapixel selfie-snapper. Now, Fairphone 2 owners can swap out that camera for a better specced version -- 12-megapixels and five megapixels respectively -- using only a screwdriver.

"If you say, 'it's just a module, it's a camera, and you take it out and put a new one in, and off you go', it sounds almost trivial, but that's the beauty of the thing. From a design, engineering and industry perspective, it's really ground-breaking," Bas van Abel, the company's CEO, told ZDNet. The feedback from other engineers was, according to van Abel, "'Holy shit, this is really something'."

Fairphone is not entirely alone in its focus on modular smartphones, but it has taken the idea further than most companies. LG's G5 had a degree of modularity, but the company didn't carry the idea through to its successor, the G6. Google has also cooled on its own plans for modular hardware. Lenovo has proved more devoted to the concept, launching several devices that have modular components.

It's taken Fairphone two years to be able to offer the upgraded camera module, due to the technical challenges it represented: "It's about being able to keep the phone relevant for a longer term, and we have had difficulties in making this possible -- the phone has to work with old cameras, you have to be able to offer people with phones that have old cameras to just take unscrew it and put the new camera in. There's also a lot of software that makes it possible, that recognises the camera and has a plug-and-play feel to it, in an industry where plug-and-play is not there yet," van Abel said.

He added: "The camera is one of the core functions of the phone, and it was developing in terms of quality so it made more sense to look into that first. It took us a year to get [the module] developed, it wasn't really easy. We found out there was a possibility to do so, and it took five, six component manufacturers to get onboard to make this happen."

But being able to do things that other manufacturers can't hasn't always been a virtue for the company. Earlier this year, it announced that it would no longer be able to offer spare parts for its first-generation device which debuted at the end of 2013. Unlike its global counterparts, Fairphone didn't have a big enough supply chain to persuade another OEM to continue making them after its initial supplier shut its factory.

"For the spare parts, we had to switch two factories -- the factory that made the phone was out of business already for three years, so we put a lot of effort into keeping the support on the phone," van Abel said.

"The problem we had with Fairphone 1 was that we couldn't find a factory that was willing to make the spare parts [over the longer term]... At a certain point, factories weren't willing to make 2,000 batteries any more, they said: 'we can't just set up the whole thing, or you'd be paying $10,000 per battery'."

"We were able to keep [the Fairphone 1] alive longer than that phone would have been kept alive in a normal industry situation. We had no hopes or intentions to keep it longer than three to five years because we knew that at a certain point it was an impossible challenge to face, that's why we developed Fairphone 2 in a different way," he added.

The company hopes to stop the same thing happening with the Fairphone 2 by doing what every smartphone company, large or small wants to do, and grow the user base.

In order to get more consumers buying handsets, Fairphone has to get more resellers and operators to stock its devices, and in order to do that, it has to build up its inventory.

Traditionally, Fairphone raised funds by asking consumers to preorder its devices. It would then buy components and deliver the phones a time later. Operators, it turns out, have less patience than the average smartphone buyer.

"The consumers were financing production and the supply chain that you need to finance when you make the product, so to grow the company, we knew we had to move from that model to a model where you build up inventory. To grow the company, we knew we had to go into other distribution channels, and that includes operators, retailers, resellers... a big telco like T-Mobile won't pay for a phone six months before they have it.

"So, we had to change from a model where we had the money in advance as a loan and then built a product and then shipped to, to building a supply chain where more demanding resellers would have a supply of product when they needed it," van Abel said.

So, to build up its inventory, it's taken on outside investment: a €6.5m funding injection from Pymwymic Impact Investing Cooperative, DOEN Participaties and others, which will help it scale up.

The aim of the company is to make the smartphone business more equitable and less environmentally demanding by showing alternative ways of building hardware. It's hoping to get consumers to keep hold of their smartphones longer, so fewer need to be made, those that are made have a smaller environmental and social impact, and fewer devices ultimately end up in landfill.

By taking investment from organisations with an emphasis on social good, the startup is hoping to avoid the 'mission-drift' that would inevitably accompany funding from traditional investors.

"The design [of the Fairphone 2] is made in a way that we can support it longer, but you're still part of an industry that is based on volumes. So one of the things that we're aiming for is the growth of the company. There's a commercial element, of course, to make sure that we have a sustainable business... if you want to run projects in the supply chain and things that are worth doing, you want to have certain volumes to create that leverage and if you want to run social projects in factories, you need to have a good relationship with them," van Abel said.

But if it really wants to change the electronics industry, shouldn't Fairphone be looking beyond phones to tablets, PCs, and more?

"We're in it for the long run, we still have a lot to do as a company. I see us moving from phones into something else, because in 10 years, I don't know if smartphones are the product we'll be using for communication. With extending to other products, we don't have plans there yet, but I wouldn't exclude it, either to expand the business or create more impact," van Abel said.

While the smartphone's future may be unwritten, Fairphone can't escape the everyday realities of the industry: people still want to know what they can expect from the company's next generation of device. Despite the startup's stated mission of extending the lifespan of devices, there are still questions about when the Fairphone 3 will be coming.

Unsurprisingly perhaps, rather than putting its efforts into creating more hardware, Fairphone is concentrating on improving the supply chain of its existing one.

Its current emphasis is working to improve conditions in the gold supply chain. Earlier this year it signed an agreement to improve the social and environmental conditions in the gold supply from mining to recycling, and to that end, it's involved in setting up a supply chain for ethical, child-labour-free gold in Uganda.

"Smartphones now do what you need them to do and technology is not the innovation any more, or rather, it's incremental innovation... One of the questions we get asked mostly is 'what is the new stuff on your product?' and then I have to explain that we see the fair-trade elements as innovation. That's the main point we want to make as Fairphone, at this point in time, you can look at a new product, and even without technologically innovating, you can create a new version of your product by looking at your supply chain and what you do. That's social innovation."

Read more about Fairphone and modular smartphones

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