Fairphone 3 cancelled

Assignment 1: Case Analysis – Fairphone

Core Information:

Due: Before 11:00 pm, Monday 8th April 2019 Weighting: 20% Individual/Group Individual Assignment Word limit: 1200-1500 words in total (plus or minus 10%)

Parts of the following article/case was published on https://studybreaks.com/tvfilm/is-fairphone- changing-the-future-of-smartphones/ - June 2018.

Fairphone, the Ethical Cell Phone, Wants to Change the Future of Smartphones

You may not have heard of Fairphone, a Netherlands-based smartphone start-up, but it could be changing the dynamics of the mobile phone industry. Unlike the leading brands, Fairphone is committed to producing ethically manufactured smartphones. Fairphone promote the phone on their website with the following claim; ‘The modular phone that’s built to last. We’ve created the world’s first ethical, modular smartphone. You shouldn’t have to choose between a great phone and a fair supply chain’ (https://www.fairphone.com/en/). That last statement ‘a fair supply chain’ relates to the fact that most of the raw materials – especially metallic-based components – obtained to manufacture the essential components of electronic devices, and in particular smartphones, come from the Democratic Republic of Congo (DRC). Although this Central African area has a vast supply of rich minerals, it has experienced devastating civil conflict due to mineral exploitation. Thus, minerals mined for smartphones (including gold, tin, tantalum and tungsten), are often referred to as ‘conflict minerals’. Peter van der Mark, a public relations (PR) expert, and Bas van Abel, an industrial designer, were passionate about letting the public know about the mineral exploitation by major smart phone companies. The pair collaborated to create an awareness raising campaign explaining the relationship between the supply of minerals for smartphones and the conflict in the DRC. Their campaign was called ‘Fairphone’. At the time of launching their campaign in September 2009, neither Peter nor Bas intended to make a commercial product. Indeed, they did not have the necessary expertise to do so. They assumed a prototype would be a concept device that wasn’t functional and at best hoped it would be accepted as an exhibit at a local museum. Fairphone was thus started as a not-for-profit organisation and established as a campaign, with the mission of raising awareness of the major supply chain for electronic goods and its role in creating conflict minerals. However, as the campaign gained momentum people started asking how they could buy a ‘Fairphone’.

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This unexpected demand heralded the launch of Fairphone as a ‘social enterprise’ in January 2013. Van Abel took on the role of founder/CEO with the aim to: ‘produce a cool phone that puts human values first’. However, despite the enquiries about a Fairphone from people who had watched the campaign, at this time the company essentially had no solid customer base, no employees who has any industry experience, limited working capital and no mobile phone prototype. Nevertheless, Van Abel and six staff launched a crowdfunding campaign in mid-2013 through their website, with the aim of pre-selling a maximum of 5,000 fair smartphones. Instead, by November 2013, Fairphone had pre- sold 25,000 non-existent smartphones for 325 Euros each. By February 2014, Fairphone staff had produced and delivered 25,000 ‘fair’ smartphones to customers in 32 countries. As a social enterprise, Fairphone aims to profit from making a smart phone (enterprise), whilst assisting marginalised communities, and reducing the impact on the environment (social). Thus Fairphone aims to: (1) produce an aesthetically pleasing, mid-range competitively-priced smartphone; (2) produce phones in a manner that supported people in the supply chain, rather than exacerbating the conflict minerals associated with the mobile phone industry; 3) establish good, long lasting relationships and fair working conditions in East Asian factories, and 4) reduce electronic (e)-waste by designing and building phones in a modular format that are as easy to repair as possible. These goals are summarised in the illustration on Fairphone’s website, as shown below:

Source: https://www.fairphone.com/en/

The Fairphone 3 was set to release later this year (2019), but in May 2018, the company announced that the new model had been cancelled. Instead, there will be big improvements to the Fairphone 2, starting with improved outer casing and a new version of Android. The company has explicitly stated that this recent move is because they want their phones to last much longer than others.

The Fairphone 2, which the company markets as ‘“ethical, open and built to last’ is getting a remake.

Unlike companies such as Apple, Fairphone doesn’t actually want people upgrading to a new model. This is a pretty radical stance for a smartphone company. It’s odd, then, that the Fairphone isn’t a bigger deal right now, given that it occupies a wholly unique space within the market.

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While it’s certainly making a splash — the company’s CEO just won the Global Economy Prize 2018 — the company isn’t making any huge leaps in sales and cancelling a new release might harm it further, despite its reasons being very much in line with its unique voice in the tech market.

Fairphone uses eco-friendly and recycled products, and the company checks that the production of the phone is as free from exploitation as it can be on every step of the manufacturing chain. Factory workers are paid fairer wages and raw materials are mined using local companies that employ safer conditions and benefit the community. This doesn’t mean they’re perfect, though. Most companies source cobalt, an essential material for cell phone batteries, from the Democratic Republic of Congo, where it is mined by children. Fairphone is not exempt from this practice; it also sources its cobalt from mines in the DRC, but it uses small-scale mines where there can be transparency and some progress. On their blog, the company has stated that ‘actions to improve the mining sector are…urgent.’ This approach might seem like the bare minimum, but considering what is prevalent now, it’s a big deal. Apple, Sony and Blackberry manufacture their products at Foxconn factories in China, where working conditions have been called into question. Samsung Factories, also in China, have also been reported for poor working conditions.