Computing Features are Trickling Down to So-Called Value Smartphones and Sales Are Expected to Reach 300 Million Units in 2012
The Nokia Lumia 900 smartphone running Windows Phone, a so-called value smartphone, is expected to be priced at $99.99 from AT&T. Photo courtesy of Nokia.(Flickr photo)
Design and feature-rich smartphones may be the sweet spot for innovation and profits, but the mobile phone industry is shifting to bring more affordable smartphones to market.
According to John Jackson, vice president of research at CCS Insights, "smartphones moving down the value chain" has been a reoccurring theme in the industry for years, but at the Mobile World Congress event last month this theme grew louder and more forceful. He said that Warren East, CEO of ARM, talked about taking smartphones down to the sub-$100 range, and Google Chairman Eric Schmidt talked about putting an Android in every pocket.
"It's a race to enable aspiring users just as it was a race to connect them in the first place with their first mobile phones," said Jackson.
There's "an opportunity to really put a truer, higher-fidelity computing experience into the hands of first-time users," said Jackson, who sees value smartphones getting quality cameras and video capabilities for creating and consuming content. "These features don't exist in robust fashion today," he added.
Jackson believes that although those who can bring quality, low-cost smartphones first and fastest will be well positioned, he warns that profit margins will get squeezed, potentially impeding success for smaller smartphone makers.
In the U.S., wireless carriers are selling into the value segment with new LTE, or so-called 4G-ready smartphones. Verizon Wireless is selling a LG Lucid smartphone for $79.99 after rebate and with a 2-year agreement. AT&T is poised to release the Nokia Lumia 900 running Windows Phone.
In addition to first-time smartphone buyers in the U.S., Jackson sees emerging markets presenting big sales opportunities for value-segment smartphones. "It's an order of magnitude big," he said.
"We're still at the beginning of seeing what it will take for the broader and perhaps more established ecosystem to enable those next billion smartphones," Jackson said.