Saturday, January 12, 2013

Smartphones in 2013 - The Unnoticed Third Front

There has been a lot of talk lately about an Apple "iPhone mini" and why such a phone is needed to capture the large market of feature phone users, who will eventually move to smartphones. As of October 2012, there are 6 billion mobile phone subscriptions worldwide. Of this number, a little over one billion of the mobiles phones are smartphones.


A lower cost Apple "iPhone mini" is supposed to held Apple gain access to the remaining almost 5 billion mobile phone subscribers on feature phones. These views don't seem to take account the fact of the emergence of third tier brands which will be the ones taking over this segment of the market, and even companies like  HTC, LG, Samsung, Sony will have a hard time competing for the remaining 5 billion customers.

These days a good low cost smartphone would be something like Cherry Mobiles Flare. The Flare is a low cost smartphone with a 4-inch WVGA display (480 x 800 pixels) and has a dual core processor on a Qualcomm S4 Play chip. Internal storage is a paltry 4 GB, but this is not a big issue since the phone has a MicroSD card slot. How much does this cost? Php3,990 inclusive of the 12% Value Added Tax. If you compare this price, with prices posted online, which still don't take into account local VAT, this is all of US$86. Some articles I read seem to think these low cost sub-US$100 smartphones are all old Gingerbread phones. The Flare is powered by Android 4.0.4, which is a reasonably current operating system.    

Going up to the US$135 to US$175 price point will give you a choice of phones with similar specifications from Cherry Mobile, Cloudfone, MyPhone and Starmobile and several other players with larger 4.3 to 5-inch phones, with qHD displays, even an option for a model with a 4160 mAh battery with the higher end eversions coming with more powerful MediaTek chipsets instead of the Qualcomm S4 play. These phones are also all dual SIM phones, which means having two phones in one.  There are only two things you don't get from these cheaper smartphones. Great camera's and LTE. 

The phones sold by Cherry Mobile, Cloudfone, MyPhone and Starmobile are ODM designs, which are sold by different names in different countries.

If Apple does comes out with an Apple iPhone mini, it will competing with Samsung, Sony, LG, HTC, Huawei, ZTE and Lenovo for the mid level market. Of these seven manufacturers, only ZTE has a competitive offering, the ZTE Grand X V970M at US$220. At least one reader has called me out on recommending that phone as a good value for money option,  and opined it is overpriced.

Many manufacturers can build a decent smartphones. The problem has always been what operating system to put on it. This allowed Nokia to dominate the way it for the better part of a decade. But it is a who new world.  Google released Android to the world, and so now anyone who can assemble decent hardware can come out with a competent smartphone. These companies are willing to operate on margins that would make larger companies balk.

The bulk of the five billion or so mobile subscribers still on feature phones will be moving to these low cost offerings.  An Apple "iPhone mini" will try to be taking back some sales of mid-level smartphones from Samsung, Sony, LG, HTC, Huawei, ZTE and Lenovo. The bulk of the five billion mobile phone subscriptions will be taken by two billion or so low cost, dual SIM ODM designs..

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