The PhoneBoy Blog

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(Lack of) Smartphone Adoption is Not Just About Handset Price

From Lumia 601 Just 15 Quid a Month in UK:

Of course, Nokia and Microsoft are attacking the market at every level, from the very low (Lumia 610) to the top (Lumia 900 and 800). Low prices, however, are a weapon that they intend to use the world around. Essentially, Microsoft intends to take Windows Phone into markets where smartphone penetration is poor, due to local economic conditions.

Whenever I see bullshituninformed opinions like this on the web, I want to find a clue-by-four to beat the writer over the head for not fully understanding the dynamics.

Low handset price is only one part of the equation here. The other–the one that no one talks about, is the cost of the data plan required to operate the handset.

Every single one of these cheap phones fails to address this very key part of the total cost of ownership.Apple (to their credit) tried to address this with the iPhone by convincing AT&T to offer a reasonable unlimited data plan with the first versions of the iPhone.

Of course, operators are not interested in addressing that as they have a vested interest in you (the consumer) paying as much as you’re willing to tolerate for the privilege of using your new-fangled Smartphone on their purposefully underbuilt mobile networks.

Of course, I am approaching this as someone who lives in the US of A, who has something approaching reasonable mobile infrastructure that can provide high-speed data. There’s also a (relatively speaking) affluent customer base who can afford to pay top dollar for a smartphone and the data services that it requires.

In many other places in the world, people can’t afford high-end smartphones, nor and the operators support a massive build-out for a high-speed data network. There is a massive number of consumers in this situation–consumers many people in the US and other first-world countries don’t think too much about.

The other day on Twitter, I got on a tear about this very topic. It was picked up by the Mobility Blog in Nigeria: A first world smartphone for third world networks. The basic idea is very simple: smartphones need to be cheap to acquire, have excellent battery life, and provide “first world” like functionality using a fraction of the data that, say, an iPhone or an Android device uses.

The most promising phonse I’ve seen that meets these requirements is Nokia’s Asha line of devices, which was announced in October 2011 and further expanded in Feburary 2012. These might be nice adjuncts when I travel outside the US as they are “smarter” phones, have services that consumer lower amounts of data, and a not completely unreasonable price point. Meanwhile, my trusty Nokia N95 serves that need.

The first company that can design a truly compelling first-world quality smartphone that can operate in the constraints of a third-world network, they will win. Not on margin, but I have no doubt it they will eat into Apple’s profit margins based on sheer volume. Nokia was king of the hill for at least a decade based on lower-margin featurephones, so it’s quite possible.

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