Cheaper $100 or Less Smartphones on the Way?
Despite the growing number of smartphone users in the developed world feature phones are still the prevalent mobile device in emerging markets. But this trend could soon shift as smartphone prices go down to less than $100 within the next two years.
At a panel discussion in the Mobile World Congress in Barcelona Nielsen Digital talked about how growing demand for smartphones in the U.S. is already driving down prices. While most U.S. consumers are buying smartphones and tablets the rest of the world is still in the process of transitioning from basic phones to high-end feature phones. If mobile makers want to corral the emerging market there needs to be a push to drive prices even further down to make smartphones more accessible to consumers.
"If we're really going to move the tipping point, we have to drive down prices," said Rob Conway, chief international affairs officer for Vimpelcom. "The tipping point is about $100, sub-$100" for smartphones. That's the total cost of the phone, even without a contract."
Microsoft and Google both agree that price is a major factor for users adopting smartphones. Google's executive chairman Eric Schmidt said in a keynote speech at MWC that the cost of entry-level Android smartphones could drop to around $70 in the next two years.
"Next year's $100 phone is this year's $400 phone," Schmidt said. "Many people are working on phones in the $100 to $150 range. When you get to the $70 point you get to a huge new market... Smartphones will cost what feature phones cost now next year."
Nokia is also intending to introduce Windows Phone devices priced around $100. The Finnish company launched the Lumia 610 on Monday which is aimed at the entry-level smartphone market.
"The dynamics of the smartphone industry are clearly shifting to lower and lower price points and therefore a EUR189 Windows smartphone like the one we launched today is a very important step. But that's not the end of it and we do need to make sure we get down toward the $100 price point," Niklas Savander said in an interview with Wall Street Journal at MWC in Barcelona.
With a new generation of tech savvy consumers emerging in markets like China, India, the Middle East and Africa, device manufacturers, carriers and service providers will have to adapt to provide cheaper alternatives to high-end smartphones.