The Big Mobile Trend: Low Cost And Low Feature

Michael Hedges February 1, 2011 Follow on Twitter

Excitement about smartphones and tablets stirs the blood as much as it boggles the mind. Melding the money collecting prowess of telecoms, gizmo inventing genius of geeks with cases of energy drink and market brilliance fueled by venture capital is bringing new platforms to consumers who didn’t even know they needed them. Media content producers like new platforms, too, sometimes.

Smartphone sales continue to drive the mobile market says the International Data corporation (IDC) Worldwide Mobile Phone Tracker survey (January 27). But “lower-feature” device sales, particularly in emerging markets, show the changing dynamics of mobile media markets.

Nokia remains the world leader in mobile phone sales, though sales volume dropped in the winter quarter. Samsung and LG had second and third most Q4 sales volume, respectively, both on smartphone sales. Total 2010 sales of mobile devices rose to 1.39 billion units, up 18.5% in 2009, which wasn’t a particularly good year for those selling mobile devices.

Application-rich smartphones get the techie and high-end user attention. Tables are the next to come along. But it’s the low-end that’s making the biggest market impact as European and North American 3G device markets mature. Chinese vendor ZTE moved into 4th place. It sells the budget smartphone Blade, which is having an impact in Europe and North America but its big markets are Africa and Latin America.

Apple lapsed into 5th place in the quarterly report, though Q4 iPhone sales was a record. Apple sells best in Europe and North America where manufacturers and mobile telecoms push value-added products. That, inevitably, means applications. Clever devices are just hunks of junk until somebody finds the right content.

“Mobile phone users are eager to swap out older devices for ones that handle data as well as voice, which is driving growth and replacement cycles,” said IDC research analyst Kevin Restivo in the accompanying statement. “Feature phone users looking to do more with their devices will flock to smartphones in the years to come. This trend will help drive the smartphone sub-market to grow 43.7% year over year in 2011.”

Telecom operators, to be sure, see smartphones and tablets boosting ARPU – average revenue per user. Or so they hope. Typically, a consumer person needs one subscription for their smartphone and another for a tablet, like the iPad.

Those consumer people, however, have shown an upper limit to gizmo spending. Tablet sales in France, reports Les Echos (January 31), have been “modest,” less than 40,000 iPads sold last year. WiFi enabled tablets needing no subscription led Christmas tablet sales. SFR, Orange and Bouygues Telecom are reportedly preparing lower package pricing for multiple devices.

Noting the other part of the pricing dilemma, Orange France is offering an own-brand tablet manufactured by Chinese manufacturer Huawei Technologies for less than €200. Google and Huawei have cooperated on an Android OS smartphone priced under €100.

Low price devices “do not interest technophile customers,” said Orange Internet director Philippe Brun to Les Echos. “Some just want to connect in their second home. Others want to access their personal mail or Facebook in the office and may do so from a corporate network.”  Spain’s Telefonica is market testing an iPhone plus iPad plan.

The consumer behavior of techies and gizmo geeks certainly captures the attention of techies and gizmo geeks, once gently referred to as “early adopters.” We’re glad they buy up all this stuff because somebody needs to pay €1,000 for an iPad and a two year 3G subscription then rave about worldwide sales of 14 million units, far less than DAB radio sales over the last two years.

Applications for these are, for the media world, the important story. For most consumers tablets look and feel like smartphones but bigger. Some do more, some do less but all are little more than dumb laptops. Applications, so far, have followed the same trajectory as smartphone apps, which followed laptop applications only smaller. It’s games, games and games. Then there are Furious Birds.

News Corporation is set to finally launch this week (February 2) its iPad exclusive newspaper (?) The Daily. Two tablet and smartphone news aggregators – Flipboard and Pulse – are already up and running. The Daily will reportedly cost about €1 per week. It will “rise and fall on quality journalism,” said James Murdoch at the DLD conference in Munich (January 26).

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