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The $85 Smartphone and the imminent extinction of non-smartphones

In a recent article I made the claim:

My bet is that by the end of 2012, it will be hard to find any branded phones which won’t run a smartphone

I also showed how pricing has evolved over the last three years.

Two days later an article in Fortune’s Google24/7 blog highlighted the possible price points of low-end smartphones:

I had a chance to speak with Jim Tran, VP/GM – Handset Line of Business for Broadcom, who was able to elaborate on the details of the new processor and what it meant for the industry.  Here are some of Broadcom’s bullet points:

  • The BCM2157 baseband, since it combines many functions on one chip, is able to run more efficiently, meaning less battery power will be needed than on current basic handsets
  • Low-cost, low-power, 65 nm digital CMOS process means the silicon will be cheap
  • The dual-core processors will run at 500-800mhz.
  • Supports portable Wifi hotspot and Android 2.2 and up

But the kicker is the price.  Tran says that phones made from the BCM2157 chipset will retail for under $100 and may dip as low as $75.  Those devices should debut in just 3-6 months (and we might hear about them next month at CES)….

To be clear, That sub $100 price is not the cost of materials, it is the suggested retail price after the manufacturers (and carriers) have taken their profits.

via 2011 will be the year Android explodes – Google 24/7 – Fortune Tech.

My own data shows that the average selling price for the top eight phone vendors for Q3 of 2010 was $156. Smartphone-only vendors were charging $450 on average and diversified vendors selling both smart and non-smart phones were charging $144 on average.

Nokia’s ASP for its entire line-up was $88 (spread over about 84 million non-smart and 26.5 million smartphones).

What strikes me about the claim from Broadcom is that a $100 retail price for a smartphone implies an ASP of about $85 or so (assuming $15 or a very modest 18% channel mark-up).

That means that a smartphone could be built using this chip which would have nearly half the average price of all branded phones sold last quarter.

It would also be priced cheaper than the average price Nokia charged for all its phones (75% of which were non-smart phones.)

And this type of phone could be available not in three years in three months.

The chart above shows how prices could collapse.

Of course, low price is not the only condition for the widespread substitution of smart devices in vendor portfolios. But it does take away a significant objection. It no longer seems far-fetched to say that in another two years the price points for smartphones will be low enough to make them marketable in all markets. This may in fact be true next year.

I suspect that non-branded vendors will lead the way and make these devices widely available in emerging markets. The question will then be entirely up to the branded vendors whether they will follow or will they try to market dumb phones vs. smart phones at similar price points. Will buyers opt for a branded device with no ecosystem or unbranded device with the Android ecosystem?

It becomes harder to envision any reason why non-smart devices will earn positions in portfolios two years from now.

Note that I’m not suggesting that the market for high-end smartphones is threatened yet–there is still a lot of innovation that still needs to happen to shape that market into one of mobile computing (vs. mobile phoning).

Instead, what I am suggesting is that the bottom of the phone market is very vulnerable to becoming smart. This may sound like an odd sort of disruption, but it’s a very sinister threat to companies who are in the business of selling brands and not platforms.

  • http://twitter.com/dutchtender @dutchtender

    very bad for rimm and nokia. for example nokia needs all of their dump phone customers to next buy their cheap smart phones just to remain in place. not in this lifetime. rimm is in the worst sort of pickle. android is an obvious winner. apple of course assumes it's BMW/Porsche positioning and does just fine but becomes marginalize in terms of raw numbers. android is going to be everywhere.

    • r00tabega

      RIMM's situation would be manageable if they had made or at least promised some improvements in the coming year.
      With Lazardis's incomprehensible D interview, it's clear they're betting that the market doesn't make huge changes in the next year… a bet they will probably lose.

  • mikecane

    The phone is only half the equation. The other half is the monthly toll. Here's an ad being put all over NYC:

    The Photo Foretelling Apple’s Doom http://mikecanex.wordpress.com/2010/11/07/the-pho

    How does Apple battle that, especially if Verizon does tiers of service for iPhone 4?

  • Mat

    @mikecane

    Apple doesn't have to battle that. They are quite happy being the luxury consumer electronics manufacturer.

  • http://disruptivewireless.blogspot.com Dean Bubley

    I'm not so convinced about this. The bulk of the world's lower-end phones are sold unsubsidised, to prepaid customers, in markets like China and India. A large % of these are sub-$50 and used on networks that either don't support data, or by people who wouldn't pay extra for it. They certainly won't be buying apps. Many may also not have electricity at home, so want maximum battery life – hardly a smartphone strong point.

    • dchu220

      Who's buying Apps on Android? My sister's whole family got Galaxy S's and so far not one person has bought an app.

      Out here in Taiwan, I've already seen a couple Android phones that have a lot of the features removed so that they can hit really low price points. There aren't app stores available for these phones and not one person I've asked uses it to surf the Internet. Is it a smartphone? I don't know. But it's still considered an Android.

      Now I don't know what these new sub $100 phones will look like, but my point is that the manufacturers in Asia are figuring out how to do a lot of interesting things with it.

      • Narayanan

        Exactly. Since I haven't seen many Androids around where I live, your comment confirms what I've suspected for some time now.

        The disconnect between Android activation numbers and the slower rise in Android web market share suggests that either Android activations are a stretch or most Androids continue to be used for normal voice and text usage(or gather dust).

      • BenHill123

        google only counts those phones which have appstore available, there is no way for google to count those devices where appstore is not enabled. I rather trust a company like a Google which is liable to be prosecuted if they are deliberately misleading the market or general public than some wacko on some messageboard who cannot digest the success of Android.

      • dchu220

        Really Ben. Who knows what Google means when they use the term 'activations'. They are deliberately using a vague term to keep themselves from being liable.

        No one here is saying that Android isn't successful. It's probably the hottest OS in Asia right now.

      • Narayanan

        Ben, Have a look at the latest browser stats from
        http://www.netmarketshare.com/operating-system-ma

        It is clear that iOS is ramping up way faster than Android and we know that iOS was selling more than 250,000/day. Then Google releases the 300000/day activation numbers, but hey it is clear that the browsing trends do not reflect these many active devices. Hence my conclusion about them being in drawers or being dumbed down devices.

        On top of it, you say that 300000 number reflects only the official Appstore ones? Do you mean that there is a whole bunch of uncounted Androids out there?? Wow !! Some KoolAid ;-)

      • BenHill123

        tell me smartypants, how can google count all those nook colours, nook ebook readers, all those tablets(made by Archos and others), there are no carriers to report the numbers, nor do they have the market installed on them. So Google has no way to count them. There is no registering with a google account for these devices.

      • BenHill123

        by the way your stats show the percentage of growth for android is far higher than the one for iOS, to break it down for you .06 to .31 is more than 400 percent growth, but iOS has grown by 130 percent only.

      • dchu220

        Hey Ben. The key stat is the difference in growth in OS market share. Let's take October as an example since that was when Android activations and iPhone sales were similar.

        October:
        Android Activations per day – 200,000
        Android Browser Gain – .03%
        iPhone Sales per day 230,000
        iPhone Browser Gain – .08%

        The method of analysis does have some holes since we don't know the method by which the data was taken and there could be some use cases that explain the disparity, but the disparity is interesting.

      • BenHill123

        october iphone sales were not similar sorry, I guess you are talking about iOS activations. Steve Jobs mentioned iOS activations which include all three ipod touch, iphone, ipad.

        as per apple report for Q3, iphone sold 14 million, whereas android phones accounted for 20 million as per gartner, canalys,IDC.

        I agree Q3 iOS devices were more than android phones(20 million) due to ipod touch which comes to (14+4(Ipad)+10{? ipod touch)=28

        but it is not way higher as Narayanan smugly tells.

        20 million comes to around 214K per day and this is as per gartner report, if anything google was actually underreporting,

        now google is claiming 300K per day which comes to 28 million , if anything android phones have overtaken iphone sales and android phones alone are rapidly approaching/catching up with ipod touch+iphone+ipad.

      • dchu220

        Hey Ben. I think we're arguing different things. The question I'm interested in is:

        "Why does Android need to activate 20 million devices to gain +0.1% in OS browser share while iOS needs 28 million to gain +0.3%"

      • BenHill123

        how about installed base ? iOS devices has a bigger installed base and since they are designed to enabled great webbrowsing, so android will take a while to catchup

      • dchu220

        Install base shouldn't matter since we are measuring the change in OS Browser Share. The increase in Browser Share should be correlated with the number of new users on the platform.

        The web browsing experience shouldn't matter so much in theory since both iOS and Android use the same browsing engine, WebKit.

      • BenHill123

        ok i guess you dont know how netmarketshare measures analytics, they partner with websites and when a user visits them, they analyze the user-agent and figure out the OS, browser type etc, so a user has to visit one of the partnering website to get the details, so obviously the install base matters, since IPhone/ipod touch has been around from 2007 and selling well since that time, whereas android phones have been selling well only from nov 2009 onwards

      • dchu220

        I never knew Eric Schmidt had a reality distortion cloud of his own.

      • BenHill123

        eric schmidt is in any case not driving the company alone, it is the geeks Page and Brin who run it. Eric is just around pretty much as the public face of the company at worst and at best he just offers his opinion and advice to Page and Brin :)

      • BenHill123

        "What's more, Google says, its activation numbers may be understated because they only include phones that use Google services." in other words those that have market installed.

        Google has no way of knowing how many non-market android devices are out there in the wild.

        Read more: http://www.businessinsider.com/google-steve-jobs-

        Maybe you need to come out of the Apple bubble or reality distorting field and look at things objectively :D

      • dchu220

        So Narayanan is being less objective because he is trying to analyze data instead of relying on what a company says?

      • BenHill123

        ok what is the source of narayanan's claim that "It is clear that iOS is ramping up way faster than Android and we know that iOS was selling more than 250,000/day" cleary very very objective.
        So are you claiming google is fudging ?, so why suspect only google, why not suspect apple or microsoft or facebook, maybe all are fudging. Maybe facebook does not have 600 million users, maybe google does not make 30 billion dollar revenues, maybe they are cooking the books who knows. It is a vast conspiracy I tell you.

      • dchu220

        What I'm saying is that we don't know what Google means when they say "activations". Therefore, we can't make direct comparisons and we are forced to make educated guesses. Narayanan made an interesting observation.

        I don't think either of us ever said that Android wasn't a success. We only said that manufacturers may be using it to make low-end phones that have less features. That would explain the disparity between activations and OS browser growth.

        In Google's eyes, Android is definitely a success. The main reason they entered this space was a defensive move to keep themselves from being locked out by Microsoft.

      • BenHill123

        ok did you read the article, google states clearly

        "Well, now Google has responded, telling Fortune's Seth Weintraub that it doesn't include upgrades in its activation numbers, either"

        it is not upgrades, it is new customers.

      • dchu220

        I did read the article and it's has nothing to do with the conversation on this thread.

        I believe that Android is outselling iOS. I'm just asking why Android's Browser Share isn't going up as fast as iOS. I don't know why, but I think it's an interesting question.

      • BenHill123

        "What I'm saying is that we don't know what Google means when they say "activations"."

      • Narayanan

        Ben you may be interested in another interesting Gruber piece on Facebook app downloads on iOS vs. Android. Again the conclusion is inescapable. Read it for yourself.

        Lies, Damned Lies, and Statistics: http://df4.us/guh
        – Via Daring Fireball

      • BenHill123

        so you want to rely on a known apple acolyte who has lost all objectivity, Here is the list of google fans I recommed you read to get some opposite perspective
        louis gray
        fred wilson
        paul buchcheitt

        And also I recommed you read http://www.opera.com/smw/2010/11/, whichs mobile web is growing quite fast, maybe most people on android are using facebook using browser who knows, certainly Gruber does not know

      • dchu220

        There's no point. Ben doesn't listen to reason or mathematics. He thinks he wins arguments when he's the last person to comment.

      • BenHill123

        thanks for the certificate :)

      • BenHill123

        hey are you an Apple shareholder(I can understand in that case your hostility/disdain/doubts regarding android activations) ? I am neither Apple nor Google shareholder, so I really enjoy this fight between Google and Apple and if Google really facilitates the ultra commodization of smartphones via broadcom and other partners, then I guess it is a good thing overall for the world. It is going to be pretty amazing just thinking there are going to be billions of smartphones with a webbrowser, it is going to sorta transform the world and just possibly for the first time, people anywhere in the world with a smartphone are going to have similar sort of economic/social opportunities right in their hands, no more buying expensive PCs/Mac/laptop/notebooks to connect to the web, just 50 dollars would do(I hope). If microsoft/Facebook facilitates that instead of google, I would defend/support Microsoft/Facebook too. Google's business model actually aligns with this in a rare sort of way, their business model demands that hardware devices be cheap, software be free either supported by ads or by SaaS model, so that more people use google all the time and to facilitate that they want everybody to have a smartphone, they want to drive down prices to the ground. Except for possibly Apple shareholders, this has to be good thing for everybody even Apple consumers.

      • dchu220

        I'm not an Apple or Google shareholder. I'm not anti-Android. I think Android is a great platform. What I'm interested in is the strategy each company takes and how it relates to the theory of disruptive innovation.

        I haven't said anything disparaging about Android, only that Google's reporting of activations is very fuzzy. It's an important fact because if a large number of users are using their Android phones as if they are 'feature phones', then they should be categorized as "non-consumers". It changes all the metrics that we use to measure the success of the two platforms.

        Honestly Ben, I'm glad that you are idealistic about the future but in the real world you can't cram things to fit the mental models in your head. Hardware doesn't magically become cheap. (Ask One Laptop Per Child). Not every business can be Ad-supported. (Ask any newspaper). Sometimes you have to separate PR from reality. (Remember when mortgage derivatives were considered risk-free?) Software doesn't all want to be in the cloud (Look at the sales numbers for the App Store).

        I wish everyone in the world could get a great smart phone for $50 non-subsidized. I also wish that everyone found happiness, never went hungry and had beautiful children. Unfortunately the world doesn't work that way.

        Capitalism is a horrible system, but it's better than the alternatives out there.

      • BenHill123

        oh I know all of that, but possibly for the first time ever, we have a Strongly motivated and cash reserve holding company that actually benefits a lot monetarily if they push for cheap smartphones, for free-flowing information, for almost every person to get hold of a smartphone, a company which benefits a lot if web moves forward, a web theoretically not in control of anybody, if standards move forward. That is what I like, nothing to do with idealism. Apple's motivations are restricted to selling pricy hardware, microsoft's is restricted to selling software license. But Google only makes money if people are searching, are on the web, entire web acts as a giant advertising medium in the eyes of google and so they will do eveyrthing in their power to improve the internet, after all it is in their best interest monetarily.

        One laptop per child might have succeeded, but the cost was too high, it never came below 185 dollar. It was being sold at a loss, somebody had to bankroll it, I guess.

        software will move to the cloud, the old legacy companies under the control of the scared IT departments afraid of losing their jobs, afraid of change, will continue to use on-premise sofware thinking falsely that it brings in security, more privacy, after all mainframes are still around, but the younger companies weaned on google, facebook, the web will appreciate moving software to the cloud

        Newspapers failed to adapt to the internet era and in any case, newspapers were the last generation middlemen, this generation middlemen is google, apple and facebook and so if power changes hand, obviously there is some churn ha ha.

        and why is a 85 dollar smartphone of IPhone 3g standards in 2011 not possible, I guess it is possible or that is what broadcom believes.

        the 85 dollar smartphone is the real OLPC and this time it will be supported by google and all of its partners who want to make and will make money, unlike the charity oriented OLPC.

      • dchu220

        You seem to think of Google as if it were a non-profit. They are a great company, but a non-profit they are not.

        You seem to treat broadband as if it were as ubiquitous as electricity. It may one day become that way, but not in the next 10 years. There are still major infrastructure issues at hand. More likely we will be moving to a partial cloud model where software computes on the cloud and locally depending on what is more efficient.

        Newspapers will adapt with more of them moving behind pay walls.

        I'm not saying an 85 dollar smartphone of iPhone 3G standards isn't possible, but I'm not going to go out on limb for it until I see it. It's just like OLPC, people get caught up in the hype of possibilities without really understanding what it takes to make a phone at that price point. Even if they can make a cheap chip, it doesn't mean they can make a good phone. A product is the sum of it's parts, not just the chip.

        Seriously Ben. You don't know what you are talking about. There are a lot of technical reasons why the world is the way it is.

      • BenHill123

        OLPC was structured as a charity, 85 dollar smartphone business model is structured as for-profit business model. That is capitalism at work for you.

        And no moving newspapers behind pay-walls is not going to save them. newspapers were the consumer middlemen for the last generation, people read newspaper the first thing in the morning, they got to know what was happening in the neighbourhood, in the city, in the country, in the world. And because they had the eye-balls of nearly everybody, they charged massively for the ads. The ads subsidized everything, including the journalists who write all those world-class articles. Newspapers are dead, the payment towards newspaper was little more than a pittance compared to the super massive ad-money, the world will not move back to the pre-web era.

        That model is dead, it is gone. Sure we like to read world-class journalistic articles, but newspaper is no longer the interface to the world for majority of the people, it is google, facebook, twitter, groupon etc and the general web.

        Yeah if US does not make broadband ubiquitous, others will do like South Korea which already has ubiquitous broadband and twice the US average speed, more frighteningly, China might improve its broadband and speed up internet, and move more rapidly to the cloud, saving huge amounts of money, money which will put into R&D further, US has no choice, but to improve. The world is innovating, Indian telecom companies are charging the lowest charge in the whole world and making reasonable profits. India has simply moved to wireless, skipping the entire wireline generation.

        Partial cloud model you mean the oxymoron hybrid model with the virtualization thrown in to give the flavour of cloud, so that the traditional dinosaurian IT companies like oracle , IBM etc continue to loot the consumers.

      • dchu220

        Ben. Have you ever run a business? Once you have, you will realize that most news is a bunch of smoke and mirrors. When you have dealt with vendors that promise you the world but fail to deliver, it changes the way you look at things.

        You might not like IBM, Oracle and Apple, but they exist because they provide real value for 'their' customers. You may never be one of them, but if you ran a 30 Billion dollar company, you are not going to risk your business to save some money on the cloud.

        I used to think I was smarter than a lot of companies. I used to jump on a lot of the tech hype. It wasn't until I was baptized by watching my first company go under that I realized how little I knew. I also realized the value of good data. That's why I don't take anybody's word for face value unless I can see objective data that backs it up.

        It's easy to be brave when you have nothing on the line.

      • BenHill123

        I like Apple who said I didn't, Apple is one of the few big companies apart from google that cares deeply about consumers , but all i think is that their business model is shackled by their desire to sell only pricey hardware, pricey hardware has not brought about revolution. If you look at it the greatest impact technology has made in the last 50 years, it has been through 'green revolution'(Norman Borlaugh) in the 1960s, that changed things dramatically for a number of countries, it pushed up world growth, it brought so many people out of poverty, this 85 dollar smartphone has the potential to do same thing(or I hope anyway)

        You might think Apple has disrupted telcos, but they have not really disrupted enough, people are still paying 100 dollars per month to acquire an IPhone, why is AT&T and Verizon not offering simpler plans, buy phone outright and get everything data, voice for only 50 dollars a month, why is AT&T and Verizon not offering premier android phones/IPhone on prepaid basis, carriers are still too strong.

        Who said I have nothing on the line, I work in Oracle ha ha

      • dchu220

        Here is the great thing about America. If you price a product too high, people won't buy it. Look at cable TV. People are beginning to 'cut the cable' because they don't see the value of paying $70 for 7 channels they actually watch.

        Same thing goes for data plans and phones.

        If you are really interested in how revolutions are started, I suggest you take a look at the theory of disruptive innovation. That's the central topic of this blog.

      • BenHill123

        all I am saying is just one point

        google has a lot more motivation than Apple to disrupt everything from telecommunications to search to ecommerce to cloud to developing countries(accelerate broadband, internet usage through cheaper smartphones etc) than Apple ever will have. Which is a good thing for consumers. That is the only way they are going to grow to satisfy their shareholders who want the next engine of growth apart from search.
        I think we are now beating around the bush repeating the same points :D

      • BenHill123

        anyhow it is not "Google recently announced that they’re up to 300,000 Android activations per day"

        It is more than that as per Andy Rubin
        "There are over 300,000 Android phones activated each day." http://twitter.com/arubin

        big difference between 'upto' and 'over' :)

        as I said you need to get some non-Applified resources

        Fred Wilson I guess is a good VC who has been advocating that devs should develop for android phones first, then for iOS and he is advising his clients so.
        http://www.avc.com/a_vc/2010/12/the-smartphone-ex

        Actually I think 300K per day is less, it should be around 500K per day at year-end(I hope)

  • http://twitter.com/UVStaska @UVStaska

    The question is – how much truth/vs PR spin there is in those Broadcom statements, which seems to be the sole basis for Fortune article. We now have Qualcomm/Samsung/TI making ARM chipsets for $300-600 smartphones -90% of the market. And here comes Broadcom with a chipset almost good enough for a $85 smartphones. Even before Mediatek got around making one…I'm not saying that price reduction won't happen. I'm just finding it hard to believe that it can happen next year.

  • http://twitter.com/aegisdesign @aegisdesign

    Spec for the chip is at http://www.broadcom.com/products/Cellular/3G-Base

    It's based on an ARM 11 core running at 500Mhz, no GPU, 5mp camera, old HSDPA spec, 320×480 max screen size. ie. it's about as powerful as a Nokia 5230 from 2 years ago but with a lower resolution screen. Snore…

    • Rick

      I think you forgot the part where it's a DUAL CORE running at 500 mhz each……The lack of GPU does suck though.

      • http://twitter.com/aegisdesign @aegisdesign

        It remains to be seen how well written Android is for multi-core CPUs and how well the apps have been written to take advantage of multiple threads. However, in this case the second core is being used to run the baseband stack instead of a discrete piece of silicon. That's why it's so cheap.

        The current low end ZTE Racer and Blade are 600Mhz single core btw and they generally suck at being smartphones.

    • asymco

      So is your point that this spec is not better than dumb phones in the same price range?

      • m4rkus

        I guess the hw like displays, cameras, covers etc could be worse than in similarly priced feature phones as more money goes into raw CPU power and memory required for multitasking. So, looking at a decent GM% the devices would likely need to have something like Samsung Champ mechanics. I guess in those pricepoints it's down to the Android appeal over decent HW.

        On the other hand looking at Huawei and ZTE pricing it looks like not everyone is in the hw game to make money on the short term…

      • http://twitter.com/aegisdesign @aegisdesign

        No, I'm saying it's not better than a platform Nokia have already ditched which they were using in smartphones costing $100 PAYG. Symbian was passable on those. Android on 500Mhz ARM11 is going to be very stinky particularly if people are expecting Android 2.2+ features.

        This Broadcom package is a little bit better than the ZTE Blade and that's just awful.

    • Steven Noyes

      My concern as well. This will accelerate Android's fragmentation since this new chip will force new phones to ship with 1+ year old versions of Android. Both Gingerbread and Honeycomb put 1 Ghz minimum specs on the CPU and no GPU? How many people will buy one of these new phones hoping to run Angry Birds and then blame Android when none of the cool new stuff (like games) works?

    • BenHill123

      nokia 5230 seems to be resistive touch screen along with stylus, this seems to be capacitive screen

      • http://twitter.com/aegisdesign @aegisdesign

        I'm not sure how you can work out resistive v capacitive from just the chipset specs but at under $100 it's more than likely it's resistive like the ZTE Racer and Blade. A capacitive screen is more expensive.

      • BenHill123

        "Built-in support for HVGA displays, multi-touch screens, 5 megapixel digital cameras, 3G dual SIM/dual standby, and other key smartphone capabilities."

        multi-touch HVGA display/screens seem to indicate support for capacitive screens, also nokia 5230 had 2MP camera, this supports 5MP

      • http://twitter.com/aegisdesign @aegisdesign

        5230 platform was also used in the 5800 and N97 which all had various camera spec levels.

        I would still bet against a capacitive screen. I've yet to see one on a phone under $200.

    • BenHill123

      A quick wikipedia/google/bing study shows the specs are pretty similar to IPhone 3G

      • r00tabega

        Your post is incorrect. The iPhone 3G has a rather nice GPU. This one does not.
        This makes a huge difference for all the UI glitz and multimedia.

      • BenHill123

        but this one has a dual core which is better than the processor in iPhone 3G

      • http://twitter.com/aegisdesign @aegisdesign

        As a CPU in isolation, yes, it'll be maybe 25% better which is about average for the performance increase you get from adding a second core to a design.

        It's not in isolation though. The iPhone had a PowerVR GPU, separate signal processors for handling data and baseband radio comms and more.

      • BenHill123

        ok I am no chip designer geek :), but when my wintel computer changed from single core to dual core processor back in 2007, performance improved drastically.

      • planecrash

        That was certainly not Windows – it was the design of the original core chips over the prior Pentium chips. At slower speeds, they achieved drastically faster performance. Even the core solo outperformed the prior generation. XP certainly did a poor job of supporting multiple cores, and certainly not applications for Windows. It is only recently that applications for Windows have been taking advantage of multiple cores. And with XP, it only supported dual cores or hyperthreading, not multiple CPUs (unless you had XP Pro) which is why at the time almost no apps supported multiple cores/CPUs.
        However, I imagine Android was engineered with dual cores in mind. I sure hope so. Would be pretty back thinking if it were not.

      • http://twitter.com/aegisdesign @aegisdesign

        I'm not sure. Android is a Java Virtual Machine running on top of a Linux core. The Linux core should be fine with multiple cores but that means nothing unless the Java VM is designed to run multi-core. Google are using their own JVM remember, hence the big argument with Oracle.

      • Sandeep

        android VM is far better than the crappy JVM for mobile, basically you need to compile the bytecode into dalvik compatible code,now because Dalvik is a register based architecture, it is much faster than J2ME, although instructions tends to be bit larger since the data has to be pushed into the registers.

      • http://twitter.com/aegisdesign @aegisdesign

        I imagine that if you switched one of those cores off in the new computer it'd still run rings around your previous computer. Intel made a big leap in 2007 going from Pentium 4 to Core.

        But still, a lot of people seem to think a dual core CPU doubles performance when it's far from the truth. I once worked on a computer with 1024 CPU cores. It was terrible unless you split your task up into 1024 units of work that each CPU could do. It's the same problem with multi-core computers today. Ask any MacPro user. You can have 8 fast CPU cores in your computer yet iTunes still only uses 1 of them to convert music so your $5K computer is as fast as a $1K Macbook at some tasks.

  • Rob Scott

    @aegisdesign – great point.

    The cheapest Android handset for Q1 2011 is $150.00, I haven't seen anything cheaper than that.
    +50% of dumb phones are below $50.00 (more like $20)
    And to @aegisdesign point, how is Android 3.x going to run on these things (apparently it can run 2.2.)? Are we going to have Android Starter like in PCs? I am interested in how Google will pull this off.
    I expect Apple to introduce a wider range but nothing below 1GHz and 256MB of RAM and 8GB of storage with Retina display – a $250 – $300 price range.
    Nokia will be the biggest loser as they currently dominate this price range. Samsung and Sony should be the biggest winners. I would expect RIM's 8520 to be wiped out.
    If this $85.00 is really possible I will know by Feb.

    • dms

      Why would Samsung and Sony be the biggest winners here? I would think the branded Android hardware makers would be the hardest hit, since their margins will be squeezed big time if the price bottoms out.

      • Rob Scott

        I meant in terms of volumes (and revenue), maybe not so much in terms of profits.

      • Rick

        They will make a ton of money before they'll be worried about that.

      • asymco

        Any company that relies on a brand to sell voice products is in deep trouble. Someone pointed out that Virgin is using the Android brand to sell service.

    • asymco

      And the 50% of dumb phones that are over $50 are not threatened by low end, low spec smartphones at the same price? This is not about the trajectory of Android or of iPhone. It's about how unsustainable the voice business has become.

      • Rob Scott

        Wow, the voice claim is a huge one. No Horace voice is not threatened at least not in this part of the world. Our data business is growing like never before thanks to the iPhone and to an extent BlackBerry through BIS/BES. But voice is still like 80% of our revenues and is growing. We are heavily a prepaid business, and operates in 21 countries with more than 100 million subscribers, voice is still and looking forward will still be a growing healthy business. Data is growing fast but not at the expense of voice. 40% of the phones in the more developed countries we operate in are smartphones but guess what – they are used primarily as voice devices, even the iPhone. So no, $85 smartphones will not destroy voice, but will help us get our subscribers to use data as well. Having said all of that I haven't seen these sub $100 devices, but should see one or two by mid Jan beginning Feb.

  • Rob Scott

    Posted this on Quora: Why might Android fail to live to Google's assumptions of it's being Windows of our mobile future?

    • BenHill123

      google assuming android to become windows like ? what are you smoking ? google hates windows, they have even moved away from window based systems in their offices to mac and linux based systems.

      • Rob Scott

        Android vs. iOS is often compared to Windows vs. Mac OS. The take is usually that Android will do to iOS what Windows did to Mac OS hence Android being like Windows. Google sees Android playing Windows in the new mobile OS wars. I hope you get that.

      • BenHill123

        you said 'google's assumptions', I don't care about what industry/business/tech 'experts' believe android to be, that is their prerogative. But Google does not believe android v/s iOS is like windows OS v/s Mac OS. Android is open and free, significant and huge difference from windows. Their business model is totally different from Microsoft.

      • BenHill123

        Eric Schmidt has said on many occasions that there is room for more than 2 smartphone platforms, since the market is so huge.

      • Rob Scott

        You seem worked out about this.

        A Google executive has said before that they do not see a point for a competing OS like WP7 for an example and Andy Rubin suggested recently that everyone should adopt Android. Those are windows like ambitions as far as I am concerned.

        My Quora question was edited I noticed that after posting it here. This was my original question:

        Why Android will fail to live up to the arrogant assumptions of being Windows of our mobile future?

      • BenHill123

        ok cool, google hates one thing and that is Microsoft. So why would google themselves compare android to windows. And I am not sure what Andy Rubin was suggesting in that interview, maybe he was hinting that Nokia should adopt android? Google loves Nokia ;)

      • Steven Noyes

        This is exactly the ambition that Google has for Android. Even Rubin has questioned why any company would use anything but Android. This is a very Windows like mindset with the idea that there should be a single OS in mobile and he question the logic of any OS rather than Android. This is a very Windowsish mindset if you ask me.

      • BenHill123

        http://www.phonearena.com/news/Andy-Rubin-lavishe….

        And google hates microsoft, the feeling is mutual I know.

      • Steven Noyes

        Just because Google does not "like" Windows, does not mean they do not want, within the mobile space, the market control that Windows enjoyed on the desktop.
        http://www.osnews.com/story/23889/Rubin_The_World

        My biggest issue with Android is that it is stil a geek OS and I was hoping for lots more out of Google than what they are delivering. They seem very centered on rushing spec sheet check marks of features and not implementation of the features they have. Cut/Copy/Paste is a perfect example. They have it but the implementation is rather poor. Moving media on and off devices is another. Geeks love a "file system" concept. End users just want to move media on and off.

        In the end, I think this will hurt the platform and their partners while eroding away future profit and growth for developers.

      • BenHill123

        google has had less time to develop, they were probably going after blackberry model first and they had to change direction quickly, if they had waited like windows phone 7, would have been game over for google literally. owning the platform and having a good starting base of consumers allows them to do push the apps concept and push the mobile web as well and let the users decide. And by the way Andy Rubin acknowledges the issues with android, but fast iteration has its place, I am sure gingerbread is far far better than 1.5.

        And the article only reinforces that Andy Rubin dislikes windows. Here are some more http://www.webhostingchoice.com/news/2010/10/wind

        google enjoying windows like monopoly will only bring ever greater anti-trust scrutiny, it is rumoured that this is what scared off groupon for instance, why would google aim for 90 % marketshare ?

    • Alan

      Four potential reasons: 1) Carriers wield a lot of power and reap a lot of money from their data networks (far more than handset makers) and may not want to be beholden to Google. 2) Proliferation of software – there are enough titles and no real killer apps that are Android only so the lock-in is not strong, and 3) the buying cycle has been much faster than PCs at around 2 years leaving room for agile players to make rapid gains (including Android of course) and 4) smartphones are not yet commoditized – there is a lot of value placed on innovations rather than price at this point.

  • mortjac

    In other word, when all mobiles are smartphones, we can just drop the silly word and call the just mobiles.
    What a relief!

    • timnash

      By the time that happens we'll be able to call them all phones.

    • 123

      then what will we call the phones that will beat bigblue and cray comps at chess?

  • http://aardling.com/ Stijn

    I disagree. The non-smartphone will not be replaced. Both types will continue to exist side by side for many years to come. A lot of people around the world still won't be able to afford a high-priced piece of technology.

    • Pieter

      I do think the non-smartphone will be replaced.
      However, a lot of users will use it in a 'dumb-phone' way (At least at first), so no data connection and no adding of applications.
      (If the selling price is indeed $85, no subsidy due to a data subscription is needed)

      I think that for the average 'dumb-phone' user, the OS is not important, they just buy a pretty, not too expensive phone.
      They don't care if it is Nokia S40 or LG's low end OS or Samsung's low end OS or …

      Having a 'smart-phone' will allow the phone builder to have a nice, fresh looking OS with several features, without the phone builder having to write and support that OS itself.
      If the OS can also be used in the more expensive series (e.g. Android), the support for the OS will be 'free' while having a unified product strategy.
      So no Nokia S40/S60/S60v5/Meamo problems, but more of a 'HTC Sense on all phones' strategy…

    • asymco

      Similar sentiments were expressed when mobile phones emerged. They were luxury items once. And anyway this article is about low priced pieces of technology.

  • m4rkus

    I guess there is a lot of Broadcomm PR here. If you take the CPU out of the equation for a while and think what you can currently get for 100usd (before taxes and subsidies). You get a (w)qvga 2.8 inch 2mpix device that’s likely 2g and has either gps or wlan with resistive touch. This gives us a hw baseline.The devices on the Broadcomm chipset might have a dual core engine, but the other hw is actually pretty lame. And especially the small screen would be an Issue. I think a 3.2 inch capacitive screen used by e.g. RIM cost something like 35USD according to a teardown.

    Even if the Broadcomm chipset would be like a ridiculously cheap 400bhp sports car engine, the resulting car would more resemble a Geo Metro than a Dodge Viper.

    • BenHill123

      And you work for Qualcomm or Nvidia or ? just joking :)

      • m4rkus

        My point was that even if something like Snapdragon would be free, the 85USD smartphone would not be that amazing as the CPU is no longer the most expensive component of the device. Displays and memories are really expensive. If the Viper uses carbon fiber and ceramics, the Metro Geo uses glass fibre and cardboard. Changing the engine only gets you so far.

      • asymco

        To be sure, these would be Geo/Yugo/Trabant (name your derogatory car brand) kind of phones. But, to stretch the analogy, as smartphones, they will be competing with mopeds. Think of these as the Tata Nano vs. two or three wheeled open vehicles.

      • http://twitter.com/m4rkusr @m4rkusr

        You get a hell of a motorcycle for the price of a "Geo". Similarly you might get a bigger screen, a better camera and maybe a metal body on feature phone compared to a barely working plastic fantastic smartphone. There is a BOM tradeoff in making smartphones.

      • guest

        Dacia

    • http://twitter.com/aegisdesign @aegisdesign

      I made the point earlier that the Broadcom chipset was roughly Nokia 5230 territory. It's essentially the same hardware platform they used in the 5800 and N97 for the last few years, which they're replacing gradually. For reference, those use an ARM11 434Mhz CPU with 640×360 resistive screen and include 3G and GPS. A 5230 sells for around £50 here in the UK inc tax PAYG.

      • m4rkus

        Many of the UK PAYG devices seem to be still SIM locked and carry a subsidy. Not as big as with a contract but still. The 99GBP TMO Pulse was a good example. As for the 5230 comparison, I guess the big difference would come from single vs dual core.

  • MattF

    It's worth noting that "supports Android 2.2" could cover a multitude of sins.

    It's also important to remember that for computers 'more integrated and cheaper' generally means 'harder to use'. I expect that people will have to learn this lesson all over again for smartphones: that computers (and now, smartphones) are different from, e.g., cameras– a more expensive and 'fancier' smartphone will generally be simpler from the user's standpoint than a cheaper one.

    • BenHill123

      tell that to millions in India, China and I suspect many in US where every 50 dollar is a material addition to the final price. 85 dollars for a smartphone of iphone 3gs kind of specs in Q1/Q2 2001 would be phenomenally good.

      • http://twitter.com/aegisdesign @aegisdesign

        It's nowhere near iPhone 1 spec never mind iPhone 3GS.

      • BenHill123

        ok i meant iphone 3g

      • http://twitter.com/aegisdesign @aegisdesign

        ok, It's nowhere near that either. :)

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  • Jim

    Some of us are sick and tired of paying outrageous data rates.
    A cell phone without any smarts will continue to exist as long as carriers insist on gouging customers.

    • asymco

      Do you think carriers are colluding on gouging? If not then why doesn't one carrier choose to offer better service at lower prices and gain the customers from those who gouge? Perhaps carriers are just charging what the market will bear and will lower pricing when the high end is saturated.

      • BenHill123

        I hope t-mobile and the smaller US carriers like US cellular offer innovative pricing and concentrate on improving their networks and leave the devices to OEMs, Apple etc, because that is the only way for them to grow via disruption. Big carriers like verizon and AT&T have no incentive to improve customer services and stop gouging. Because their is nobody to replace them or so they believe. Verizon and AT&T are pretty much money printing machines and extremely anti-consumer. If verizon and AT&T are not forced to change their stupid behaviour either via competition or severe regulation, then one can say US has turned away from idealistic capitalism which allows creative destruction and become like any other country scared of change. I would hate that.

  • Davel

    As it has been pointed out above hardware competition will seek to dilute the 'Android Brand'. There wil be more than one OS floating out there as well as more than one basic hardware spec. As vendors release cheaper android phones to beat there competition the consumer will start to get confused. This dilutes the Android brand and will be a problem for Google.

    This may force them to have their branded phones in the market which will piss off their clients. Having branded phones will cause them issues as Google is not really a consumer company and they are bound to have missteps like the first phone where customers could not find someone to help them.

    This is good for Apple as they have a clear vision of who they are. Apple just needs to continue to have multiple carriers in each market so the consumer has a choice.

    • dchu220

      I think the definition of smart phone has already confused customers.

    • BenHill123

      yep Apple is a glorified gadget maker.

  • http://twitter.com/garybauer @garybauer

    $100 chips do not equal $85 handsets! Processors are connected to batteries, displays, cases, radios, etc. They are assembled, boxed up and shipped. The sales and marketing people do their jobs and eventually a comsumer buys the product. The 'help desk' needs to be trained and staffed to ensure that the customer experience builds loyalty.

    Not unexpectedly, this raises the price beyond $100.

    In fact the equation Cost Of Materials * pi = selling price is a good approximation for new products. So a $100 processor + $20 worth of everything else (unreasonably low) yields a sellign price of $360 BEFORE the telcos get involved.

    • Pieter

      I agree with the statement about cost of parts vs sold product, but the second quoted part in the article specifically talks about sub-$100 at retail.
      Twice.

    • asymco

      The $100 is not for the chips but the estimated complete product price at retail. I assumed from that $85 is the ASP that the vendor charges. That's the basis of comparison for the ASPs for other products currently in the market.

      • http://twitter.com/jpgrosen @jpgrosen

        Assuming Cost Of Materials * pi = ASP is correct. The $85 ASP leaves just $30 for the hardware.
        What kind of phones are they going to build for $30?

        Even if the processor/baseband/chipset is free you still need at least Memory/Display/Touchscreen/Camera/Battery/MicroSD. Which in the case of the Nexus One cost $85 in hardware alone.
        http://www.isuppli.com/Teardowns/News/Pages/Googl

  • http://twitter.com/relentlessFocus @relentlessFocus

    I think some people overestimate the "cheapness" value that Android carries as an OS. There aren't too many licensed OS's anymore with Symbian on the way out and Windows Phone 7 being the newest. I've read estimates that the licensing fee on WP7 is between $7-11 per handset, initially Microsoft may be cutting deals to make this even cheaper (and lets not forget that Android is still involved in many significant patent infringement cases which may wind up costing hardware makers a licensing fee; HTC already pays Microsoft a per handset fee for Android patent infringements). My point being that "cheap" smartphones aren't amazingly cheaper just because they're using Android, it's because they're using cheap hardware. Apple never sells anything that uses cheap and Apple doesn't have to pay to use iOS either. So the difference between these ultra-cheaps and Apple's future market is one of strategy.

    Here in the UK folks can shop at really inexpensive food stores like ASDA, Iceland, Lidl, Tesco, etc or they can shop at high end food markets like Waitrose, M&S, etc. The goal for any company is to position yourself in a market and to add unique value against your competitors. In the PC market Apple features its ease of use, stylish design and platform tools like iTunes, MobileMe, Bonjour, iWork, iLife, etc to add value and justify a higher unit cost to a consumer. Apple has a very solid and growing business in the PC market. Macs are never the cheapest options but they are an amazingly popular option showing that you don't have to grovel with the bottom feeders to make a buck or 2 billion.

    I believe that Apple will continue this approach with iOS devices but here they have one fantastic competitive advantage, they buy component parts in such large numbers that they get excellent prices. Rest assured that on any given component Apple gets great prices because of the number of component units they buy for their one iPhone offering. While most of the so called IT press focus on the Android vs iOS war, the real war is fought among hardware makers of which Apple is one.

    When the marginal profit on a phone is measured in a few dollars rather than in several tens or even hundreds of dollars, the pressure on low end phone makers are enormous. They have a short window in which to sell large numbers of phones before the next cheap hardware revision obsoletes their current product. Conversely the manufacturer involved wants to maximise profits by keeping the model live as long as possible. Conundrum. Android 3 will see Android move to roughly the same iteration schedule as iOS putting yet more emphasis on the hardware game.

    This scenario is a familiar one. There is always a market for dirt cheap devices whether screw drivers at your local hardware shop or smartphones. And there is always a market for luxury goods whether screw drivers or posh autos or smartphones. The key to mass selling of luxury goods is adding perceived value. One can argue that the growth of a cheap and cheerful market of smartphone actually helps create a robust market for differentiated high end smartphones. After using their sluggish processors with low flash memory or rotten screens which don't react well or don't have high resolution or they have weak antennas or crap audio circuitry and other money saving hardware scrimps, a luxury phone with added value will be aspirational for many. And it's got to be harder to differentiate a luxury Android device from a cheap and cheerful one when the OS is the same.

    I think Apple will continue to discount its former version phone to be competitive at the upper end of the cheap and cheerful market and will continue to dominate in the luxury end of the smartphone market by dint of adding unique customer value through a combination of design, highly engineered hardware, easy to use software and special features like iTunes, MobileMe, find my phone, iWork apps on iOS, iLife apps on iOS and a host of things we haven't thought about yet but which Apple is working on in those secret labs in Cupertino.

    • BenHill123

      Samsung has pretty much the same advantages when it comes to hardware components and in fact they manufacture many of them themselves. Rotten Screens, flash memory or low resolution maybe are sore points when you compare to IPhone 4, but for a guy coming in from a feature phone does not matter much.
      And of all those special features you mentioned, only itunes is a certified hit, rest are just so-so.

      • http://twitter.com/relentlessFocus @relentlessFocus

        Samsung's phone division doesn't get to buy Samsung semi-conductor parts for discounts, they are essentially 2 different businesses.

        A guy or gal buying their first smartphone after using a feature phone may well buy one of these ultra-cheaps. Many will stay with them and be quite happy. But its clear that large numbers of middle class people prefer to move on from ultra-cheap anythings and the more so when its a device that one uses frequently. It's in this area where the real profits are to be made and its here where Apple excels. In the laptop market Apple sells a small overall percentage of laptops but in the over $1k price range Apple sells 90+% of all laptops. That's the model.

    • BenHill123

      so people wanting more affordable phones are bottom feeders, hmm so elitist.

      • http://twitter.com/relentlessFocus @relentlessFocus

        Sorry you're so rocked by my use of a common industry term to describe the problems faced by hardware makers battling it out at the ultra cheap end of IT hardware . It's indicative I guess that you move on to name calling rather than dealing with the argument about market segmentation. Ho hum…

  • Ajay

    Here is India, a local phone manufacturer plans to introduce a smartphone at around $125. He is not even one of the bigger local players. So expect this price point to be beaten by others soon. Resistive screen, 2.8" inch display and 3MP camera specs will not threaten branded smartphones anytime soon. But it'll eat Nokia's breakfast, lunch and some more.

    People who'll buy these handsets won't load apps, nor will they have a data connection. These phones will at most be used to play music or watch videos loaded from memory cards.

    Looking at stiff price competition at lower-end, the $100 target next year looks very much feasible.

  • http://twitter.com/oipozas @oipozas

    In a kind of emerging market such as mine (I'm Mexican) the problem of having an smartphone is not the cost of the handset itself, but instead the hyper expensive monthly fee of crappy call and data plans. Iphone 4 stands (subsidized) like USD$300 here, while is not a big problem for many to achieve that cost, the monthly fee for an Iphone 4 data plan is nearly USD$ 70 to 100, that means that in three months, you already hit the price the carriers sell you the handset and they usually make you sign 24 months plans for it and the quality of the networks here is just awful. I just dont think that ultra-cheap hardware will help in anything for emerging markets and to masificate smartphones if the handset itself is not a problem but the data plans associated with it.

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  • http://www.myemailreminders.com Birthday Reminder

    I think the non-smartphone will not be replaced. Some more slowly then others, but you will reach a point where they just aren't going to be supported anymore by the phone companies, and people will be forced to upgrade to a smartphone.

  • Summmon

    Non-smart phones will linger on in some form until the mainstream carriers start offering bottom tier smart phones without an extra fee for data. CheapoCellular's network quality sucks outside of urban areas and for consumers who mostly use their phones as phones unlimited in-network calling is worth more than the slightly higher number of anytime minutes offered at a given pricepoint (ie $40ish, VZW's 450 trumps metro's 600 if you spend a decent amount of time talking to Verizon customers)

  • http://www.notesark.com iphoned

    This information pretty much indicates the the question posed in the previous post – why doesn't the market give Apple a higher PE multiple.

    • asymco

      I fail to see the connection. I consider an $85 smartphone a great opportunity for Apple.

      • dms

        Can you elaborate on how Apple benefits from the boom in the sub-$100 (unsubsidized) smartphone market? I guess there are several scenarios. Which do see as likely?:

        1. Apple introducing an iPhone Nano or sorts to hit a lower price point (let's say ASP of $200-300 unsubsidized)?

        2. Apple staying in the premium slice (~15%) of the market but benefiting from the overall pie getting bigger.

        2A. Apple benefiting from low-end Android users upgrading to premium phones.

      • asymco

        The iPhone does very well in markets where there is a large base of early smartphone users. It does not do very well in markets where there are few smartphones. The reason is that a large population of smartphone users (RIM in the US and Symbian in Europe) caused users to appreciate the value of such a device and also persuaded operators to upgrade their networks. Of the options you list, 2A is the best explanation. (This depends on early platform have relatively low "stickyness" which allows for easy switching.)

  • http://www.notesark.com iphoned

    Here is the connection. When prices drop so dramatically, the results on net income are hard to predict. You have multiple threads going on that can impact net income some up and some down as you very well know. One of such major threads is downward pressure on margins. My guess is that the uncertainty of the outcome here worries wall street, and this is the major reason for the low stock multiple accorded to Apple, and not SJ's health as posited in the post.

    • asymco

      The history of the P/E is shown here: http://www.asymco.com/2010/10/27/wall-streets-inf…. You can also see the growth figures on a separate chart on that page.

      The P/E ex-cash has been below 20 for over two years. Gross margins have been increasing over that time frame. http://www.asymco.com/2010/10/25/visualizing-appl

      Keep in mind that throughout the iPhone's life so far, competition from lower cost vendors (basically, all vendors have lower prices than the iPhone) has been pitched.

      At what point in this prolonged period of P/E compression did the market decide that an additional low price point was enough to trump accelerating earnings growth and expanding margins?

      • http://www.notesark.com iphoned

        If memory serves me correctly, the drop in PE correlates with the take off of the iPhone. My interpretation: the market was comfortable with the "settled" Mac, iTunes, iPod margins, but the market still does not believe that iPhone margins are settled. Essentially, in my humble interpretation, by assigning such low PE, the market is saying that iPhone margins will shrink. I am not saying the market is right, merely trying to interpret the low PE. You can see this phenomenon well with cyclical companies – at the peak of their growth they get ridiculously low PEs. Frankly, as an Apple investor I share the Wall Street "concern".

  • Alan

    There are a lot of comments pointing out that the cost of the service plan outweighs the cost of the hardware and that until the data cost drops people will opt for voice only phones.

    But I believe it is the voice part of the plan that will drop. I pay $40/month for voice minutes and $35 for data and text. I'd be happy if they'd just drop the voice service and install VOIP using just the data connection.

    But the carriers are getting now while they can. Don't expect it to change until someone disrupts that particular business.

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  • noogie60

    People have commented how relatively expensive data is, especially in the developing world.
    I'm surprised no one's mentioned Huawei and there aggressive play in the mobile network infrastructure field.
    It wouldn't surprise me if they started doing deal for cheap Android handsets (say 150 000 at cost) thrown in as part of a 3G network that they would build for someone.

  • http://hottechstuff.blogspot.com Naeem Akram Malik

    Nokia C3-00, and C6-00, Samsung Corby line up, Huawei's Android Ideos are clear example of low priced smart phones, and they tell us where the market is heading. Although the market with flashy stuff like iPhone will remain alive, because the population of functionality loving techies is far lesser that quickly dazzled general public.
    We already have a slump of China made phones(mostly replica of expensive devices), these are cheap and pretty cool devices. And usually a lay man prefers buying a non-branded echo system free cheap phone which is good for making/receiving calls, and playing FM radio along with audio songs and a few videos.

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  • Sandeep

    Google will find it hard to disrupt the entrenched and evil US carriers like AT&T, Verizon. Google should instead get into Indian 3G market by offering cheap 3G data plans for 100 Rs per-month inclusive of unlimited calling and SMS and some decent amount of data say 5GB. Indian economy will hurtle forwards at superspeed and Google will also make tons of money. Win win win all round.

  • Winston

    "My bet is that by the end of 2012, it will be hard to find any branded phones which won’t run a smartphone"

    This has already happened, perhaps more than once. All branded phones today are smartphones, compared to the phones to which that name was first applied. The definition of smartphone constantly changes so that it always means the smartest of the phones currently on the market.

    • asymco

      Not quite. The definition of a smartphone that is accepted by most market measurement companies is one which runs an operating system that has native APIs.

      The point is that none of the major, first tier companies (Nokia, Samsung, LG, Motorola, Sony Ericsson) will make phones that will not be smartphones by 2013.

      • Carlos

        Then, what do you think of Windows Phone 7? Its System is equivalent to,for example, Nokia Series 40, you don't have multitasking and you access the APIs in a similar way to Java.

      • asymco

        WP is going to improve rapidly. Version 1 was rushed to market. Having a Java-based API is not strictly "native" but it offers sufficient access to the device hardware for powerful apps. RIM's Blackberry is similarly constrained.

        The main distinction is between JavaME-based devices (or BREW or iMode) and those which are using a Java-like language.

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  • -

    there is still a lot of innovation that still needs to happen to shape that market into one of mobile computing (vs. mobile phoning)
    Speech input?
    Brainwave receivers :-)
    What if dumbphones became so inexpensive that service sellers began selling cheap time to people who worry about the risk of typical contracts? IOW, the (sub?) wallmart clientele. The wristphone. Phone-in-an-earbud. The phone equivalent of nettops.

    Mobile service competing with unlocked on wifi? (PS. i only read about this bleeding edge tech. I prefer a regular phone with decent battery life and usable ui, admittedly a quixotic pursuit.)

    This also reminds of digicams. None with less than 5mp have lenses worth ****. And I expect ‘camcorders’ will eat digicams from one side, while mobile phones will eat digicams from the other side (excluding ‘pro’ and ‘prosumer’, slr, etc)

  • Steven

    Pundits who speculate as to the future ubiquity of the smartphone don't seem to realize that no matter how cheap subsidized smartphones eventually become there will always be a substantial number of people who cannot afford smartphone data plans, or who do not have the credit required to sign up for contracts. There will always be a Total Cost Of Ownership floor for smartphones. Below this floor, the feature phone/pre-paid market will continue to thrive.

    This is why I dismiss the prospect of Apple having to introduce an $85 iPhone just to remain competitive.

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