Mid-Range Phones - the next big battle ground in market share
The Apple iPhone 6S, Samsung Galaxy S7 and LG G5 are all great examples of modern "flagship" phones. With multi-core processors, high end graphics, cameras, etc. They are the leading edge of what you can buy today.
The challenge however with many of these phones are their price tags. Ranging from $650 - $950 - few people buy these devices outright anymore. Many use the various monthly plans available from the vendors or carriers. But these often have 24 - 30 month commitments. In many cases you can buy a nice laptop for the price of some of these phones.
As I commented on in an earlier post this year, the average price folks in the US are paying for a smartphone is $352. In other countries like China - $250US is the sweet spot. Folks are also holding on to their phones longer. 3 - 4 years now common.
When you go shopping for a phone in the US with a major carrier like ATT or Verizon and look at the price filters, there are huge gaps. For example with ATT - they showed 36 phones between $0.01 and $49.99, 1 between $50 and $99.99, 4 between $100 and $199 and 34 > $200. Of those 34 > $200 only a handful were less than $400 and they were either A) older models like the iPhone 5S or LG G4 or B) More obscure devices like the HTC Desire Eye or the now defunct Nokia 640XL. One bright spot was the new Samsung J3 @ $169.
This approach to the market in the US has been employed by the major hardware vendors for many years, introduce the new device and then discount the previous year models to provide a "lower" cost alternative. But often not much lower.
But that model is changing and will become the next great battle for market share in the coming years.
Apple learned in Q1 of this year how much that model is changing. Even though Apple introduced the iPhone SE for $399 - it was based on the older 4" iPhone 5 format. In the worlds largest market - China - they got their lunch eaten by the likes of Xaiomi, Huawei, Oppo and others who were selling larger screen and similar spec phones for $250 - $300. Apple experienced a 16% decline in sales.
Even Samsung is expanding their market line up. Today they announced the Galaxy C5 and C7 lines in China and also submitted them to the FCC for approval. The Verge reported the release and the info is here
http://www.theverge.com/circuitbreaker/2016/5/26/11790672/samsung-galaxy-c5-c7
While these phone don't have the leading edge specs that the Galaxy S line does, they are also half the price so $350 - $400. For many use cases they are more than adequate.
Similarly Motorola launched the Moto G line as an alternative to the Moto X. Even Google's Nexus line is priced under these "flagships"..
The point here being - As the smartphone market has matured, vendors are recognizing that while there is certainly a market for flagship devices that continue to raise the bar on power and functionality, that market size is limited.
There is a much much larger market in the Mid Range. And the fact is that with many of these phones your can have an excellent experience. They offer HD screens, expandable storage, good RAM and CPU.
Customers are also smarter as well, they will certainly start to shop more and be more price driven as the choices expand.
And with the Chinese vendors like Huawei, Xaiomi and others ready to come to the rest of the world, I expect a huge battle to rage in that $250 - $400 range and these vendors battle for market share in this 1B+ device / year market.
In my opinion the smartphone market is going to "commoditize" much faster than the PC market did - so you'll see similar specs/features from 4 - 6 different vendors and then it will be a matter of price, OS or feature preference. You should also be getting more and more for less. More CPU, RAM, Storage, etc.
Bottom line is this - look for a flood of new $300 - $400 smartphones that would have been considered flagships 18 months ago. Probably starting this fall and especially in 2017.
The challenge however with many of these phones are their price tags. Ranging from $650 - $950 - few people buy these devices outright anymore. Many use the various monthly plans available from the vendors or carriers. But these often have 24 - 30 month commitments. In many cases you can buy a nice laptop for the price of some of these phones.
As I commented on in an earlier post this year, the average price folks in the US are paying for a smartphone is $352. In other countries like China - $250US is the sweet spot. Folks are also holding on to their phones longer. 3 - 4 years now common.
When you go shopping for a phone in the US with a major carrier like ATT or Verizon and look at the price filters, there are huge gaps. For example with ATT - they showed 36 phones between $0.01 and $49.99, 1 between $50 and $99.99, 4 between $100 and $199 and 34 > $200. Of those 34 > $200 only a handful were less than $400 and they were either A) older models like the iPhone 5S or LG G4 or B) More obscure devices like the HTC Desire Eye or the now defunct Nokia 640XL. One bright spot was the new Samsung J3 @ $169.
This approach to the market in the US has been employed by the major hardware vendors for many years, introduce the new device and then discount the previous year models to provide a "lower" cost alternative. But often not much lower.
But that model is changing and will become the next great battle for market share in the coming years.
Apple learned in Q1 of this year how much that model is changing. Even though Apple introduced the iPhone SE for $399 - it was based on the older 4" iPhone 5 format. In the worlds largest market - China - they got their lunch eaten by the likes of Xaiomi, Huawei, Oppo and others who were selling larger screen and similar spec phones for $250 - $300. Apple experienced a 16% decline in sales.
Even Samsung is expanding their market line up. Today they announced the Galaxy C5 and C7 lines in China and also submitted them to the FCC for approval. The Verge reported the release and the info is here
http://www.theverge.com/circuitbreaker/2016/5/26/11790672/samsung-galaxy-c5-c7
While these phone don't have the leading edge specs that the Galaxy S line does, they are also half the price so $350 - $400. For many use cases they are more than adequate.
Similarly Motorola launched the Moto G line as an alternative to the Moto X. Even Google's Nexus line is priced under these "flagships"..
The point here being - As the smartphone market has matured, vendors are recognizing that while there is certainly a market for flagship devices that continue to raise the bar on power and functionality, that market size is limited.
There is a much much larger market in the Mid Range. And the fact is that with many of these phones your can have an excellent experience. They offer HD screens, expandable storage, good RAM and CPU.
Customers are also smarter as well, they will certainly start to shop more and be more price driven as the choices expand.
And with the Chinese vendors like Huawei, Xaiomi and others ready to come to the rest of the world, I expect a huge battle to rage in that $250 - $400 range and these vendors battle for market share in this 1B+ device / year market.
In my opinion the smartphone market is going to "commoditize" much faster than the PC market did - so you'll see similar specs/features from 4 - 6 different vendors and then it will be a matter of price, OS or feature preference. You should also be getting more and more for less. More CPU, RAM, Storage, etc.
Bottom line is this - look for a flood of new $300 - $400 smartphones that would have been considered flagships 18 months ago. Probably starting this fall and especially in 2017.
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