The current trend in the mobile phone industry is to consider towards the demand of below $100 smart phones. The reason behind this trend is high priced smart phone market has reached its saturation point. Although not all mobile manufacturers are keen on it.
According to trade analysts, low cost smart phone is new hope for demand growth for the industry. This was the major focus in the recent Mobile World Congress in Barcelona. One of the latest observation regarding smart phones is decreasing ability to differentiate in terms of the look of the phone.
According to market research firm IDC, the demand for smart phones is shifting towards China and other developing countries. Therefore cell phone makers are keeping their focus on around $100 smart phones. Although, they do not have all the features of the current high-end smart phones. This year the maximum marketing attention was towards these low end smart phones in Barcelona.
The first comer in this market as leaders are Chinese companies many of them unknown outside the country. These companies have spent great amount of resources in getting technical and design knowledge. This in turn will help them to make low cost phones without bringing down the quality. These companies are Lenovo, Huawei, TCL Communications and less known companies like Gionee, Oppo, and CorePad. These companies have some domestic advantage over other companies as China is world’s largest phone market.
This recent trend has compelled Nokia to use Android for its basic range of smart phones, despite Google being rival firm after Nokia’s mobile arm acquired by Microsoft. According to Stephen Elop, CEO of Nokia Corporation, this segment is growing four times faster compared to the rest of the market. According to industry analyst Ben Wood of CCS Insight, this step by Nokia is “hugely controversial, but necessary”. Such smart phones which have fewer features are targeted towards billions of new consumers in the upcoming markets.
Though, growth in demand is putting pressure on the demand and cost of components. According to Qian Hao Lv, head of ZTE’s device strategy, “All vendors face the challenge of the cost of key hardware components such as screen displays, memory and keyboards. These are crucial to differentiate one model from the next.” According to Kan Yulun, another ZTE executive, the company is working on new technologies to make the cost of the phone as low as $50 or less.
