We have seen it before. As the the popularity increases the economies of scale set in and the price comes down. The US smartphone industry is a little different but the same still holds true. Motorola,
owned by Google now owned by Lenovo, is turning the industry on its head.
The Moto G is an affordable, off contract smartphone that is definitely worth owning. With 4.5-inch display, 8GB of storage, quad-core processor, 5MP camera and sporting the latest Kit Kat 4.4 priced at $179 there is no other smartphone that even comes close.
So, if it is possible to produce a phone at $179 what is keeping the industry to from making a smartphone at a lower price point. Your carrier advertises off-contract prices ranging $500-$800 but are they priced competitively? Does the Moto G cause us to beg the question that an unsubsidized phone must be expensive?. From the looks of things, the market is already in the process of making that determination.
The Market Has Spoken
The increase in demand of no-contract cellphone has the market and carriers reacting in a way we have not seen before. AT&T recently released a pricing structure geared for customers that already have a phone or who are no longer under a contract with their current phone. The reason: the demographic of customers is changing. All of the customers who are willing to be early adopters already own smartphones. Individuals once grasping their flip phones are starting to open up to the idea to owning a smartphone instead. For these consumers, it needs to be at the right price.
So, what about that $50 smartphone. Well, Motorola has confirmed plans to launch a $50 smartphone. Motorola CEO Dennis Woodside said speaking with TrustedReviews, “We’re going to look at that and just delivering on that value promise is super important. I mean why can’t these devices be $50? There’s no reason that can’t happen so we’re going to push that.”
This is great news for the today’s new smartphone customer and yesterday’s premium smartphone owner. With the non-contract price competition increasing you will start to see the cost of ownership across all smartphones go down. With an expected 40% increase of smartphone sales globally you can expect some major changes to occur. One of which is the price. With the US more of an exception than the rule, the global adoption rate is typically related to price.
So, what does this all mean? The global marketplace will dictate the future of how the US will purchase mobile devices and the carrier’s plans needed to support them. We are already seeing carriers starting to move away from smartphone subsidies.
Tell us what you think. How long do you think smartphone manufactures can continue to sell their devices through subsidies?