Consumers want cheaper smartphones

dollar sign An article by way of Mercury News may shed some light on the slow adoption rate of smartphones in North America. While there are an estimated 200 million cell phone users in the US, only 2.2% own smartphones; analysts at Telephia are saying that this percentage reflects an industry emphasis on feature-heavy devices, when consumers want lower prices.

With device costs ranging from $400-500 (don’t forget expensive voice and data plans), most smartphones like the BlackBerry or Treo 650 are beyond the average consumer’s budget. One CrackBerry addict questioned within the article says that while they love their BlackBerry, they wouldn’t use it if their employer didn’t pay for the data plan.

Question of the day, folks: how much are you willing to pay for your BlackBerry (for get enterprise stuff, we’re talking average consumer here)?

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http://www.gunmecha.us/ Jamison Banks

Honestly, smartphones and PDA’s in general? $99 to $250. If they can’t price a unit down there, ain’t buying. The prices are all markup. R&D and marketing are what drives prices up, the rest is pure profit.

Bottomline – the industry needs to grow the market first, take the profit hit, and raise prices later.
http://www.gunmecha.us Jamison Banks

Honestly, smartphones and PDA’s in general? $99 to $250. If they can’t price a unit down there, ain’t buying. The prices are all markup. R&D and marketing are what drives prices up, the rest is pure profit.

Bottomline – the industry needs to grow the market first, take the profit hit, and raise prices later.
Thought

I would pay $300 to $400 for a good smartphone, but I realize that I am most likely in the minority, because I’m a big gadget hound.

I agree with Jamison above…probably most people will only go up to around $100 to $200.

I don’t think, though, that the industry can offer low prices at first, grow the market, and then raise prices later. Once you’ve trained consumers to expect lower prices, it is awfully difficult to get them to accept higher ones. Now, that doesn’t mean that manufacturers shouldn’t offer lower prices anyway; there may be some virtue in sacrificing pricing for greater volume of sales.

I do think, though, that the carriers have incentive for subsidizing lower prices: they get to sell more lucrative data plans.
Thought

I would pay $300 to $400 for a good smartphone, but I realize that I am most likely in the minority, because I’m a big gadget hound.

I agree with Jamison above…probably most people will only go up to around $100 to $200.

I don’t think, though, that the industry can offer low prices at first, grow the market, and then raise prices later. Once you’ve trained consumers to expect lower prices, it is awfully difficult to get them to accept higher ones. Now, that doesn’t mean that manufacturers shouldn’t offer lower prices anyway; there may be some virtue in sacrificing pricing for greater volume of sales.

I do think, though, that the carriers have incentive for subsidizing lower prices: they get to sell more lucrative data plans.

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