Consumers Migrating to Low-End Smartphones, IDC Reports

by Matt Klassen on November 28, 2014

While you might think that everyone in North America owns a high end iPhone or Android device and that low- end, budget handsets are really more of an emerging markets thing, well, think again. Although sales for those high-end devices remain strong, the demand for affordable smartphones is growing as more and more people realize they can live without expensive extras like cameras and high resolution touchscreens, looking instead for something that just does the job a smartphone is supposed to do.

As report by the Associated Press, a study from tech research firm IDC found that about one third of smartphones sold in the U.S. between July and September had a price tag less than $200 unsubsidized, a number that has jumped 18 percent from the year previous. Top end phones, it should be noted, are the ones that will set you back $600-$700 unsubsidized and that are only truly affordable when you lock yourself into one of those long binding service contracts. While one might balk at the notion that $200 is ‘affordable,’ those are the phones that typically come free with a two year service contract.

So what does this mean? Simply put, budget phones are no longer something for those burgeoning markets, the ones that are still transitioning from the old feature phones to the modern smartphone. People here have realized that while it may be a status symbol to have a phone that is as versatile as a Swiss army knife, its really not that practical. Now while it won’t happen anytime soon, eventually this will mean that we may see people lining up around the block not for the latest iPhone or Galaxy device, but for that phone that offers the best functionality at the lowest price.

As companies like Xiaomi in China and (now to a lesser extent) Samsung everywhere else in the world have shown us, today’s affordable smartphones are anything but cheap. Gone are the days when the low end of the smartphone market meant “no-frills devices with small screens and slow processors”, as Ramon T. Llamas, a research manager for phones at IDC explains, for as the cost of smartphone parts drop manufacturers are able to produce budget devices that now sport advanced features once exclusive to high-end handsets.

Now granted these phones do lack the latest in mobile technology, such as fingerprint security, and admittedly their cameras aren’t as sophisticated or as sharp, but for those who need a communication hub and a mobile Internet platform these low end devices are more than adequate. In fact, as Jeff Bradley, senior vice-president for devices at AT&T, notes, “Many cheaper phones now even offer the fastest wireless speeds on 4G LTE cellular networks.”

Further, while one might expect the rise in consumer interest in budget smartphones would mirror a rise in prepaid, no-contract phones, that no longer seems to be the case, as there is a marked rise in consumers choosing low end handsets on post paid service contracts. The simple fact is that many are realizing it just makes more sense to have a functional smartphone for under $10/month, instead of paying those stiff subsidies for an expensive phone over the life of the contract.

In the end, if this migration towards lower end smartphones is evidence of anything, it’s that the wireless market is changing. As carriers get creative on how to abolish contracts, subsidies and increase smartphone turnover rates consumers are getting wise to the fact that there are some real savings to be had now, if you’re willing to forego that classy high end smartphone that is.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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