I interviewed Jeff Hawkins, designer of the Palm Pilot and Treo about the time the iPhone came out. He said "Someday all phones will be smart phones."
The same dynamic that drove PCs from costing $3,000 in the early days to $200 today will carry smartphones into the mid and low end markets eventually, he said.
I don't think feature phones will die--nothing ever dies. But I agree with Jeff, smartphones will eventually become cheap enough for entry level and developing markets. As they do they will take over most of the market.
Of course by that time high end models will be doing--God knows what!
Yes, Bango is fascinating. Certainly being able to make purchases and simply have the purchase price added to your phone bill is significant. I did think the writeup might be optimistic on things like "with credit cards potentially becoming redundant as a result." The question is how the user pays the phone bill. In many cases, phone costs get billed to a credit card. My prepaid plan automatically hits one of my credit cards at specified intervals, for onstance, because the plan requires period purchases of additional minutes, even is a minutes balance is present.
But it reduces friction in the purchase process, which increases commerce. One thing I've tried to get across elsewhere is that the market will pay for value, and you must provide value, price appropriately, and make it as easy as possible for the customer to give you money. Bango makes it easy for the customer to give you money.
My phone is a feature phone. It's the smallest, cheapest, least powerful model Samsung makes, used with a prepaid phone plan. All it does is calls and SMS, and that's all I want it to do. Everthing else is something else's job.
The waters get muddied by the nature of the market. The actual price of a phone won't necessarily be a factor, as most phones aren't bought at retail prices by users. They are acquired through a carrier who subsidizes part of the phone's cost as part of a multi-year contract.
And the biggest use for all those apps involves going online, which both reduces battery life before a recharge is needed, and requires a data plan. The data plan may be the highest fixed cost in the contract.
The cost of a data plan may tip some users toward a feature phone, if they conclude they don't really need to go online fom their phone at any random moment.
A correspondent elsewhere did the math and determined his option was to buy a current iPhone at full retail ($600), then shop for a plan. Because the carrier wouldn't be subsidizing part of the phone's cost, the plan would cover strictly service used. He calculated that his total cost over the expected lifetime of the phone would be lowest doing it that way.
Of course, for him, the phone was a tool, not a fashion accessory, and he expected to keep it for a while, rather then upgrade when the latest "Ooooh! Shiny!" hit the market. And most of the market seems incapable of taking the long term view.
It might well make sense for Nokia to issue a low cost phone in the US, aimed at those who planned to simply buy the phone at retail, then get a plan from a carrier like T-Mobile who seems to be pushing precisely that unbundled approach.
@mhrackin: Marty is even older than I am; we are both "pre-boomers" and thus very much aware of the needs of OUR generation!
Hi mhrackin, I bet a phone like the Jitterbug might not even appeal to baby boomers or some pre-boomers anymore after they get used to a smartphone. Do you think? Some octogenarian relatives of mine are now into texting me from their smart phones--I think they're more savvy sometimes than I am, having been tortured by a Blackberry as you were. As long as someone shows them how to use the smartphone, they like the technology. It's the last time we'll have a generation of seniors who didn't know how to use cell phones.
I did like my Nokia flip phone because it wasn't as power hungry, but it was hard to do any texting.
Thanks for your comment. You must have some interesting stories to tell.
It would be interesting to see the comparison of feature phones vs smartphones in actual use out there, on a year to year basis. As opposed to "shipments," as shown in the graphic.
Featurephones don't need to be upgraded as often as smartphones are. For one, because the features haven't changed much in the past years. For another, because they aren't a trendy fashion accessory. So the real question is, are those who still use feature phones aching to get a smartphone, or could they simply not care less?
This matters because the term "downward spiral" for feature phones might be a misnomer. It's possible that demand could persist indefinitely, rather than falling to zero. For that matter, I would not assume that the fast turn-around of smartphones will last forever either. People do have a way of assuming that the status quo today is "the new normal," but it rarely turns out that way.
Susan, thanks for bringing that up. I had forgotten about Jitterbug. It's good to hvae a cell phone intergrated with a medical alert system! (well, at least that's what us kids think that our parents should have)
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