Google Analytics

Monday, September 9, 2013

Are "Low End Phones" the Holy Grail of Mobile?

By Duane Higgins, ceo

Microsoft recently paid over 7 billion dollars for Nokia. Largely because of the advantage that Nokia has in the "Low End Phones" market. See this article below:

Microsoft's brilliant move: Keeping the Nokia Name on the Low End Phones it Just Bought.  By Leo Mirani:

Mr. Mirani is talking about phones that range range in retail for $99 or less before tax.

A quick search on Google finds that the term "Low End Phones" gets about  2,770,000 results to date.  "Low End Mobile" getting around About 1,760,000 results. Low End Phones are projected for explosive growth in developing markets. The next version iof ANDROID will be aimed at Low End Phones in emerging markets. Check this article here.

Xiaomi, a Chinese smartphone maker recently hired Google vice president Hugo Barra as part of a push for international growth.  Xiaomi,  this month said it completed a round of funding that gave it a valuation of $10 billion. You will find that much of the Xiaomi targeted markets will be "Low End Phones."

Low End Phones/Smartphones are a massive market and growing exponentially. One marketing research company just recently predicted that there will be 1 billion "Low End Smartphones" purchased yearly by the year 2018. That's only a few years away and that is only the phones considered to be at the low end category or under around $150 according to this article.

So to clarify, thats one billion Low End Phones purchased per year. How much revenue is that? Even at  a $100/phone average price, that would be 100 billion dollars per year in sales just for the unit sales.

So why is the "Low End Phone" market considered to be so valuable by all of the biggest cellphone companies? So large? Growing? Explosive? The answer of course is that people like cheap phones. Especially people in developing and emerging markets. Think India. China. Africa. South America and on and on.

But think a little further.  Why do companies like selling Low End Phones. Especially, when the prices and margins are so low? The answer is that Low End Phones are gateway phones. Individuals who buy Low End Phones of course generally upgrade. Sometimes again and again. That's where the brand recognition and brand loyality come in. Get the customer hooked early and you may have a customer for life. That's Marketing 101.

As you would have guessed. Apple joined in on the "Low End Phone" party with this announcement just today (09/10/2013):

The iPhone 5C, with retina display, will retail for $99 for 16GB.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.