Thursday, October 5, 2006

Busting The myth of Smartphone Market

I recently read an article at 'Mobile Opportunity', discussing about the Smartphone market.
The myth of the smartphone market : Who will buy smartphones? And what are the “killer” features?

It is quite an interesting read infact. But I disagree to an extent the conclusions and predictions made about the Smartphone market.  I will quote only relevant text here for discussion. Read the full article here,

Update (21st October, 2006): Posted More news reports from Gartner and Informa Telecoms & Media about current sales of Smartphones and predictions until 2011 in Smartphones Will Rule The Markets. Both sources reported that Smartphones are the hot selling devices and will continue to grow. Symbian’s Nigel Clifford forecasts the death of PC, as Smartphones take over. Read more at my recent post Smartphones Will Rule The Markets.  Back to the article, now.

The main reason why Smartphones or converged devices will be the future, is it is so painful to do otherwise. You can carry an ipod, olympus recorder, Palm PDA, a cell phone, a digital camera, a gaming console, a GPS navigator, a jump drive, a laptop to access internet, …………….. or you can have a smart phone that can do all of these and more. 

I had almost all of them, and it is so painful to carry all or some of them all the time, that I some time figure out a way to get things done without them !!. So I am all in for a Cellular phone that can do all of them. I want to see every thing in this picture on my cell phone.



Coming back to the article, I was little confused about the analogy between the current mobile device and a PC. The ideal and accurate comparison would have been the list of features and applications on a desktop. There is a reason why one want to have ONE LAPTOP with office suite, Skype, GarageBand, Blogging application, Photoshop, Music Player, Video player, and ofcourse a browser and you want to connect to internet by ethernet cable, wifi, 3G, bluetooth and so on. Going by the same analogy, this is a smart laptop, that can do all you need. Otherwise, you will have one laptop with office suite, one laptop for playing music, and one laptop for editing pictures. Not exactly like that, but I hope you understand my point.

Are people to willing to pay additional price for a converged device? The article says that people are ready to take features but don't want to pay for those features. It is true, not many of us are willing pay any extra buck than absolutely essential. But that does not mean, they will not pay even if they see value. Here is a simple math. (Highly approximated and average prices. Compare for yourself based on what you have or want to have and a smart single converged device available in market):

  • Audio Recorder : $65

  • Music Player: $200

  • Digital Camera : $150

  • Jumpdrive : $60

  • Palm Personal Organizer: $199

  • GPS : $145

  • Basic Cell Phone: $40

  • Accessories for all those devices: $300 (Leather sleeves, cables, warranty plans ..... )Total cost of all these devices : $1159


One smart phone equipped with all those features and more: $500 + $200 for accessories and warranty. == $700.

A saving of around $460. And did I mention that you need a handbag so that you can carry all of them as one pack if you have seperate devices. So painful !.

Now make your own comparisions based on what you need. And see for yourself what you can save if you buy a smartphone.

Carriers can not expect to make a buck of every feature they include in the phone. I love my camera on my mobile. But I rarely send an MMS. That does not mean, I don't like my handy camera on mobile.
For an example of this effect, look at the high sales of subsidized cameraphones, and compare that to the low number of people who pay to send lots of MMS messages containing those photos.

There is some nice classification in the posting, where they classify the users into different segments and all that. Read if you are interested.

And the most interesting part where he explains why converged devices won't sell.
These typically don’t sell well, for two reasons. First, unlike a PC, when you add features to a mobile device you pay a heavy price. If a PC gets a little heavier, or uses a little more power, no one will even notice. But do that to a mobile device, and it may suddenly become too heavy for most people to carry, or its battery life may become too short. Tiny differences in specs can create surprisingly huge changes in sales.

Come on, if you are ready to carry a handbag full of devices, can't you carry a little bigger mobile phone? If you haven't noticed, the devices are becoming smaller and thinner day by day. Have a look at the Motorola Q phone.



Point mouse here to see latest Amazon offer on this
The second reason is about functionality:
The second reason why “Swiss Army Knife” products don’t sell well is because most mobile customers are intensely practical. They buy mobile products like appliances, to do a specific job. All of the most successful mobile products are associated with a particular task that they do well. They may be capable of doing more, but there’s always a lead feature that they excel at. The iPod is fantastic at music acquisition and playback. The Blackberry is great at Exchange e-mail (and stinky at almost everything else). And the original Palm Pilot excelled at calendar and address book.

How practical is this to carry a handbag full of devices to office every day, and juggle with them when you need it. Doesn't it sound practical and inexpensive to have them all in one device. And when it comes to functionality, a smartphone is reasonably close to its individual counter parts. The great thing about a smart phone and a converged device is that you can integrate all of them in a meaningful way. How easy it is to take a picture and send it to your friend or posting it to your blog using your mobile. Compare it with having a seperate device for those tasks: a camera, and a laptop to do the same. So go wherever you go, take a picture. Come home or goto a nearest internet cafe to send the picture. Come on. This is not that practical as we think.

Remember, similar objections have been voiced all over the world about internet, e-commerce, and everything online a few years back. But look at it now.

Not many of us know exactly afront, what we want and what we are willing to pay for. But when some thing nice is available, we embrace it.  If somebody would have asked any one of us in 2000, whether you spend $250 for an iPod and then buy each song at $0.99 online, I bet, nobody would have said, YES. Read for yourself reviews and analysis of online music and MP3 players back in 2000. But see now, how many of us do the exact thing, which we never expected to say YES to.  I hope I got my point clear. In digital gadgets world, users always have beaten the market analysts. And they will continue to do so.

Not everyone of us want to have everything on a mobile phone, YET. But many love to see a converged device  with meaninful utilities converged onto a single device.  One converged device for youth, one for business people and one for enthusiasts and so on.  We are already seeing this. Camera has become an integral part of cell phones. Isn't it? So in the coming months (not years), we will see more converged devices. Will people pay for it? A resounding Yes. So is there a market for smartphones. I strongly believe, YES.

[tags]smartphone,mobile-applications,3G,mobile-devices,motorola,converged-device,mobile-technologies,mobile-life-style[/tags]

12 comments:

  1. [...] It is so painful to carry each individual device and its accessories. And it is quite expensive to buy an individual device for each function. Read how you can actually save 100s of dollars if you buy a smartphone in my previous post Busting The myth of Smartphone Market . If you decide to have an individual device for each function, don’t forget to buy a nice handbag as well, to carry all of them and accessories (:-)) [...]

    ReplyDelete
  2. While most of your points about the foreseen ubiquity of smart-phones/converged device is but a natural progression, with such a spread comes the inevitable fragmentation. This fragmentation is both desirable and otherwise at the same time. Including a set of features in a device while being desirable has its limitations. So the question in my opinion is at the next level - what classes of converged devices are likely.

    Another point being, a very simple device with high connectivity could in theory act as a thin client to most applications and services - thus being smart in services but a dumb client. So with next generation signalling mechanisms, perhaps a low-resource device could offer more services than today's high-cost heavy devices.

    ReplyDelete
  3. I was just wondering where you would find actual demographics for these smartphones. The companies have to have them somewhere, even though most don't put them out there. I would just like to look through some of them as its pretty interesting stuff. Thanks

    ReplyDelete
  4. Many of the reports are not available in public domain. And in most cases, they are quite expensive to buy. Here is a news release from Mmetrics that has little more data about countries and what exactly users are doing with a smartphone. I will let you know if I find a publicly avaialable resource with demographic data on smartphones.

    http://www.mmetrics.com/press/PressRelease.aspx?article=20060710-smartphones

    ReplyDelete
  5. [...] I stongly believe that Smartphone will rule the markets and also posted my thoughts why it is so inexpensive to buy a multi tasking phone than buying individual gadgets that can do one thing better (Busting The myth of Smartphone Market). NewYorkTimes reports about some surprsing skills that new cellphones are equpped with this Christmas, indicating the trend towards Multitasking phones instead of plain old cell phones, that can just do one thing better. You don’t need to own a smartphone or a blackberry to do multiple tasks. Almost all new phones are like smartphones that can do whatever you need.  [...]

    ReplyDelete
  6. [...] I strongly believe that Smartphone will rule the markets and also posted why it is so inexpensive to buy a multi tasking phone than buying individual gadgets that can do one thing better (Busting The myth of Smartphone Market). NewYorkTimes reports about some surprsing skills that new cellphones are equpped with this Christmas, indicating the trend towards Multitasking phones instead of plain old cell phones, that can just do one thing better. You don’t need to own a smartphone or a blackberry to do multiple tasks. Almost all new phones are like smartphones that can do whatever you need.  [...]

    ReplyDelete
  7. [...] I have also posted why it is so inexpensive to buy a multi tasking phone than buying individual gadgets that can do one thing better (Busting The myth of Smartphone Market). NewYorkTimes reports about some surprsing skills that new cellphones are equpped with this Christmas, indicating the trend towards Multitasking phones instead of plain old cell phones, that can just do one thing better. You don’t need to own a smartphone or a blackberry to do multiple tasks. Almost all new phones are like smartphones that can do whatever you need.  [...]

    ReplyDelete
  8. [...] murali01:40 pmAdd comment There are quite a few reasons why I believe Smart Phones are the future. And here are few stats that shows how smartphone market is growing.  Also, These [...]

    ReplyDelete
  9. "One converged device for youth, one for business people and one for enthusiasts and so on."

    Dude, that's at least three different devices. Do you want *one* convergent device or what??

    You are truly out of touch with what most people want and need. As are the Symbian guys you referred to.

    ReplyDelete
  10. [...] a graphic designer, and it doesn’t take more than a 1 minute with powerpoint). I expressed my frustration and pain of carrying multiple devices available at that time in more than one article [...]

    ReplyDelete
  11. [...] is my dream smart Phone (see my original post Busting the myth of Smart phones posted on  Cellular Lifestyles in October, 2006)  Many critics of iPhone are quite reluctant to accept that iPhone has not only changed the [...]

    ReplyDelete
  12. [...] is my dream smart Phone (see my original post Busting the myth of Smart phones posted on  Cellular Lifestyles in October, 2006)  Many critics of iPhone are quite reluctant to accept that iPhone has not only changed the [...]

    ReplyDelete

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