When you look at the tremendous value offered by
smartphones like the Huawei Ascend Mate 7 or Xiaomi
Mi4, which undercut competitors by hundreds of
dollars, it’s hard to disagree with MR Osterloh’s
prediction, given enough time.
Of course brand loyalty and premium build qualities
still hold some sway at the moment. We are not
looking at a sudden KO for the top-tier manufacturers,
but rather a gradual decline. The poor support and
questionable build quality of the bargain OnePlus One
suggests that there’s still a little way to go before the
West succumbs to the value proposition, but high-end
tech is clearly reaching the point of diminishing
returns.
The smartphone market is more diverse these days,
putting downward pressure on prices.
We love to keep on top of
brilliant new technologies
that could improve our
smartphones. But further
display resolution bumps ,
MEMS camera lenses, IGZO
backplanes , slightly slimmer bezels , or bendy displays
aren’t going to rerevolutionizehe industry. Consumers
aren’t going to continue to pay higher prices for
technology that isn’t noticeably improved.
Furthermore, the trend towards pre-paid handsets is
only making value for money increasingly important,
and technology that enables cheaper manufacturing is
going to be more important than a few more pixels on
the screen.
With more consumers opting to buy devices off-
contract, price tags are becoming increasingly
noticeable.
Simon Hill also made an excellent observation about
smartphone companies attempting to force new
markets. The smartwatch trend is probably the best
example, as are curved displays, with customer
reactions remaining subdued despite the eagerness of
developers to trot out products.
Our various polls over the past year have also
expressed similar sentiments. Components of previous
interested are deemed more than good enough
already, and there is growing contempt for the lack of
innovation and high price tags.
From polls we can see that consumers still
want high-end hardware, that’s a market that isn’t
going anywhere, but raw specs alone aren’t the
driving force in consumer preferences that they were
before. Better battery life remains a key demand,
followed by pricing and atheistic features. A better
balance between price and performance ranked very
highly in our results too, echoing what we’ve seen in
recent market data.
It’s not a stretch to conclude that it’s just a matter of
time and resources until the trend towards more cost
effective manufacturers that we have observed in Asia
arrives in the US and Europe, and the healthier
competition is something that we should embrace.
