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Wednesday, March 25, 2009

The collapse of the featurephone market

There's been a lot of discussion about the woes of Motorola, SonyEricsson and others recently. I thought I'd add a couple of viewpoints from what I've been seeing:

- Push by mobile operators to lengthen upgrade cycles for phones, from 12 months to 18, and now to 24 months. (This is especially in Europe - I know that Americans have had 24mo contracts for ages, and Canadians sometimes have to deal with ridiculous 3-year deals). The 12-18 month move, at the height of the "boom" in 2006-7, was catalysed by giving away top end devices like Nokia N95's on a highly subsidised basis. This time around, it's being catalysed by the promise of low prices or better bundles
- Upgrading from one featurephone (or low-tier smartphone) to another doesn't really seem to be a priority for most people. Going from a 5MP to an 8MP camera is "meh". A slightly faster data connection you still don't use isn't exciting. Storing a bit more music? Yawn. Basically, people either seem to want to migrate to something completely new (usually either QWERTY or Touchscreen) or else they're not that bothered.
- Familiarity breeds contempt. There's a zillion slim slider-phones around - it has to be pretty special for your friends to notice your cool new phone. Or it needs to be a touchscreen or QWERTY (see above....)
- Operators pushing SIM-only contracts are making it appealing to use an old, ordinary phone for cheap voice & SMS.
- Some of the recent featurephones have been a let down. I'd say my SonyEricsson C902 is probably worse to use than my old K800i, even though it's cuter/slimmer. It "hangs" regularly, the flash is anaemic, and the UI is slower generally.
- The iPhone has redefined peoples expectations a lot. I feel clumsy & old-fashioned showing people my camera's photos on a 2-inch QVGA display, even if the colours are good.

Bottom line - selling mid-tier candybar, clamshell or slider phones is going to be tough for the rest of this year at least.

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