Nokia well positioned for approaching smartphone price wars as costs plummet
In tech media, it’s always the big, whizz-bang devices that tend to garner the most attention from enthusiasts. After all, they tend to have a disposable income and they are at the forefront of mobile technology. They're also the loudest for complaints or praise, dominating the conversation.
The Nokia Lumia 1020 is a perfect example, coming in at nearly $700 without a subsidy and $299 with—most people can’t afford it, but it reaps the headlines. And people still want it to have better, more expensive specs. Meanwhile, mid to low range devices are met with derision and scorn as people who are in well financed, established markets chime in on a device not aimed at them. We even see it here on this site, where people just want quad-cores, 1080P displays and envelope-pushing gizmos, yet they lament devices like the Lumia 625.
But the reality of the market is that smartphone prices are dropping favoring devices like the Lumia 52x and Lumia 62x or Huawei with their Ascend W1 and W2. According to the IDC, the average smartphone price has plummeted from $450 to just $375 in the last year. That trend is expected to continue with the average price headed to $350 and lower in 2013 and that directly cuts into the profit margins of Apple and Samsung, who often bet on high-end smartphones like the iPhone 5 or Galaxy S4 (neither of which are cheap).
Michael Morgan, an analyst at ABI research, was quoted by Bloomberg saying
In response to this, Apple is expected to release a lower-priced iPhone later this year in addition to their high end version. The problem here though is Apple is reacting to the market instead of anticipating, losing valuable time and ceding ground to other manufacturers. There’s no doubt that companies like Huawei and Lenovo are starting to take a bit out of the smartphone business, but Apple so far has not had a response.
Likewise, HTC has been doing the opposite: trying to be a high-end premium manufacturer akin to Samsung and Apple, chasing the more lucrative “flagship” status with their One. While that device has received very positive press coverage and reviews, consumers are still choosing Samsung over HTC when Android is the option. The problem here, as noted by BGR, is HTC does not have much in response for the low-end market anymore, as they sunk a lot of resources to get behind the One, consolidating their offerings (even the Mini is still not low enough). With Samsung and Nokia positioned against them, HTC is now caught in a dangerous situation.
Nokia and The Next Billion
Speaking of Nokia, the company has been very forthright about reaching “the next billion”, referring to emerging markets who are graduating from simple feature phones to full smartphones. This is why Nokia keeps hammering at devices like the Lumia 520, Lumia 521, Lumia 620 and tomorrow’s Lumia 625—it offers them an area where they can legitimately compete without Apple breathing down their necks.
Just today, AT&T announced the Lumia 520 for a no-contract pre-paid price of $99. That’s $99 for a brand new smartphone, flat in the US. Likewise, MetroPCS was also shown to be getting T-Mobile’s Lumia 521, presumably at a similar price point. While these devices don’t get a lot of admiration, they are the next big thing driving the industry (plus, we actually really like these phones).
The good news here though is Nokia is not reacting to the market, but rather expecting it. That means devices like the Lumia 52x can flourish at the low end for a few months, giving some respite before Apple drops their $300 device in the fall. And if Bloomberg is right, we could see the industry start to cannibalize itself, akin to what happened to the PC market years ago when costs plummeted and there was (and still is) a race towards the bottom.
So, dear reader, next time Nokia or Huawei announce “another” low cost, premium Windows Phone, don’t roll your eyes but rather rejoice at the forward thinking of these companies. Chasing the high-end smartphone market, while necessary to a certain extent, should not and cannot be their only focus. Continue to enjoy the Lumia 920, Lumia 1020 and whatever unicorn phone comes out in the future, but remember, it’s the Lumia 520 and Huawei Ascend W1 that are driving this industry now.
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Daniel Rubino is the Editor-in-chief of Windows Central, head reviewer, podcast co-host, and analyst. He has been covering Microsoft since 2007 when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, laptops, next-gen computing, and for some reason, watches. Before all this tech stuff, he worked on a Ph.D. in linguistics, watched people sleep (for medical purposes!), and ran the projectors at movie theaters because it was fun.
Lumia 900, 800
Lumia 920, 820,
Lumia 940, 840
We are talking about phones then? no Windows needed?
Nokia + WP is a kill combo. Uber hardware innovation (even their "low end" cameras are pretty good), great Nokia apps, combined with the efficiency and butter-smooth OS. The fact that WP can run so smooth and stutter-free even on the Lumia 520/521, is a great thing. When people pick up a 521 and look at what they are getting for the price, it's pretty amazing. This is a huge differentiator when you look at the Android offerings at this price point... stuck running an ancient version of Android, and just laggy all over.
I'm game for any way to grow the WP marketshare. This could play out to be a great year for the platform. Haiwai, HTC, Samsung... all are welcome in my book.
I know games like Subway surfer,TR 2 are great to have but that doesn't really mean you have to crave for them because while using windows phone you need to sacrifice your urge to play popular games for the sake of an overall extraordinary user experience without any kind of lags or bugs etc.
And don't worry Windows phone is still in its development stage and in six months or so i hope frequency of complaints about lack will be getting lower :)
- Video picker API
- Share video to app (like share picture)
.... In other words,, iDroid has been just fuc#$%& tha market.. Windowsphone is gonna make love to it.......
One thing is sure, Windows Phone is having increased Mind Share and then the market share will follow. Its only a matter of time.
Nokia phones don't win on pure numbers, as WP has never done, as WP is considerably more efficient than Android. However, 92x and 1020 are examples of good high end phones, and I think Nokia is still working in this space as well.
In addition to the screen likely requiring more power, more RAM also requires more power. RAM needs to be constantly powered, and constantly refreshed, otherwise the data in it is lost. Each bit in RAM is a tiny capacitor, a device that holds an electrical charge. That charge discharges itself within quite a short period of time, so it has to be regularly read and written back so that when it is read, there's enough charge left to be detected. (Reading the bit also causes the capacitor to discharge, so the reading circuit automatically recharges it.) More RAM basically means lower battery life, or a larger battery is required.
Windows Server 2012 (same kernel as Windows Phone 8) supports 640 logical processors (64 processor sockets) in the higher editions. The lower editions are restricted by configuration in the registry: they run exactly the same code. Windows 7/Server 2008 R2 blew away the old one-logical-core-per-bit limit (32-bit OS supported 32 processors, 64-bit supported 64 processors in Windows Vista/Server 2008 and earlier editions). I think the theoretical limit is 4096 (64 processors in each of 64 groups), but Microsoft only claim to support configurations they can test, i.e. hardware that actually existed when they were developing the OS.
The CoreCLR on Windows Phone 8 is a filtered version of .NET Framework 4.5. Basically, the complex pieces used for implementing the 'server' garbage collector, ASP.NET and other server-side pieces, and the complex Code Access Security model are removed. .NET 4.5 supports more than 64 processors, though you have to turn support for processor groups on in the program's configuration file (they are off by default) to have its threads run on more than one processor group.
There isn't a lot of benefit in having additional cores in Windows Phone, because the OS behaves the same way as Windows 8 'Windows Store' apps. When an app moves into the background, the OS asks it to persist any unsaved state - so that its memory can be discarded - and then suspends all its threads. The code of non-foreground apps literally cannot run. An app has to register a background agent to keep itself up to date in the background, and the OS is very stingy on giving these agents resources. Foreground apps are actually very unlikely to be able to consistently saturate two cores and get any benefit from more than two cores.
In contrast, Android just allows all code to run all the time. That's why it needs more processor cores: because background apps and services can be hogging the CPU cores and preventing the foreground app getting work done. It requires the user to actively manage the running apps and services to avoid runaway CPU usage, which uses up the battery, while Windows Phone (and iOS) follow the motto: "out of sight, out of mind".
Additional CPU cores will still use a little power even when 'parked'. Less than they would if they were idle, or actually being used, but again, it's a trade-off of performance versus battery life.
I did see that Nokia describes the new 625 as "orange", however I think a neon orange for nokia would go better with their neon blue (cyan) color scheme. The reddish orange 625 could use some cheering up, its too dark.
But there's no doubt that the cheap phones are the ones who will sell more and push forward the market. Let us all remember that Western economy is in the sh*t and the majority of people don't have money to waste on expensive smartphones (yes, I say "waste" on purpose. If you have a limited family budget, smartphones are NOT an essencial good.). So they'll demand a low budget one or they won't buy at all. And if people don't buy, companies go out of business. Simple math. As for the iPhone...the iPhone is the most overpriced piece of crap I've seen. 1000€ for a smartphone? Yeah sure. Let me just go to the bathroom produce gold turds. With the economy on the ground, even Apple realized they had to release a budget iPhone. Which would have happened long ago if they had noticed that, whenever they release a new iPhone and the prices of the previous versions are droped, there's a boom in sales of the older devices.
I've seen that happen a lot when the iPhone 4S was released (people bought many iPhone 3's and 4) and when they released the iPhone 5 (people went and bought iPhone's 4 and 4S).
When phones are "free" or "just" $99 dollars, people tend to go for the high end, because the true cost is hidden and subsidized. With the small but noticeable shift towards the model that is more common on other countries, where the plan and phone are priced separately (see T-Mobile for subscription, and PAYG phones), the lower end phones will become more competitive and more important.
Apple in particular has had a HUGE advantage with the currently prevailing model, where the true cost of the phones have been hidden. They have very little response to the shifting subscription landscape, whereas a manufacturer like Nokia has ruled this market for a long time.
Will be interesting to see if this shift is just a blip in the US and won't last, or if it's truly a new paradigm. If it is a lasting change, the hardware market will surely change dramatically.
It's clear that this article came after the negative response to the 625. I just wish we would embrace that yes, it is a good thing to have quantity. WP is still very young and has a lot of ground to fill.
But stil discouraged by the following facts:
1. Timing for the distribution
2. WP still limited options of apps compared to Android and IOS, especially the ones working with low spec RAM
I don't know why it takes too long for Nokia and Microsoft to fix this area. Hope they realize that they are killing them self by not fixing these issues immediately.
But as long supporter of Nokia, from 3210 to 920, I wish Nokia could go and compete the others like they done years before.... Go Nokia!
I'm not trolling. I just couldn't hold my tongue any longer. I mean, almost every article you post is like this.
P.S., you should get some shut eye too. I think any work schedule beyond 10 hours a day should be illegal...
Check out this one.
That's ruoghly US$277. And there's more where that came from, even coming down to $150.
In comparison, the 820 costs roughly $393-$417 here. 720 at $300-$324, which already is lower specced but somehow more expensive. 620 though can be bought for around $210.
Considering that, it isn't really surprising that Nokia's popularity, especially the Lumia line, is fading here. Add to the fact that they can't penetrate the iPhone, Galaxy S4, HTC One crowd due to late releases...
US Carriers are also moving towards European style. No contract, No subsidy, monthly payment model. They are really getting worried about the profit margin. So $100 to $400 range Windows Phone will have more market in the future. WP works smoothly on low end devices than Android. Apple we need to see. By 2014 you will see this change. Nokia is well positioned for this change. They have 525, 625, 725, 825 already lined up for this price range (from 4.5 to 5.5"). Now People can't live without phone, And carriers does not see any value in signing 2 year contract with a customer. If one leave another will sign up for service. Hopefully attractive plans will emerge.
Sure the 920/1020/Galaxy 4S/iPhone 5 are full spec high price products, but when you are going after the Blue Ocean of the masses, the masses really doesn't care about such market leading technology and the associated price, they just want something that does what they need at a price they can afford.
It is how products like the Wii was so successful. Rather than focus purely on amazing graphics and compute power they offered a new experience to the user with graphics that were just ok and marketed it at a cheap price, the result was the fastest selling console in history. There have been plenty of other examples of companies who keep focussing on the high end of the market with big profit margins and leave the lower quality low margin market ignored. What happens is that there is still a market for these lower quality products, but as technology improves the company who started on the low quality product starts making more premium products and can then start pushing the incumbents out of the market given their strength in the market across all levels.
I'd even say that Google use a market disruption type of strategy by simply starting with a basic search engine and just building their brand. From their they have slowly added more and more services that don't have all the features of the big enterprice products, but they have most of what people need at a cheap price to try and encroach on the incumbents domination.
I feel like this is what Nokia is trying to do, build up their foundations on the cheap handsets that don't have all the cutting edge features, but offer a good experience overall at the right price. They will keep making flagships for the enthusiasts, but mostly for R&D purposes. I don't think they will genuinely be a major competitor in the market until the bottom end of the market is the core foundation that they can build upon.
Talking about htc the worst thing i used to find about their budget phones was that early on they lacked some key features like Front camera even in the $300 bracket and when htc realised their mistakes it was already too late and regardless to say although Sense UI is really beautiful but it still is not that functional
Coming to apple i believe they are loosing their charm because people nowadays want freedom and there are hell lot of budget users in todays market where apple doesn't have any presence. Apple need to realise that gone are the days when people used to wait for the device from apple to release(still there are a significant number of those people but that number is still small as compared to those who are not willing to wait) and this is where companies like Samsung(already regarded the king by a few people but not me) and Nokia(it used to be the undisputed king and maybe it would become if it plays its cards right) have a chance...
I hope the 625 will do just as well, or even better, particularly as an affordable LTE phone!
Here's to the 520 and 625 pushing the WP userbase to greater heights!
Because the tide is turning, it's REALLY interesting to see just how Nokia and other manufacturers are gonna develope their low and midrange portfolio from now on. The new race is ON! ;)
a 600 phone would end up costing me close to 1000 or more customs alone charge 55% of the original price i am glad that phone are getting cheaper especially since my current budget is only 1100 for a new device i go to school and work part time, thats a lot of money