Android set to smash feature phone market

If last week’s CTIA Enterprise & Applications event in San Francisco showed the mobile industry anything it was that Google Inc.’s Android operating system has hit critical mass. From the never-ending announcements of new devices sporting the OS to the 30-foot tall blow-up Android doll in the convention center’s lobby, few could argue this year’s event was not dominated by Android.
That domination seemed to be welcome news to many in attendance that were looking to find ways to capitalize on the increased consumer awareness and demand for mobile devices that do more than just make phone calls. Consumers seem to want more feature-packed devices and the ability to download applications to those devices.
The market appears to be answering the call. While the initial splash of Android-powered devices were targeting the higher-end of the space, it now appears device makers and carriers are bringing those offerings down the price scale.
Sprint Nextel Corp. tried to make a big splash with its Sprint ID offering that allows customers to download a package of applications to their Android-powered devices. However, the announcement was overshadowed by the fact that one of those Sprint ID-enabled devices would be a $50 handset from LG Electronics Co. Ltd. (That price point includes all subsidies and a two-year contract.) The device, dubbed the Optimus 5, sported many features that were standard on Android devices from just a year ago that sold for around $200 with full subsidies.
In addition, Leap Wireless International Inc.’s Cricket service unveiled an Android-powered device from Huawei Technologies Co. Ltd. that was set to retail for $150 without a contract.
In my eyes these devices are set to wipe out the once-blossoming feature phone market that was the talk of the town following the launch of Motorola Inc.’s iconic Razr more than five years ago. Ah, the Razr.
From a consumer’s perspective, I can’t see anyone shopping for a new mobile device and picking a $50 phone with a standard 12-button dial pad over a glorious smart phone. Sure, for a customer more comfortable with a clamshell form factor a feature phone could prove more compelling than a slab smart phone, but my guess is that demographic is shrinking by the minute.
Some may argue that the additional monthly fee required by carriers for smart phones could extend the life of the feature phone segment, which in most cases does not require as much of a monthly premium. That could be the case, but my guess is that most people are more concerned with the upfront costs and abilities of a device rather than an additional $10 to $30 they may be forced to pay per month for that device.
Don’t get me wrong. I believe that many consumers really don’t need all the bells and whistles embedded into today’s smart phones any more than they need a sixth toe. But, with price now being taken out of the equation when it comes to cross-shopping between a smart phone and a feature phone, most will follow human nature and want to get as much for their dollar as possible.
So where does that leave us? Well, I think in a year or so there will still be a market for entry-level, voice/text-only devices that will sell for $50 or less without a contract or will be given away with a contract. But, above that, smart phones powered by either Android’s OS or hardware variations of Apple Inc.’s iPhone will rule the market leaving little room left for the feature phone.