The majority of flagship Android phones sold in 2-3 years will be under $400?

[apolloa]

The majority of flagship Android phones sold in 2-3 years will be under $400 off-contract?

Fact or Fiction?

This is already a FACT in the world biggest and third biggest smartphone market. China and India. Will it also become a norm in the West also by 2017/2018?

Haha absolute fiction, the way the world works you see means everything goes up in price as do wages. Things that cost penny's years ago cost pounds today.

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Gotcha, thanks for the clarification. I also understand subsidized pricing (while a dying breed) is mostly a US thing anyways.

Nope, in the UK pretty much every phone is available subsidised on contract, its been the model they use for years.

 

[bubulol]

I only buy unlocked phones
iPhone, Xperia, all above 600 euros
I have LTE contract for less than 3.99 euros per months (without obligation)
for Internet at home, 1.99 euros (up to 22 mbits but i dont need more)
do the maths, i win

 

[JHUFrank]

I am very interested to see the outcome of the growth of the Chinese market/manufacturers and how they will influence cell phone price.

 

[TimelessOne]

Umm I think you lack an understanding of flagship. Those tend to be the best phones. Not the ones they sell the most of. In the western countries yeah they are one and the same but not for other markets. That is not going to change.

 

[MRU]

The problem as ever with EBookReaders entire premise is that an item in China - costs the same as an item in USA.

It doesn't.

The average salary in China per year is 52388 CNY or in US $8,450

Average salary according to US social security / national wage index in USA is $44,888.16

Hence proportionally an item priced close to $400 in CNY to a Chinese audience is actually domestically far greater expense to the consumer than a $700 US phone to a USA consumer.

Hence ... You CAN NOT take an item price in territory 1 and translate it directly over to territory 2 with far higher wages and costs and expect it to cost the same as in the 'poorer' country.

Its ridiculous notion and utterly flawed thinking to expect so.


The reason OnePlus One have sold cheaply is because they do not sell from USA - they sell from China and are likely not paying any taxes to the USA and are not paying any USA employment wages. They are circumventing things that should these items be purchasable actually 'inside' the country - in stores - would have to pay proper import taxes and duties (putting price up) and marketing budgets for stores to stock them (putting price up) and far greater USA domestic wage bill (putting price up). Suddenly that $300 phone sold and shipped from China - now costs $500 upwards for the same product in the market.

 

[jamezr]

The problem as ever with eBook Readers premise is that an item in China - costs the same as an item in USA

It doesn't.

The average salary in China per year is 52388 CNY or in US $8,450

Average salary according to US social security / national wage index in USA is $44,888.16

Hence proportionally an item priced close to $400 in CNY to a Chinese audience is actually domestically far greater expense to the consumer than a $700 US phone to a USA consumer.

Hence ... You CAN NOT take an item price in territory 1 and translate it directly over to territory 2 with far higher wages and costs and expect it to cost the same as in the 'poorer' country.

Its ridiculous notion and utterly flawed thinking to expect so.


The reason OnePlus One have sold cheaply is because they do not sell from USA - they sell from China and are likely not paying any taxes to the USA and are not paying any USA employment wages. They are circumventing things that should these items be purchasable actually 'inside' the country - in stores - would have to pay proper import taxes and duties (putting price up) and marketing budgets for stores to stock them (putting price up) and far greater USA domestic wage bill (putting price up). Suddenly that $300 phone sold and shipped from China - now costs $500 upwards for the same product in the market.

Agree with he above and would add another caveat. All of these Chinese phones are GSM only. They do not support the biggest US carrier Verizon which is CDMA. They will work on AT&T and TMO but not the biggest carrier in the US ........Verizon.

 

[gotluck]

Hot Damn MRU!

 

[Technarchy]

The majority of flagship Android phones sold in 2-3 years will be under $400 off-contract?

Fact or Fiction?

This is already a FACT in the world biggest and third biggest smartphone market. China and India. Will it also become a norm in the West also by 2017/2018?

Never mind intellectual property theft which limits the markets many Chinese phones can touch.

Then add privacy concerns, missing Google services, no Official carrier support, weak tech support, questionable availability, spotty LTE support, and anti-dumping laws and Chinese phones have nowhere to go.

Don't forget taxes, tariffs, American staff wages and benefits, and international shipping costs.

So yeah your prediction is wrong.

 

[EbookReader]

People keep talking about these Chinese manufacturers getting sued if they sell in Western market, well, what about OnePlus One?

They sell in the West and have sold 1 million OnePlus One so far which mean they are not flying under the radar.

SO......where are the lawsuits?

And if OnePlus One can make a flagship phone at $299 / $349 and make a profit selling them in Western markets, so can other companies. Xiaomi is worth $50 billion USD. Others will want to get a piece of that pie by copying their "HIGH END DEVICE AT LOW MARGIN PRICES by selling ONLINE."

My basis premise is simple: More companies like Xiaomi, Lenovo, Huawei, OnePlus selling their flagship online at under $400, in a few years time, more than half of the Android flagships worldwide will be sold at under $400.

Huawei copied Xiaomi strategy and it is paying off big time. Lenovo is a bit late to the game but they will start this April.

http://www.reuters.com/article/2014/12/23/us-huawei-tech-mobilephone-idUSKBN0K11QV20141223

China's Huawei Technologies Co Ltd [HWT.UL] has taken sales of its low-price Honor brand of smartphones to 20 million from 1 million in just one year, hitting pay dirt with the disruptive online-only strategy it copied from smaller upstart Xiaomi Inc.




In a few years time, worldwide

Chinese flagships at under $400 will OUTSELL

Samsung flagships + LG flagships + HTC flagships at $650

This trend is already happening in China.

 

[MRU]

This trend is already happening in China.

And you still fail to misunderstand economics by taking one flat assumption from one territory (ignoring all the economic reasons why an item is priced in a country as it is) and think you can apply that to a different territory with a totally different economy.

Stop taking flawed assumptions and thinking you can apply them universally. You are embarrassing yourself at this stage.

 

[ucfgrad93]

And you still fail to misunderstand economics by taking one flat assumption from one territory (ignoring all the economic reasons why an item is priced in a country as it is) and think you can apply that to a different territory with a totally different economy.

Stop taking flawed assumptions and thinking you can apply them universally. You are embarrassing yourself at this stage.

Agreed. While it may work in China I don't see it working in the US or Europe.

 

[Septembersrain]

Add in the underground sites that ship from China to the USA by the thousands and it's easily fiction.

 

[PinkyMacGodess]

Fiction. But I wonder what part of the unsubsidized phone price is an offset for the price of the subsidized phone price. In that I'm sure that those buying one outright are paying a little more just to make a higher profit because of the subsidized prices.

But anyway...

 

[EbookReader]

And you still fail to misunderstand economics by taking one flat assumption from one territory (ignoring all the economic reasons why an item is priced in a country as it is) and think you can apply that to a different territory with a totally different economy.

Stop taking flawed assumptions and thinking you can apply them universally. You are embarrassing yourself at this stage.

All I'm saying it has been demonstrated that it is EXPORTABLE. Due to the internet, the world is a lot flatter.

OnePlus is a Chinese company.

They sold flagship Android smartphone at $299 / $349 to Western markets and make a profit.

If OnePlus can do it, so can bigger Chinese companies like Lenovo and Huawei. It's very easy to copy OnePlus strategy.

1) Make high end smartphones
2) Sell it at very low margin on the internet
3) Invite system like OnePlus or flash sales like Xiaomi



http://www.bloomberg.com/news/2015-...ic-offering-for-new-smart-device-company.html
Lenovo Considering Public Offering for New Smart-Device Unit

The unit, which will be called Shenqi, could be worth “a couple of billion dollars” after it begins selling smartphones and Internet-connected household devices online under its own brand in April, Chief Executive Officer Yang Yuanqing said today in an interview at the company’s headquarters in Beijing. Yang declined to give a timeframe for any fundraising moves or name specific investors.


The Lenovo startup would use a direct-to-consumer, Internet-based business model similar to that which propelled closely held Xiaomi Corp. to the top of the China smartphone market and third-place globally in the third quarter last year. The Shenqi brand and online store would allow the company to reach consumers beyond the mobile phone carriers and retailers who sell Lenovo-branded smartphones and computers, Yang said.

“We want to build a pure Internet-oriented model,” he said. “If we do this kind of model within the current Lenovo, there is a lot of conflict with existing channels and carrier partners. With a different team mechanism, we can do whatever we want.”

 

[EbookReader]

The problem as ever with EBookReaders entire premise is that an item in China - costs the same as an item in USA.

It doesn't.

The average salary in China per year is 52388 CNY or in US $8,450

Average salary according to US social security / national wage index in USA is $44,888.16

Hence proportionally an item priced close to $400 in CNY to a Chinese audience is actually domestically far greater expense to the consumer than a $700 US phone to a USA consumer.

Hence ... You CAN NOT take an item price in territory 1 and translate it directly over to territory 2 with far higher wages and costs and expect it to cost the same as in the 'poorer' country.

Its ridiculous notion and utterly flawed thinking to expect so.


The reason OnePlus One have sold cheaply is because they do not sell from USA - they sell from China and are likely not paying any taxes to the USA and are not paying any USA employment wages. They are circumventing things that should these items be purchasable actually 'inside' the country - in stores - would have to pay proper import taxes and duties (putting price up) and marketing budgets for stores to stock them (putting price up) and far greater USA domestic wage bill (putting price up). Suddenly that $300 phone sold and shipped from China - now costs $500 upwards for the same product in the market.

By selling them in stores and using marketing would defeat the whole strategy of selling smartphone ONLINE. And as you suggested, it would increase the price from $300 to $500.

If OnePlus sells their smartphone at a AT&T and T-Mobile stores, the $500 would be the price for it because there are things like marketing, retailer overhead, retailer profit margin, warehouse, shipment etc...

The "direct-to-consumer, Internet-based business model" is the opposite of it. It is meant to cut expenses so the customers can save money.

Xiaomi and OnePlus is able to sell high end devices at half the prices of similar phones because they sell online and they don't spend on marketing.

Agree with he above and would add another caveat. All of these Chinese phones are GSM only. They do not support the biggest US carrier Verizon which is CDMA. They will work on AT&T and TMO but not the biggest carrier in the US ........Verizon.

So there are no Sprint or Verizon Lenovo or Huawei or Coolpad phones?

LOL. These are Chinese companies and surprise surprise, they work on CDMA.

If LG can make the Nexus 5 work for T-Mobile, AT&T (GSM) and for Sprint (CDMA), so can the Chinese companies.

 

[EbookReader]

It's easy to see why Xiaomi have sold so many phones in such a short period of time.

http://techcrunch.com/2015/01/19/xiaomi-secret-sauce/

“The reason we do these price cuts is because we’ve managed to negotiate component cost decreases [with our suppliers] over time, which ends up leaving us with a bigger margin than we’d like to have, so we do a price cut,” Barra added.

 

[Technarchy]

It's easy to see why Xiaomi have sold so many phones in such a short period of time.

http://techcrunch.com/2015/01/19/xiaomi-secret-sauce/

“The reason we do these price cuts is because we’ve managed to negotiate component cost decreases [with our suppliers] over time, which ends up leaving us with a bigger margin than we’d like to have, so we do a price cut,” Barra added.

Also doesn't make much money either.

http://www.forbes.com/sites/parmyolson/2014/12/15/xiaomi-profit-margins-samsung-china/

 

[Savor]

Reading that Xiaomi is still a few years away on concentrating in the US market, it can be a reality once Xiaomi and other Chinese brands follow suit.

Right now, sub-$400 isn't the NORM in the US yet. And those companies are still UNKNOWN. But once they start to become known in the next few years, then yes. Americans love a good deal. Look at Black Friday for example. They go through all that chaos just to save a few bucks here and there. Considering the Nexus 4, 5, and 7 were just a taste of finding a good bargain, imagine how much more successful other brands can do? Remember, VIZIO was a market leader for HDTV's early on because of PRICE & GOOD VALUE.

The only smartphone that interest me right now is the Asus Zenfone 2. I checked the Huawei Ascend Mate 7, Meizu MX4, and Asus Zenfone 6. All are very good. The Zenfone 2 seems to hit three check marks - camera, good battery life, and most importantly PRICE. The Meizu MX4 is quite affordable already but the $199 Zenfone 2 still seems to be a better deal. I love dilemmas. It means there are many, many great options to choose from nowadays.

Market is fickle. We change our minds every few seconds. Wait when selfie sticks, 6-inch phablets with large batteries, and cheap Asian flagships starts trending in America... It hasn't happened yet. But it will. It tooks years after until Americans started grasping texting... (circa 1999-2000) when most Asian countries were already into it.

 

[I7guy]

By selling them in stores and using marketing would defeat the whole strategy of selling smartphone ONLINE. And as you suggested, it would increase the price from $300 to $500.

If OnePlus sells their smartphone at a AT&T and T-Mobile stores, the $500 would be the price for it because there are things like marketing, retailer overhead, retailer profit margin, warehouse, shipment etc...

The "direct-to-consumer, Internet-based business model" is the opposite of it. It is meant to cut expenses so the customers can save money.

Xiaomi and OnePlus is able to sell high end devices at half the prices of similar phones because they sell online and they don't spend on marketing.





So there are no Sprint or Verizon Lenovo or Huawei or Coolpad phones?

LOL. These are Chinese companies and surprise surprise, they work on CDMA.

If LG can make the Nexus 5 work for T-Mobile, AT&T (GSM) and for Sprint (CDMA), so can the Chinese companies.

One of the reasons I like my high priced Apple phone, is if anything catostrophic happens, I can buy a new phone and be up and running in 15 minutes with full continuity and they work on verizon. Don't know if you can go this on these direct to consumer phones but I suppose you could buy two as their cheap enough.

 

[Abazigal]

The majority of flagship Android phones sold in 2-3 years will be under $400 off-contract?

Fact or Fiction?

This is already a FACT in the world biggest and third biggest smartphone market. China and India. Will it also become a norm in the West also by 2017/2018?

So what if it turns out to be fact? So what if it's fiction?

 

[MasterRyu2011]

You know, I am actually all for off-contract pricing. I would be quite happy if subsidies go the way of the dinosaurs. Without subsidies the smaller players selling inexpensive phones would certainly get more exposure; competition is good. Most people wouldn't be so quick to jump ship on that new S6 or iPhone 6S if they have to pay almost a grand up front.

 

[I7guy]

You know, I am actually all for off-contract pricing. I would be quite happy if subsidies go the way of the dinosaurs. Without subsidies the smaller players selling inexpensive phones would certainly get more exposure; competition is good. Most people wouldn't be so quick to jump ship on that new S6 or iPhone 6S if they have to pay almost a grand up front.

Subsidies aren't going away so fast. At least not in verizon. They are being supplemented by leasing options and term loans, to make sure people can still get the Apple device of their choice. But the real issue for consumers is China to you bypassing the stores and mission critical support.

 

[MRU]

You know, I am actually all for off-contract pricing. I would be quite happy if subsidies go the way of the dinosaurs. Without subsidies the smaller players selling inexpensive phones would certainly get more exposure; competition is good. Most people wouldn't be so quick to jump ship on that new S6 or iPhone 6S if they have to pay almost a grand up front.

subsidies are not going anywhere here in Europe where they are the primary selling point for both consumers and carriers.

Contract length is increasing which suits carriers - and subsidies are increasing which suits the consumer who thinks they are getting a cheap phone.

 

[jrswizzle]

For this to become a fact, Apple's marketshare would have to take a SIGNIFICANT plunge given they currently own nearly 45% of the US market and a decent share of the European market.

Add in all high end Android devices and you're WELL OVER 50%.

I don't see iPhone users bailing on their beloved device just because some cheap Chinese knockoff comes along.

Could it affect high-end Android OEMs? Absolutely. But it's pretty obvious the high-end (price-wise) Android market doesn't make up a large percentage of Android's overall share (I think high end Samsung devices like the Note 4 and GS5 make up somewhere around 20% of their total devices sold - that's an estimate based on some pulled together data).

All-in-all, I don't expect companies like Xiaomi or Oppo to make much of a dent in the US or Europe.

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subsidies are not going anywhere here in Europe where they are the primary selling point for both consumers and carriers.

Contract length is increasing which suits carriers - and subsidies are increasing which suits the consumer who thinks they are getting a cheap phone.

And here in the US, the model is moving away from "subsidies" and toward calling them what they've always been - interest free financing built into your bill.

You can either pay $1000 for your 128GB 6+, or you can charge it, interest free and take on an extra $55/month to your cell phone bill.

Either way, the overall cost of the device is somewhat mitigated when the option of interest free financing is available. Best of all, I didn't have to pay anything up front.

I think people underestimate the brand loyalty Apple has and Samsung is building. They already make up a vast majority of smartphone sales anyhow here in the West. People are used to spending a certain amount of money for a specific product. They won't necessarily change just because its cheaper.

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You know, I am actually all for off-contract pricing. I would be quite happy if subsidies go the way of the dinosaurs. Without subsidies the smaller players selling inexpensive phones would certainly get more exposure; competition is good. Most people wouldn't be so quick to jump ship on that new S6 or iPhone 6S if they have to pay almost a grand up front.

I think you underestimate the brand loyalty these companies have.

And while traditional subsidies may go the way of the traditional 2-yr contract, there will still be interest free financing options with zero down (AT&T Next, T-Mobile JUMP etc).

I don't care how cheap the device is or what processor it has. I wouldn't replace my iPhone with any other brand.

And if I couldn't afford a new iPhone, I'd keep the one I have rather than upgrading to a cheaper Xiaomi or whatever. I can guarantee I'm not alone - likely in the majority of iOS/Apple users.

 

[EbookReader]

For this to become a fact, Apple's marketshare would have to take a SIGNIFICANT plunge given they currently own nearly 45% of the US market and a decent share of the European market.

Apple market share has nothing to do with it since the title isn't

The majority of flagship phones sold in 2-3 years will be under $400?

The title is:

The majority of flagship Android phones sold in 2-3 years will be under $400?




p.s. No-subsidy might be even more attractive than subsidies to customers who want to pay $0 down instead $199 upfront.


$0 down and installment plans

vs

$199 up front


The carriers have done their calculations. They get about the same money either way.

The saving comes from when you bring your own device.