Who here remembers the very first Asus eeePC? It came out almost 3 years ago, and man was it a terrible product. Screen quality was not only horrifyingly bad, but so was the size and resolution. The keyboard was cramped. It was slower than your 90 year old Jewish grandmother behind the wheel of a Cadillac in Florida. And and and … the list goes on. What it did do however was break a price barrier. It made people think about laptops as an object that can cost less than $400. Compare a $400 laptop today and the first eeePC and you see how the evolution of what I like to call a “price category”.
Take that same thinking to mobile phones. There’s a reason Google isn’t trying to sell $30 feature phones to people in Africa. They, like Asus, know that eventually a smartphone running their operating system will reach that price point. It’s going to take a company, maybe not Asus, but instead some Chinese company whose name you can’t pronounce, to make the first $100 and even $50 Android devices, and they’ll be horrible, but they’ll destroy today’s current price barriers for smartphones.
Nokia makes $30 mobile phones because they can do so, profitably, while still maintaining a respectable amount of build quality. Chinese vendors don’t think like that. They’re going to make a $50 or $75 smartphone that will fall apart in 6 months, be slow, have a small screen with a terrible resolution, but they’ll at least be creating a different price category. There will be a new market for A, B, C features at price point X, people will compete in it, and the smartphone of today that you can buy at price point X will be X/5 in less than 3 years.
Why then do companies like Samsung and Nokia and LG make cheap mobile phones that can only do voice and SMS? I’m all for connecting the next billion people, but shouldn’t companies be competing on connecting the next billion people to the internet? How cheaply can you build a smartphone? How low can you go so that today’s feature phones, the devices that only do 2 things, no longer make sense to produce?
All these thoughts came to me during the weekend when I stayed over at my friend’s place and after opening up a drawer in the kitchen to try and find a wine opener, I found a Samsung SGH-E530. The feature list is great: WAP 2.0 browser, 176 x 220 pixel screen, 1 megapixel camera, Bluetooth, all in an 85 gram package. Cost? 350 EUR when in came out in June 2005. You can buy 3 units of the Nokia 5230 for that amount.
Mediatek recently announced that they joined the Open Handset Alliance. The gentlemen’s club where you get a lap dance from one of the Google brothers and watch a ping pong show staring Eric Schmidt every World Wide Wednesday and Search Engine Saturday. What does this mean? The company that designs the chips used by an untold number of vendors to make super cheap mobile phones, most of them clones of devices from other brands, is now going to be designing their chips to run Android.
How huge is this? It’s massive. When you see a Nokia E71 clone, called the Nokla E88, running Android 2.2 and not Symbian, or some home brew mobile Chinese operating system, being sold for $100, then you know that only then will progress me made in the mobile industry. That $100 clone will turn into $75, then $50, and some day maybe even $30.
So I’ve got to ask, why is everyone making a $50 feature phone when we should all be aiming for $75 smartphones? Operators are happy because they can charge more for their internet enabled services. People are happy because they get the technology that only rich people were using 3 years ago, but is now common place. Google is happy, because they’ll be making fractions of pennies for every advertisement shown, and trust me, they’ll be a lot more web surfers when everyone stops deciding to make feature phones.
Let the race be not to the bottom. To make the cheapest phone that can do nothing but be a phone. Let the race to the bottom be towards the people’s smartphone. If it sounds like Nokia’s goal, well it is, but who else besides Nokia uses Symbian?
My point exactly. Google’s Android OS, powered by Mediatek designed chips, in products with poisonous lead paint and questionable build quality, will be what powers the future. Not feature phones.
Can we stop building them?