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Why Cheap Smartphones Are Going To Upset the Industry 234

An anonymous reader writes "Just when people got used to good smartphones costing $200 with a 2-year contract, they also started to realize that those 2-year contracts were bad news. Still, it's often more palatable than fronting $600 for good, new hardware. But that's starting to change. Cell phone internals are getting cheap enough that prices for capable devices have been creeping downward below $200 without a contract. We ran into something similar with the PC industry some years back — previous-gen chips had no trouble running next-gen software (excluding games with bleeding-edge graphics), and so the impetus to keep getting the latest-and-greatest hardware disappeared for a lot of people. That revolution is underway now for smartphones, and it's going to shake things up for everybody, including Apple and Samsung. But the biggest effects will be felt in the developing world: '[F]or a vast number of people in a vast number of countries, the cheap handset will be the first screen, and the only screen. Their primary interface with the world. A way of connecting to the Internet where there are no telephone lines or coaxial cables or even electricity. In nations without subsidized cell phone contracts or access to consumer credit, the $50-and-you-own-it handset is going to be transformative.'"
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Why Cheap Smartphones Are Going To Upset the Industry

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  • by anubi ( 640541 ) on Sunday May 18, 2014 @05:26AM (#47030417) Journal
    I would not be surprised in the least to find voice over internet protocol (VOIP) completely taking over once everyone has access to this technology.

    Who needs a cellphone carrier if they have access to the internet?

    The providers as we know them now may go back to selling buggy-whips for all I know...
    • Upset the industry? (Score:4, Interesting)

      by Anonymous Coward on Sunday May 18, 2014 @05:38AM (#47030437)

      Except in places where data is limited to a fault, ie anywhere that isn't urban america and/or some other afluent cities (like London). Same reason why SDCards aren't going to die for android, as much as google might want you to stream your music it just isn't possible and a sub 2gig plan. Even then it's still stupid. So long as there are stupid caps to the level of data that companies will give people nothing like this will take off. Take my plan for example. I live in Australia and all the plans from every comapny around $30AUS a month have about 200-400 MB worht of data. to get anything worth while you have to go up to $60 a month which for a lot of people isn't something they can do. It's similarly shitty in a lot of other countries too

      • Clue up google. Dont be daft dick heads.

        Unless you give me a 64g nexus phone thats $299, give me a mobile with 3 microSD slots.

        1 for video
        1 for photo
        1 for apps/data.

        Your 100% wireless internet is still 15 years off.

      • In Africa, you get things like community mesh networks spreading. Especially with recent codecs like Codec2 (hi, Bruce Perens! ;-)), you should need even less bandwidth than GSM for reasonable-quality VOIP apps.
      • by gl4ss ( 559668 )


        having data is mandatory for the 2.5th world countries. because everyone uses whatsapp or line for chat(sms is too expensive).

        but anyways, upset the industry? maybe the american version where selling shit networks and gouging ridiculous money from "subsidized" handsets from users.

        anyways, nokia is making a dualcore android phone now and it's retailing at about 80 bucks(unsubbed)... 200 bucks is mid range.

        I live in finland and thailand and really the cheap data options are about the same, except

      • by mlts ( 1038732 )

        You hit the nail on the head. In a way, it is a razor and blade school of marketing. The phones are cheap, but if you want to use any data with it, you will be paying upwards of a C-note a month, regardless of using T-Mobile, Sprint, AT&T, Verizon, CREDO, Millenicom, or the other MVNOs. It used to be that there were unlimited data plans, but the tier 1 providers dropped the hammer on the MVNOs to disallow it.

        Google seems to have good intentions with wanting to get rid of the SD card, but realisticall

      • Ha, we beat you!
        $30 a month will get you up to 1GB of data in NZ.

    • Voice calls are very cheap and reasonable in many developing countries such that it isn't really an issue. In my experience the connection quality is usually too low for an adequate VOIP service, but this may change with the new generation of mobile internet.

      My perception is that telcos in developed markets are finding it more lucrative to milk whatever they can from legacy customers still ready to pay high prices for voice service than invest and develop new technologies and services.

    • by Anonymous Coward on Sunday May 18, 2014 @05:50AM (#47030467)

      Who needs a cellphone carrier if they have access to the internet?

      To acually get to the Inernet when there is not any WiFi around?

      • by mcrbids ( 148650 )

        I'm sitting in front of my $2500 laptop while a $50 TV stick smoothly plays Netflix on my bedroom TV. This "TV stick" is a fully functioning Android computer [] with all that implies. This is the "desktop equivalent" to the laptop, which in this case is a mobile phone device.

        My point is that what "is a computer" is so cheap that the market is about to be tripped, completely. My phone now represents the majority of my interaction with the Internet in a personal context, and I do Internet development professiona

    • by ebno-10db ( 1459097 ) on Sunday May 18, 2014 @06:33AM (#47030551)

      I would not be surprised in the least to find voice over internet protocol (VOIP) completely taking over once everyone has access to this technology.

      There is nothing about VoIP that's inherently cheaper than straight digitized voice streams. VoIP eats up more bandwidth (all the headers and stuff), and RF bandwidth is the most precious commodity there is in wireless. They've done a great job w/ better modulation and coding techniques, but Shannon and Nyquist are still right. Getting more RF bandwidth is great too, but there are still limits. Maybe someday we'll use mm wave for cell phones, but we're a long way from that.

      VoIP makes sense for fixed point connections where umpteen zigabit/sec (or whatever they're up to this week) makes bandwidth extremely cheap, but otherwise it sucks. And I haven't even mentioned latency requirements yet.

      • Most of the carriers use VoIP internally now anyway - the entire BT backbone in the UK has been VoIP for a long time. The difference between VoIP over the phone company's phone plan and over their data plan is the QoS. It is inherently cheaper to send data when you don't have latency and jitter guarantees, because you need to reserve spectrum for the duration of the call to be able to guarantee meeting the maximum jitter requirement, and if you miss it then people complain. For VoIP over a data plan, peo
    • I use VOIP sometimes but have often had to drop my calls and go back to the standard phone network because the quality was so poor. Maybe other ISPs or VOIP providers would be better - but it's a bit of a crapshoot. It's certainly not good enough to abandon conventional phones entirely.

    • by alen ( 225700 )

      every carrier in the USA gives you unlimited minutes and texts
      what's voip supposed to be used for again except international calls?

      • Sure, lots of carriers will give you unlimited voice and text for something like $30-40/month (or more)... but that's with only a little scrap of data. If you want unlimited voice and a reasonable amount of data (say, 2GB of 4G) then you're talking about $60+/month.

        ...Unless, of course, you realize that you can use VoIP and therefore don't need the unlimited voice. In that case, you can get a T-mobile plan for $30/month that gives you 5GB of 4G data but only 100 voice minutes (that you won't use anyway beca

    • Who needs a cellphone carrier if they have access to the internet?

      So who do you think is going to provide this ubiquitous internet ?

    • by gtall ( 79522 )

      Err...who owns access to the internet?

    • by nurb432 ( 527695 )

      Who needs a cellphone carrier? So you think that its 'magic' that your phone has data as you drive around? You seem to not understand that many carriers these days have data caps, but not voice caps. ( all will follow if more people use more data.. ).

      "but i have wifi" , ok where is that coming from? Another carrier that will cap your use. And how do you expect to get that WiFi once you leave your home? Idiot.

      You cant beat the people that control your connection. They make the rules. You will take it, and a

    • So why would you buy an iPhone and not an iPod Touch?

      Because cellphone carriers provide internet access and seamless handover between cells

      Imagine trying to call someone over VOIP on WiFi, while walking down the street, or sitting on a bus.
      Every time you switch access points your connection will die, you'll be given a new IP address behind a different NAT going through a different ISP.
      There will also be a few seconds where you have no connectivity while your device times out because you went out of range of

  • A way of connecting to the Internet where there are no telephone lines or coaxial cables or even electricity.

    What the hell is going to power the phones then? I think someone may be getting a little carried away with themselves

    • by WegianWarrior ( 649800 ) on Sunday May 18, 2014 @05:49AM (#47030459) Journal
      While I can't comment on the third world in general, I saw a lot of solar cell setups for charging cell phones in South Sudan - people even ran solar charging as a business; a solar panel, some car batteries, a black box of electronics and 3 to 5 South Sudanese pound for a full charge.
      Also saw plenty of cell towers with solar panels and battery banks, with diesel generators for backup. Not as clean or tidy as plugging into the grid, granted... but it works. Was a life line for me for a year spent down there, and twice so for the people who lives their whole life there.
      Just because you can't plug something into a national grid, don't mean you can't get power... often cheaper and more reliable than the grid too - at least in Juba.
      • by Thruen ( 753567 )
        Right, so, electricity. It doesn't stop being electricity when it comes from solar panels or diesel generators, so I'm not sure what you're on about. Clearly, they were getting carried away suggesting you'll be able to connect to the internet without any electricity.
    • by rossdee ( 243626 )

      In most parts of the world they have these 4 wheeled vehicles powered by internal combustion engines. They usually have a 12 volt output that you can plug a phone charger into.

      • Running a vehicle just to charge a cell phone is _grossly_ inefficient, and expensive. A local generator charging batteries is more efficient. But why pay for gasoline, and maintaining a motor, or even pay for grid electricity, when a modest solar charger can pay for itself in a month?

        • A solar charger can pay for itself in a month in a country not dependent on electricity? I live in the country with the world's highest electricity prices and the payback period on solar for a whole house is in the order of 5 years.

          To think that a small panel would pay for itself unless it was run as some part of a business is ludicrous. On the flip side gasoline is very bloody cheap in Africa compared to most of the western world, and many people have cars already.

      • In most parts of the world they have these 4 wheeled vehicles powered by internal combustion engines. They usually have a 12 volt output that you can plug a phone charger into.

        What is it that's 12 volts? Hint: the answer is electricity.

        The summary might have meant "electric grid", but using mobile phones without any electricity at all will be pretty tough to do.

  • Sigh (Score:5, Insightful)

    by ledow ( 319597 ) on Sunday May 18, 2014 @05:55AM (#47030479) Homepage

    What else, precisely, were you expecting?

    That we all continue to pay for the latest-and-greatest no matter what for ever and ever? Smartphones are plateauing, like any other technology. They are now so ubiquitous that there's little point spending a fortune for something that can do the same, but "slightly faster" or with more megapixels, or whatever.

    Sure, there are evolutions, and merges of technology, and lots of new developments still to come but if the phones don't have something new, then they are all just the same as each other, give or take a few statistics here or there.

    Smartphones beat out ordinary mobile phones, that's for sure, but it was a long while coming. Tablets are in the same place at the moment - they are powerful enough to run almost anything and so there's little to distinguish them except for company name and some random technical specifications.

    Welcome to the era of ubiquitous computing, where my mobile phone can plot a course across Europe, suck down traffic data and tell people on Facebook when I'm going to arrive quicker than I could do it myself on a full PC. While also handling all my calls, monitoring my car engine, checking my Exchange accounts, etc.

    The problem we have now is not pricing - the cost of something going down is rarely a problem for the consumers or the manufacturers and their suppliers. The problem we have now is what comes next? We all have Turing-capable machines that run at stupendous speeds, and most of us actually have several. The question is how do you design your services to take account of this - TV streaming, etc. is still in its infancy and pretty much in denial at the moment.

    • Re:Sigh (Score:5, Interesting)

      by ebno-10db ( 1459097 ) on Sunday May 18, 2014 @06:15AM (#47030519)

      You're absolutely right, but in addition to that the cellphone business (smart or dumb) has always been a crazy business to be in, even crazier than PC/laptop's. There it was about price, so the change was always slower and smoother (might take 5 years to be put out of business).

      The cellphone biz is insane. Remember when Nokia was king of the hill? Blackberry, Motorola, etc., etc. It's probably better business to be a component supplier. The margins may get thin as the prices go down, but it's all about performance and price. Chip sets (the RF/DSP stuff, not ARM's), displays, etc.

      Electronics: the only business where prices go down.

      I wish there were more like it. They keep telling us that inflation is low because smart phones are getting cheaper, and a pair of socks is $0.05 cheaper because they're now made in a country where people earn $2/day instead of $3. Never mind that nobody can afford medical insurance (yes, before Obamacare too, w/ double-digit inflation), and going to college (let alone grad school) means mortgaging your children's children.

      Here's one for you who complain about old fart stories. Between a partial scholarship, federal grants (yes grants, not loans, and my family was working class, not poor) and employer tuition payments (100% if you got a 'B' or better), I got my BSEE and MSEE without paying a cent in tuition. I'm not gloating, because it was not because of anything brilliant that I did. I wish we still had it because my kids are approaching college age. But inflation is low!

      • Re: (Score:2, Insightful)

        Reagan set the stage. Clinton triangulated the Democrats and aligned himself with the Republicans. Though the Democrats love the "Big Dog", he was the one who decimated welfare as we knew it, killed Glass-Stegal, exempted derivatives from regulations, and permitted regulator shopping among the financial institutions. 100 billion dollar insurance companies register themselves as thrifts to escape oversight, for example. All through the 90s there was systemic wealth transfer from the bottom 80% to the top 20%
    • by swb ( 14022 )

      That we all continue to pay for the latest-and-greatest no matter what for ever and ever? Smartphones are plateauing, like any other technology.

      I think some people will, there seems to be a lot of opportunity for improvements in technology and platform-specific development even if cheap phones seem good enough for some specific set of circumstances.

  • by hamster_nz ( 656572 ) on Sunday May 18, 2014 @06:29AM (#47030545)

    ... it is just that the phone networks don't want you to have them.

    I have a 5", quad core, 2GB RAM, 32GB Flash smart phone from Chinavasion []. It is much like a Samsung S4, and cost US$250. Unlocked as a standard feature, and with dual SIM, Took five days to from order to doorstep. Plugged in my work SIM and my own SIM and gave back a my work's S3.

    A cheap 4" can be had for under $70.

    • by Thruen ( 753567 )
      But the Chinese might be spying on you!

      Hah, gave myself a good chuckle with that one.
      • by sjames ( 1099 )

        I would prefer the Chinese spies to the U.S. spies.

        The Chinese don't give a crap what the vast majority of Americans say or do. They won't likely decide I support the 'wrong' candidate for president or that I have a 'bad attitude' about some law or another here.

  • by sirwired ( 27582 ) on Sunday May 18, 2014 @07:25AM (#47030667)

    In the US anyway, Google/Motorola has been raising the bar on what's possible with inexpensive smartphones. I have a Moto G targeted to the Boost no-contract plan for which I paid $80, out the door. It has a decent (if non-removable) battery, excellent screen of a decent size, runs KitKat/Dual-Core/1GB RAM, and is even waterproof (plenty of YouTube videos showing the phone functioning in a bowl of water.) The next version (coming out soon) will add a much-needed MicroSD slot and LTE. The only significant con is the camera, which is pretty mediocre (but what do you expect for that price?)

    The CDMA one I bought was easily flashed over to PagePlus/Verizon (Boost inexplicably did not request Moto permanently lock the bootloader; you can obtain a bootloader unlock code for free from Moto.) The GSM version is sold unlocked directly by Google for all of $180; the 4G will be $220.

    And they just announced the Moto E; a slightly lower-spec phone for only a puny $130.

    There's rampant speculation if Lenovo will continue this trend of well-spec'd cheap phones. The consensus seems to be no, given how Lenovo actually wants to make money on the purchase, and nobody thinks Google has any kind of usable margin on these superb value-priced phones.

    • by ifiwereasculptor ( 1870574 ) on Sunday May 18, 2014 @08:21AM (#47030769)

      The Moto G is actually a quad-core. I have a Nexus 4, but I envy Moto G owners mostly because the phone is undistinguishably speedy, its battery lasts longer and it's unbelievably cheaper. Lenovo would be crazy not to continue the trend, because what Moto needs now is market and mind share. They attempted to make good phones with good margins (I'm thinking of the RAZRs) and they were doing way, way worse than with the Moto G/E.

      And what Google did with Moto was so simple it's laughable. Just remove the cruft (stop wasting resources with kevlar backs or MotoBlur), simplify and optimize the software and you can actually surpass the competition while using cheaper components. They could sell the Moto G for $300 and it would still be a good value if you compared it with the competition. LG's G2 Mini is pretty much the same phone, but priced at $400.

      • I bought a Moto G because I wanted to test it out before giving it to my brother and upgrading to a "proper" phone, the N5. At this point my brother might be getting my current Moto G but only if I decide to get the 4G version... It does absolutely everything I need and does it well. Damn shame Google sold Motorola - why do they make it so hard for me to give them money?!?

  • Except they really were not $200. It's just that people are too stupid to figure out the true cost.

    • by gl4ss ( 559668 )

      it's talking about 200 dollar unsubbed smartphones.
      which have been a reality for 10 or so years...

      but now it's nearing the point where you can't even tell the difference without running a benchmark software. you can already get dualcore phones for under 100 bucks. unsubbed. it will play youtube, spotify, angry birds, whatever.

  • by gelfling ( 6534 ) on Sunday May 18, 2014 @09:17AM (#47030969) Homepage Journal

    Transformative? Every time some semi alcoholic blogging 'communications major' from Vassar or some such place wanders into the mall and discovers that last year's models can be had, from a third party kiosk for near-free they immediately whip out their own brand new iPhone to proclaim a Golden Age is Upon Us.

    Cheap smartphones have been around for years and years you retard. The problem is the NETWORK.

  • by PopeRatzo ( 965947 ) on Sunday May 18, 2014 @10:06AM (#47031241) Journal

    Can I go on record as giving not one single fuck if the "industry" is "upset"?

    You want upset? Talk to my wife when she finds out I plan to spend my afternoon watching the Blackhawks, napping on the couch and playing Dark Souls II.

    • I work in the industry. If the industry is upset, there is a good chance of me being upset :)

      • There's also a good chance of you finding a better job with a new company that doesn't have a monopsony over hiring.

        Or it could cause your company to have to develop new innovative products, which could be very good for you.

        See, the thing is, if you're going to buy into the notion of a consumer-based, "free market" economy, you've got to see this kind of "creative destruction" as a positive. Personally, I see it all as a big dodge designed to redistribute wealth upwards, but that's a different discussion.

  • by Lumpy ( 12016 ) on Sunday May 18, 2014 @12:45PM (#47032347) Homepage

    You have been able to get"free" or $59 or $99 smartphones for the past 5 years.
    There is nothing at all new about this, they were last year models or strip down models. EXACTLY what they are proposing.

    Next up on Slashdot we discuss something from 5 years ago as if it is going to happen soon!

  • I'm looking at these seriously. No contract- $50 a month for "unlimited"* calls, text, data.

    The data is slowed after some amount.

    That's $50 a month savings for me. So $500 a year (taking out the cost of replacing the phone every 2 years). $5000 per 10 years. That's a couple nice vacations or a fourth of a new car.

  • I used to be one of those people who had to have the latest flagship phone on a 2 year plan. Then I wised up, realized I could buy a $200 phone with a quad core cpu and plenty of storage via removable SD card, and pay $50 a month for service. My current moto android running kit kat is every bit as good as the latest iOS device and Samsung flagship, and I paid half the price. I think we are about to see a huge drop in price as more people come to the realization that many of the features on flagship phone
  • It's only once the "$50 w/o contract" smartphone appears in first-world countries things start getting interesting.

  • ...or some other cryptocurrency. As these low-cost screens come on in the developing world, those users will want access to the modern, internationally-capable fee-free (very nearly) monetary system represented by cryptocurrencies. This may make 1st-world debate about the good or evil of bitcoin (and its ilk) largely irrelevant.
  • by ruir ( 2709173 ) on Monday May 19, 2014 @04:58AM (#47036477)
    Lets get real. A $200 phone in a contract is a ripoff. By the time you have finished the contact, in reality you might have paid for your phone between $1000 to $2000. Better buy a new one without a fixed contract and use it with a cheap operator/plan.

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