While people may lust over Apple’s iPhone, Android smartphones dominate the low end of the market. As hardware improves and component prices get cheaper, Android phones can be had for under $100. This explains how Android racked up 75% of smartphone sales in the third quarter of 2012. So if you have any connection to the mobile world, you should definitely pay attention.
A growing market
No-contract carriers have typically represented the low-end mobile market, a market that’s expected to reach $25 billion by 2015. They’ve traditionally been marketed to people unable to qualify for postpaid services due to poor credit histories, but they’ve been moving upmarket by offering more capable handsets and attractive plans. Virgin Mobile, an MVNO running on top of Sprint, has all-you-can-eat data plans starting at $35 a month.
The low-end market has largely been the domain of feature phones, phones that have had functionality beyond the traditional phones of the ’90s, but are one step below smartphones. They typically run proprietary operating systems but allow apps based on Java, though they’re not as common as iOS or Android apps.
So if you’re a mobile phone manufacturer —let’s assume for a moment that you are — making cheaper Android smartphones is clearly the way to go. After all, it’s much easier to start out on the low end and move upmarket than to be on the high-end and try to move downmarket. And since Android is open and widely available, it makes more sense to use it instead of a proprietary system, as you can customize it to your needs.
Great for retailers
Major retailers like Walmart also find these phones particularly attractive. They don’t have to give staff any extra training to sell these phones, such as how to run credit checks. In addition, they can simply stock these phones in the electronics sections and sell them alongside TVs, game consoles and DVD players. That said, these phones are perfect for big-box stores that sell high-volume, low-margin goods like Walmart does.
How carriers are reacting
Mainstream carriers are also starting to take notice. T-Mobile has eliminated contracts and moved to a prepaid model, eschewing the traditional business model of subsidized handsets, contracts and cancellation fees. Not surprisingly, these low-end phones put pressure on high-end carriers to stay competitive, offering better features and more attractive prices to their customers.
What marketers should consider
As more and more Android phones enter the market, you’ll want to make sure Android is part of your plans. With the introduction of Jelly Bean, the newest Android operating system, it’s never been easier develop for the platform. And with the impending release of Key Lime Pie, more improvements are on the way. Even if you can’t dedicate resources to the many flavors of Android, supporting the most popular versions — Ice Cream Sandwich and Jelly Bean — are a good way to get your app in the hands of the fastest-growing smartphone user base. Because if you don’t, your competition most certainly will.