Feature phones died in the developed world years ago. With telecoms offering smartphones for free on contract, nobody was really buying a smartphone in places like the US and UK.
However, smartphones were not as common in developing nations until recently. In places like China and Brazil feature phones still served a slice of the handset market. In fact, until 2013 feature phones still outsold smartphones globally.
That changed in Q1 of this year. According to the IDC, smartphones outsold feature phones for the first time ever last quarter. The report is another reminder that the world has moved passed just phone calls and the developing world is now a lucrative market.
In some developing countries, smartphones are many people's primary internet access point. The ease of a 3G network connection in your pocket makes it possible for millions of new users to have access to the web.
While in developed countries phone calls are not even the primary use of smartphones. With text and data, the need for mobile voice communication has decreased.
Now with the growth of smartphone use those numbers should continue to rise. Smartphones have continued to become cheaper and cheaper. Gone are the days of only expensive smartphones.
Today, a person can get a clever handset for free on contract or close to it off. The market has moved to build a paradagim full of low, mid, and high range smartphones. With the new paradagim, feature phones have become phased out.
The market for cheap smartphones in the developing world is now a huge industry. It's why Samsung leads the world in sales. It's also the reason why Apple keep's hearing rumors of a lower priced iPhone.
Apple is not in the cheap device industry. The firm lives off of big margins and high quality electronics. That somewhat changed with the release of the iPad Mini. The cheaper tiny iPad was the firm's first mobile foray into cheaper end devices.
It seems likely that Apple will have to continue to push its margins lower. Apple won't do it because they want to, they'll do it because they have to. The smartphone game is changing and the developing world is the new frontier.
The smartphone arena is just as much about software as hardware. Apple makes money from ads and apps featured on iOS. With more users on an iPhone, Apple stands to gain more money through software.
Google has always been about getting Android in as many paws as possible. Now, Apple has a chance to do something similar. If the firm builds its user base in the developing world it can get more people onboard with iOS.
With more users on-board it can gain in software what it might lose in hardware margin profits. The world is changing and Apple's current strategy just doesn't fit with it. Apple will have to offer a larger smartphone portfolio if it wants to keep its crown as a leader in the smartphone world.
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