The Financial Crisis and the Mobile Device Industry
Published on: 20th October 2008
Opinion piece by Detlev G. Pinkus, President & CEO of United Design
The financial crisis and it affects causing far-spread consequences by reaching all economic areas more or less worldwide. The Mobile Device Industry will pass trough an extended painful education phase that the market will be no longer governed by the handset industry thus by consumers.
Handset manufacturers released in shorter and shorter time periods new handset models with more features by rising operational complexity of mobile handset devices. Certainly more and more built-in features, whether the consumer want that or not, have been driven the prices up of the handsets immensely, defined as "High-End" products. Interesting, in the today's world a consumer who wants to by a mobile phone has to by an operating system, plus a camera, multi media capability and he can receive pay TV and music channels. As a mobile computer, all mobile handsets, which are today on the market are not suitable as a computer, because these handsets are very limited in regard to their characteristics and not comparable with the quality of available computers.
Further more, The Boston Consulting Group recently found out that 50 percent of the consumers would consider purchasing TV's and DVD players from Dell, just for one reason to spend less money on such devices. This fact provokes another statement, if I want to buy a mobile phone why I have to buy a camera, a mini TV, a micro radio, an Internet connection capability, etc. This is comparable as if I want to buy a fridge and have to buy automatically in addition a juice extractor, a coffee machine, a popcorn machine, etc. just for the reason that there are no longer single machines available, or if I prefer to buy a single machine I only can get it in a lousy non fashionable design.
The mobile phone industry itself forced their dilemma that they are going to enter now. With more extraordinary features; certainly it raises end-user prices and makes the business more attractive till that point in time when it is necessary for the consumers to be prudent in regard to any purchase decisions. Consumers are getting more judicious and start to question whether I need this feature or not, even if I want this feature how many times I will use it and how much I have to pay for it, and particularly regarding the monthly service fees I have to pay to the mobile service provider to support such features like Internet access and e-mail services, etc.
It is expected that consumers will wait longer to replace their existing handsets, lengthening phone replacement cycles are a fact handset manufacturers have to deal with, and as the result that the average sales price (ASP) of handsets will drop and certainly handset manufacturers have to live with poor margins and it can be stated that even the big players in the market like Nokia will have to cooperate with effects that can be brought together under the generic term "struggling". Motorola is a good example for it.
How it is known, even bad times having their good sides and the mobile industry will learn that a market can be actively driven by companies only to a certain level, the main influence of the market characteristics are be forced by the consumers and they have an unbelievable high power.
Probably this view comes for some handset manufacturers too late, but to the benefit of consumers it can be stated already, handset manufacturers will gather once more how important it is to listen to their customers and start to remember to the basic terms as are: "Customer needs, customer wishes, and user friendly operation, affordable prices and price performance relation, etc."
It is quite obviously expected that handset manufacturers will make a turnaround in their technical strategy, because consumers will take the initial step not to buy a new mobile phone just for the reason to have the newest model what ever it will cost, now as mentioned before the price performance factor in cooperation with necessary mobile requirements are moving now in the foreground of future purchase decisions.
Just recently Samsung did a radical change in product strategy engineering and marketing in pushing out low-end phones on the market to grab market share in emerging markets. The strategy fits, and I am quite sure that low-end phones will be not attract the consumers of emerging markets only, remember the financial crisis had its birthplace in the U.S. and Western Europe.
Day by day used necessary phone features, state of the art technology embedded in a fashionable design to an affordable price are the highlights keeping the mobile industry in a wealthy mode. New technical inexpensive user friendly solutions incorporated in fashionable designs are the key to raise the attraction of the wide mass of consumers for such products in the nearest future.
In a recently published study done in the U.S. indicates that the today's mobile phones are far to complex to operate and users are getting lost in multiple menus within menus. Larger readable fonts and a simpler button setup so that they are not getting confused what they are doing by hitting keys accidentally, etc.
It is ridiculous and not popular to learn the usage of a mobile phone by reading an extensive user manual, where terms are be used that non technical people see these the first time and don't know what that means even for what that is good for. Consumers are using an average of about 47 percent of their mobile phone features, an expensive adventure for a high-tech toy. At the bottom line, consumers want to buy a mobile phone, no new operating systems, etc.
Whether to buy a smartphone or a basic phone is a conscious decision, but it is affirmed in many publications, consumers getting first enthused by fashionable designs and primarily they want to receive and make phone calls on a mobile phone. A subset, generating a mobile phone and a mobile computing device, and it doesn't matter what technical approach the mobile computing device would have, is probably a significant suitable technical strategy consumers want to see on the market.
At the end I want to leave a question: What a regular consumer can do and want to do with an open system as it is powerful published by Google-Android? Certainly this is interesting for developers, but first the regular consumer probably wants to receive and make phone calls on the mobile phone.
Comment, worldwide mobile phone market grows drops.
If the deepening economic concern is the real factor that the global mobile phone market will experience such an effect, than it is necessary to think about new products and strategies, which will suite consumers needs and wishes.
Opinion piece by Detlev G. Pinkus, President & CEO of United Design Works