The Smart Phone is on its way out

Take this 4 question survey before you read on: Survey Link. This will help me test the hypothesis  I am offering here.

This week we commemorated the fifth anniversary of iPhone. It has come a long way since then and so have we and our use of iPhone. Let us go a little further back in time to the day Steve Jobs made the iPhone announcement. Mr. Jobs made a dramatic announcement about three new devices they were introducing that day,

A revolutionary mobile phone

Widescreen iPod

Break Internet communications device

He kept repeating these three until he got the expected reaction from the audience. Surprise! All three devices were in one neat device called iPhone. Those were the days when smart phone meant getting email and combining music player with phone was positioned as convenience.

Those were also the days when

A phone’s mandatory purpose was talking,

Visual voice mail was a killer app,

Music meant listening to ripped songs,

Entertainment meant reading news and other sites and

Staying connected meant email.

Today all these mean completely different things –

Talking is Skype,

Music has many options,

Entertainment is 500K apps and

Staying connected is Social.

If the phone has become an App platform, does it make sense to have it in the phone form factor and keep paying $100 a month to mobile subscribers to support their phone driven business model?

With changes afoot at Verizon an ATT, the total cost of smart phone for two years is  $199 + $2400. As customers use the phone less and less for talk and text there are far fewer takers for the lucrative all you can Talk+TXT plans. So the mobile subscribers did the one think they know, get rid of cheaper alternatives in the name of simplicity, making $100 all you can  Talk+TXT with 2GB data as the only choice.

Customers see plans designed to prop up outdated business models rather than those designed to fit their changing needs?

If the iPhone was three “revolutionary” devices rolled into one, is it time to unroll it into two different devices?

The same Apps run on Tablets that offer better form factor to consume Apps and content, and cost far less than  device price and service charges for smart phones. For instance, one could get 3G data for their $199 tablets for $30 a month and get prepaid Talk+TXT only phone for less than $30 a month. Net savings for carrying a phone and tablet separately?  $960 over two years.

Do we see a future where the smart phones as we know it ceases to exist and is replaced by a dumb phone for exigencies and a tablet?

5 thoughts on “The Smart Phone is on its way out

  1. My husband and I are thinking about this option (ditch the smartphone and carry a dumbphone and tablet with data.) The savings amounts to nearly $1000 a year. I’d love to know if others have weaned themselves off their smartphone this way? We were some of the first people we knew to ditch a landline and go completely digital, and this seems like (potentially) the next step.

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  2. Christian
    Making the costs explicit makes sense as we as customers do not see to look beyond the initial out-of-pocket expense.

    iPhone retails here $650. If one can get data alone with prepaid voice, it costs about $400 over a not-so-dumb-phone and Nexus tablet. I am interested in finding if there exist a segment that is willing to trade the convenience of single device for $400 in minimum savings.
    -Rags

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  3. Which is why the option to buy it without a plan (/subsidization) is interesting.

    I don’t know how it is in other countries but in Denmark it is required by law that any price displayed for a phone is followed by a display of total cost of ownership (plan in entire duration + all fees + subsidized purchase price). This makes it very easy to compare the total cost of ownership of of a subsidized vs. non-subsidized phone.
    I bought my iphone directly from apple.dk for roughly $1000, but it runs on a 2gb $20 plan (voice and text as you go), and ends up being much cheaper than on a $100 or $200 contract.

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  4. Do we really see consumers carrying two separate devices? Especially considering that all functions could be performed by one device whether it is in the smartphone or a 7inch tablet form factor. Perhaps your survey will give us the answer. How about eliminating talk+text completely and only offering Skype or equivalent. Consumers will pay as you go for talk+text via Skype app or an alternative. Carrier Pricing should be solely based on data usage. This will happen when revenues from data consuming smart phone users tip revenues from the current customer mix. Until then…. we will continue to see pricing experiments..

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