An unsustainable business model?
But it's possible that the current state of affairs is starting to change just a tiny bit. Consider:
- Moore's law isn't making chips cheaper anymore, and that will make innovation in the tiny smartphone form factor without breaking the bank more challenging.
- More people are trading up from one smartphone to another, and unlike upgrades from a feature phone, the benefits are far less dramatic. Consider the new iPhones, which sold well but were greeted with a collective yawn in terms of innovation. As for the Android world, JR Raphael put it succinctly : Welcome to the 'So what' era of Android phones.
- The subsidized contract model is starting to give way, ever so gradually, to pay as you go. People who buy off contract are paying the full cost of unlocked new phones like the new Nexus 5 or Samsung Galaxy S4. And carriers are starting to cave in to pressure to allow the phones they provide to be unlocked, which should allow users to switch carriers more easily once their contract phones are bought and paid for.
Once people see the full cost of the new smart phone they're buying, the value of incremental improvements can be balanced against the true impact on their wallets. If people have to pay the full price of the phone and there's no compelling reason to spend $600 for a few incremental improvements, they're likely to keep what they have longer.
After all, if it's really just another iPhone, why spend the money?
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