A New Crop of Smartphones — Something for Everyone?

in Uncategorized by Eleanor Baird — October 1, 2008 at 12:48 pm | 0 comments

This holiday season promises a few answers to the iPhone from Apple’s competitors. So far, the T-Mobile G1, the Blackberry Thunder, and the Sony Ericsson Xperia X1 look like they could be contenders.

Smartphones, with their higher contract prices and upfront costs, tend to attract more affluent consumers. In this economic climate, where consumers may have less disposable income or just be unwilling to spend it, extending that appeal to a larger and already crowded market will be a challenge.

Still, the fact that millions of iPhones have been sold since July suggests that a high-end device’s appeal could extend beyond those in the highest income brackets. The $200 price drop and decision to sell the iPhone 3G at Best Buy may have been bids to broaden the device’s appeal, but do they seem to be working?

And they have, can other smartphones broaden their appeal too?

• Since the iPhone 3G was announced in June, the skew toward $100K+ income-bracket researchers has become less pronounced
• After mirroring the overall handset researcher population at the iPhone 3G’s announcement and launch, shoppers in the $60-100K income bracket were 8% more likely to be researching the iPhone 3G in August
• Even though people in the <$30K and $30-60K income brackets are significantly less likely than most to research iPhone 3G, they have been making up an increasing proportion of the research population since the device was announced

So, although the gaps are narrowing, the iPhone still appeals most to people with incomes over $60K. What does this mean for the new crop of smartphones?

People may become more price sensitive because of the economy, but iPhone is so popular with consumers any new smartphone hoping to appeal to a large audience would almost have to be priced at or below $199. T-Mobile’s G1 will follow this trend and sell for $179 with a contract.

A preferable strategy to reducing price, but probably a tougher one, will be providing consumers with a viable alternative that offers the same or better usability with a different twist. Devices with different form factors like flip phones and combining touchscreens with physical keyboards might help sway some people. The benefits of open-source based operating systems like Android may change minds. But we’ll need to wait until the end of Q4 to find out.

For more on the demographics of the iPhone 3G’s appeal, check out our September 5th newsletter.