Are they business elites, computer addicts or common people? The sales channel varies.
[+] Early adopters and late majorities
When the color handset first appeared in the market dominated then by black-and-white models, its price was awfully expensive. Of course, the volume of sale was low because few people could afford it. Today, black-and-white handsets are almost driven completely out of the market. With a few hundred dollars, you could select from a wide array of color models.
Handsets that enable the Internet accessing were expensive too at first. Today, it has become a built-in function of all handsets, no matter they are high, middle or low end. When it was first introduced to the market, a handset with a 3-mega-pixel built-in digital camera sold at a price beyond the reach of most people. Today, as models with millions of pixels are available, the 3-mega-pixel camera has become the built-in function of low-end products.
In the market, there are always a group of people that buy products which are the freshest and most expensive. In high-tech marketing theory, they are called early adopters. As those people are less sensitive to the price than common people are, manufacturers could get a fat profit by setting the price high above the cost very much.
Leading handset and IT product manufacturers have seen the attractive gross profit and steady market growth of the smart phone. But obviously, the market is still in a stage of early adopters. Once the current stage is over, it will be the end of the high gross profit.
We can summarize the development as follows: (1) cater for early adopters and enjoy the high profit margin; (2) the early adopter market is saturated, and the volume of sale appears to be a bottleneck; (3) introduce lower-end model for the mass market, in the hope of increasing the sale to make up for the loss of profit margin.
There have been historical cases where many products, such as PDA, are unable to break through the second stage. Even with the introduction of low-end models, such products cannot expand their markets, for they are not needed by mass consumers. Will smart phones be able to enter the mass market like the color handset did?
[+] Business elites and general consumers
The handset you use must have the calendar function, which you might never use, not to mention accessing the Internet with your handset. Let's increase the size of your screen, turn its desktop into Microsoft Windows, its calendar into Outlook and its browser into IE, will you start to use it then?
When it first appeared in the market, the smart phone was regarded as a mixture of the handset and PDA. Therefore, it was a wise strategy to focus on the business people, the prime users of PDA, as the target group of the smart phone. With their preference for multiple functions and convenience, those people might want an all-in-one device.
General consumers, however, do not have so many expectations for a handset. Many powerful functions that manufacturers brag about, for example, Word editing, are of little value to them. They usually just make phone calls, send short messages, take pictures, download images and ringtones, play games and MP3, seldom else.
If the smart phone follows the path of the PDA and ties itself with early adopters among the business people, its good days will end soon. Manufacturers need to focus more on entertainment functions that general consumers need. Therefore, audio/video will be a priority in the future.
From their appearance, smart phones could be divided into two categories: the PDA-like and the general handset-like. Currently, most manufacturers are making the former, because early adopters like their large screens and diversified functions (hence the larger size). However, most general consumers prefer the latter.
In others words, the smart phone must disguise themselves as the general handset to be able to infiltrate into the mass market. The ultimate reason for mass consumers to accept the smart phone would be the substantial drop in prices, which renders "smartness" as the standard function of every phone. As to those "smart" functions, how many of them will be actually used? Not many.
[+] Computer users and handset users
Generally, there are two types of smart phone manufacturer: the traditional handset manufacturer and the IT product manufacturer. Both have their own advantages. Consumers, on the other hand, have their own purchase channels. Should smart phones be sold in computer stores or handset stores?
Let's return to the start point, and look at the issue from the standpoints of the market stage and consumer identity. We can see that most of the existing early adopters are hardcore computer users and business people who, while being addicted, use computers to process files and contact others.
Therefore, IT product manufacturers are selling smart phones through computer distribution channels, which are expected to boost sales at a surprising speed. But very soon, once the early adopter market is saturated, the bottleneck will appear.
On the other hand, traditional handset manufacturers are also making multifunctional and large-screened smart phones, but sell them through telecom product distribution channels, which are not conventional to most early adopters. Therefore, the sale of those smart phones is less promising. Should the manufacturers make audio/video-oriented smart phones and "disguise them as general handsets", then it is a right strategy to sell them in the telecom distribution channels.
In addition to the desire of manufacturers to achieve continued good sales in a saturated market, the smart phone also bears the expectation from telecom operators to increase the revenue per subscriber, which might turn out to be a factor for change to the development of the smart phone.
2005/01/23 - By Digitalwall.com - Way to
China Internet/Telecom )
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