Motorola President Rick Osterloh had a very interesting chat with Ina Fried at recode.net about the companies strategy moving forward, the lack of price transparency in the US cellular market and how the high-end, $600 – $700 USD smartphone space could in fact be in danger of disappearing completely. I all fairness, I tend to agree. Here is the Mobile Geeks take.
The End of the High-End?
The high-end smartphone market has actually seen some significant changes recently with several very high quality ‘flagship’ devices from newer players, many from China, that undercut the $600 dollar and above pricing of top tier offerings from the dominant force in the field, Samsung. Until recently if you wanted to buy (without contract) a top quality, latest technology Android smartphone you would likely be paying North of $600. Today there are several options that will cost you considerably less. The OnePlus One, the Xiaomi Mi3 and more recent Mi4 are devices that we call flagship killers, as they boast flagship-level hardware for considerably less money than most flagships demand.
Undoubtedly, the poster boy of Flagship Killers is the OnePlus One, a very fine piece of exceptionally beautiful hardware that can be yours for as little as $300.
Risk Osterlich is a man at the top of the chain of command at a company that has struggled to justify its existence at times. Motorola have experienced several rounds of upheaval and change in the last decade, eventually culminating in being purchased and patent stripped by Google with the remaining handset division sold off to Chinese giant Lenovo.
Today however they are a re-imagined entity that has astonished critics with its approach of offering very affordable, solid quality Android devices. Here’s what Motorola President, Rick Osterloh had to say on the subject of the smartphone high-end.
Certainly we are in a very competitive industry. I think the days of the $600-$700 smartphone are numbered. People are realizing they don’t need to pay that much money.
These views largely echo our thoughts at Mobile Geeks which takes in to account the really great value offerings in the high-end that are out there right now, and the increasing pressure that will eventually have on pricing at the upper levels of the segment. It’s not just that you can buy a Xiaomi Mi4 for around $400 – a device that packs an industry-leading Qualcomm Snapdragon 801, 3GB of RAM, a beautiful 1080p IPS display and more – it’s the wonderful fact that there are also many other options out there today.
The Huawei Ascend Mate 7 is an great full-sized Android device that could cost you as much as $600, but it is targeting the phablet segment where the new Samsung Galaxy Note 4 still costs around $800.
The ASUS ZenPhone 5 and 6 smartphones can be your for around $200 – $250, Gionee’s flagship Elife S5.5 is only $350, so yeah… options abound at all levels.
But it’s not just about options or cheap alternatives. The key difference today, is that the difference between top and middle and entry-levels is quickly shrinking.
Lack of Price Transparency in US Markets
There is one caveat to all of the above that relates almost exclusively to folks in the US. If you are tied to a carrier in the US your options are greatly reduced and you will experience what Osterlich describes as a lack of price transparency, something that remains an issue despite increases of off-contract sales:
The U.S. pricing picture has actually gotten more confusing for consumers. Now it’s a combination. Most phones are actually still purchased on subsidies. However, there are monthly pricing options and family options. Frankly, it is pretty overwhelming for most consumers.
Although there has been better signs for off-contract sales with first Moto X and Moto G, the picture in the US is not like other areas of the globe, areas where Motorola looks to be very competitively placed.
We did see a great surge in off-contract phones when we launched the original Moto X and Moto G. That still represents a minority of the market for sure.
Outside of the US, it seems consumers are embracing today’s more affordable alternatives to the mainstream brands (Apple and Samsung account for the lion’s share )that still dominate the US market. It’s no surprise to see Motorola excelling in these large and quickly growing markets that operate practices that are generally more beneficial to consumers.
Outside the U.S., it is a totally different picture, depending on the country. Markets like India and Brazil and parts of Europe, where we have seen very rapid share improvements when consumers get the full benefit of price transparency. That’s been tremendous. That’s why we are No. 2 in Brazil and No. 4 in India after coming out of nowhere, basically. We love markets where the end user gets to benefit from price transparency.
Motorola: Meaningful Choices
Recently we have seen Motorola take the lead in terms of customization with the new Moto Maker service that offers a fairly vanilla but very customizable Android OS with by far the broadest choice of physical customization options of any smartphone vendor. These include a broad array of back covers including several natural wood options.
Check out our hands on video below:
This is also one area which is really helping them to differentiate as a consumer brand, and as a product. We looked at some Moto X phones that showcased some beautiful examples of what Moto Maker is capable of. The company plans to expand these customization features to other product line including the forthcoming Moto Hint.
We think we are taking a different approach than anyone. We want to give people real meaningful choices. We want to make it so you can choose to participate in the design of your phone like with Moto X. We give people the ability to change the user interface the way they want on their phone.