With just about every major smartphone maker performing below expectations in 2013, it’s clear the market – at least in rich, developed countries – is starting to mature. As industry observers such as tracking firm IDC have surmised, that’s going to result in some good news for consumers in 2014 and onward: lower prices.
On the face of it, such a prediction makes sense. The likes of Apple and Samsung are going to want to continue selling people new products, yet with many smartphone owners either stuck in the middle of contracts or quite happy with their existing devices, there are going to be fewer takers than in previous years. Naturally, the best way for manufacturers to entice stodgy consumers into buying something newer and shinier is to offer it a lower price.
But, as I’ve written before, that’s not necessarily how the smartphone market works thanks to the presence of middle-men: wireless carriers. For the most part, it’s cellphone companies who buy the devices and then effectively resell them to customers, usually with subsidies in exchange for those long-term contracts. Those contracts then allow carriers to keep monthly service prices higher than they might be otherwise, since customers aren’t easily able to defect to competing providers, who might offer them a better deal.
Lower prices are thus about to butt into contract subsidies, which means that the interests of wireless carriers are about to clash with those of phone manufacturers. Read the rest of this entry »