If anything, the pressure on the high end is heavier. Look at the Evo and Samsung Galaxy series phones and how they are so much more capable than the iPhone for the same price. Then you have the next gen of phones available next month, ex. the Atrix and LG 1080p, 3D, dual core and quad core phones. If you haven't seen this tech, I strongly suggest you read Apple Gears Up To Combat The Margin Compression That Apparently Only It, Google & Reggie Middleton Sees Coming [11], it's impressive. This tech is moving lightning fast and the price points aren't budging, although the margins are collapsing in this fast moving space.
On Tuesday, 15 February 2011 I penned T [7]he Nokia/Microsoft Alliance & Android's Commoditization Of The Mobile Computing Platform... [7] In said missive, I apparently foretold the future, to wit:
The Nokia/Microsoft Marriage via Force of Android team up is definitely a plus for Nokia despite the appearance that Microsoft ex-management is moving heavily into company. Nokia probably makes some of the best hardware around, but there OS game has been lacking for some time. The only real unaddressed issue is that Elop never addressed the real reason why he didn't adopt Android, and the MSFT alliance doesn't address it either. Reference this quote from Endgadget: [8]
Nokia did talk with Google about adopting Android but decided that it "would have difficulty differentiating within that ecosystem" and the "commoditization risk was very high -- prices, profits, everything being pushed down, value being moved out to Google which was concerning to us." Microsoft presented the best option for Nokia to resume the fight in the high end smarpthone segment."
Elop goes further, recognizing what I have been saying for about a year now, and that isGoogle/Android is at the forefront [9] of the mobile computing wars - Nokia: 'Our first priority is beating Android [10]. Again, I query, how is Elop going to do that if he is afraid to commoditize the platform though. Android is commoditizing the whole smartphone space, not just the low end.
[12]
As you can see, it was easy to see HTC margins collapsing 3 years ago while it was actually in its heyday. HTC is not the only one either. Samsung and Apple are suffering the same fate, simply reference Have We Reached "Peak Premium Smartphone"? [13]
How is Elop going to address this by using Windows OS? He has to do more than just charge more, he has to produce better product at competitive prices, which keep getting lower. Elop will have to license the Widows OS, which is an expense, one that he would bear to nearly the same extent if he used Android. I feel he mistakenly looks at this as Google commoditizing the Android platform, in lieu of the more reasonable perspective of Google commoditizing the entire portable computer space. They can do this because they benefit regardless, as long as the masses are moved to the cloud. See
Long story short, the only company that is positioned to come out on top of this hardware battle is Google, at least thus far. But that begs the question, what if one of the other big boys catches on? On Thursday, 25 October 2012 I penned Microsoft Is Doing What The "Has Been Giants Of Yesteryear" Were Afraid To Do, Make A Radical Change BEFORE ITS TOO LATE! [16], to wit:
Roughly 3 years ago in my "mobile computing wars [17]" series, I foretold of The Creatively Destructive Pace of Technology Innovation and the Paradigm Shift known as the Mobile Computing Wars! In particular, I warned of the benefits to the consumer and pitfalls to the potential losers of the battle between Apple, Microsoft and Google, reference There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All [18]. By the way, by Q1 2010, it was already evident to BoomBustBloggers that Research In Motion was a goner - Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion [19]). While the bulk of my opinion and analysis was directed between the upcoming heated battle between Apple and Google (The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift [20] and An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught [21]) which was accurately called, I also appeared to be the lone gunman in warning that Microsoft is not even close to being out of the race just yet - Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet [22]. This was early 2010. Well, nearly 3 years later, we have MSFT doing what IBM, LOTUS, HP, DELL, and a wide variety of other tech companies simply didn't have the balls to do. What is that, you ask? They risked cannibalizing their cash cow revenues and kicking their lazy, unmotivated (despite declining margins and market share, via ass whoopin's from Google and Apple) OEM's in the nuts, forcing either an exponential growth via a pheonix-like rebirth style wake-up call or a collapse from atrophy.
You see, although Microsoft doesn't get much mobile respect these days (and for good reason), their Windows mobile platform is quite capable. After securing the full purchase of Nokia's handset business and licensing of its patents, MSFT is actually well positioned to do some damage in the space if it truly has the balls to do what it takes. Before I go on, let's take a look at the weapon of choice that I would use...
Review: Stellar camera makes Nokia Lumia 1020 first Windows phone worth loving
In less than a month, the Lumia 1020 has become this reviewer’s go-to smartphone for taking shots of everything from family to friends to practices.
BY EBENEZER SAMUEL [23]/ NEW YORK DAILY NEWS
[24]
[25]It's the 41-pixel camera that makes the Lumia 1020 competitive as a point-and-shoot and phone all rolled into one.
NOKIA
It's the 41-pixel camera that makes the Lumia 1020 competitive as a point-and-shoot and phone all rolled into one.
The best camera is always the one you have with you. And these days, the camera you have with you can be one of the best cameras you've ever used, too.
That's the key selling point for the Nokia Lumia 1020, the first Windows phone that's actually worth loving. It runs on the same Windows Mobile OS that Microsoft has been pushing for the last few years — the sometimes clever, sometimes annoying software that is still searching for its place in an Apple-vs.-Android world.
But never mind that.
It's the hardware that makes the Lumia 1020 competitive. To be more specific, it's the camera, all 41 megapixels of it. It's a potent point-and-shoot and a decent phone all rolled into one, and in this era of Twitpic, that's something that draws attention.
Read more: http://www.nydailynews.com/life-style/review-nokia-lumia-1020-stellar-camera-article-1.1444253#ixzz2dx1jI7ux [26]
So, what happens if you take that hardware, it's competent but not necessarily Android-dominating OS, and embue it with the two things that 90% of smart phone consumers use and want, but don't have available on their smartphones? What is that, you ask? Well, I'm talking about fully capable Microsoft Office and X-Box gaming! Integrate full, usable, uncrippled Office suite and the full port of XBox gaming and media on this Nokia handset with just a tad larger screen with no premium in pricing and you start attracting power users such as myself to the table. When people like me sit down and eat, we often bring our family, friends, readers, followers and clients. That's how Android did it!
The caveat is... In order for Microsoft to accomplish this they will have to eat margin compression in the short to medium term - and big time. Of course, anyone paying attention knows MSFT will eat this dish best served cold anyway, it's just a matter of who serves it to them. Either they do it themselves and leave room for expanded revenues to compensate, or they let Google's Android force feed them at the compression table. The decision is theirs, I suggest they choose wisely...
Subscribers, see also...
Google Q1 2013 Valuation Note - Retail