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Motorola's president and COO claims the “days of the $600-$700 smartphone are numbered”

Posted: , by Peter K.

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Motorola's president and COO claims the “days of the $600-$700 smartphone are numbered”
Motorola already renovated its portfolio with the new Moto X and Moto G troopers, as well as its compelling Moto 360 wearable. If we judge by last year's crop of Motorola smartphones, their refreshed successors will most probably give the competition a pretty hard time. It's not only Motorola though – the top smartphone makers on the smartphone market are also being undermined by various named and unnamed China-based rivals, as if the competition from the likes of Motorola is not enough.

It seems that Motorola might be basking in a wave of confidence that 2014's Moto G and Moto X will not fail deliver. The president and chief operating officer of Motorola, Rick Osterloh, claimed that as per his own observations, the top-end line of smartphones is in serious trouble.

"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," said Osterloh. 

The reason for this is that more and more manufacturers begin to offer some pretty power-laden devices at affordable prices, the current dominating players of the smartphone market are in trouble. Samsung, the still-largest smartphone producer, is the living evidence for this – the giant has been experiencing a lot of financial conundrums throughout the year, the most recent being the plunging shares of the company.

What do you make of Rick Osterloh's words?

source: Android Authority

45 Comments
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posted on 25 Sep 2014, 04:50 20

1. spin9 (Posts: 291; Member since: 31 May 2014)


Ofcourse they are. People all over the world go poorer, due to recession, and smarter

posted on 25 Sep 2014, 04:57 10

2. itsdeepak4u2000 (Posts: 3718; Member since: 03 Nov 2012)


Phones should not cost more than $500.

posted on 25 Sep 2014, 05:48 12

14. 14545 (Posts: 1537; Member since: 22 Nov 2011)


No, phones shouldn't cost more than 350-400. A crippled mobile device should never exceed the cost of a full computer with all of it's bells and whistles. I also welcome the days of cheaper devices because hopefully it will force the issue of buying phones direct, instead of through a carrier. Thereby allowing us to have full access to the phones services. (Unlocked BL's, etc). When one buy's something there shouldn't be a lock on it. That would be like buying a house and not being able to go into one of the rooms because the previous owners locked the door and told you that you couldn't. Ummmm, I bought the house, I'll do with it what I dang well please. Screw the carriers and their asinine policies.

posted on 25 Sep 2014, 06:32 2

18. itsdeepak4u2000 (Posts: 3718; Member since: 03 Nov 2012)


Yes, I thought the same but for all of the top notch specs like flagship devices with 128GB storage considered, it should be less than $500.

posted on 25 Sep 2014, 08:21 1

30. aksa123 (Posts: 320; Member since: 30 Jan 2014)


Easy pal, there are numerous phones below that price point. What really matters is "how's the phone?".

posted on 25 Sep 2014, 11:04 3

32. synot (Posts: 277; Member since: 14 Sep 2012)


Is buying an Iphone a part of paying tax in America? Iphone buyers purchase the phone as if its mandatory and carries a sentence if you don't buy it.

posted on 25 Sep 2014, 14:16

38. Muzhhur (Posts: 260; Member since: 14 Sep 2012)


let me tell yoy something, for example the iPhone is more expensive in Mexico than USA

posted on 25 Sep 2014, 18:06

42. elitewolverine (Posts: 5184; Member since: 28 Oct 2013)


taxes and exporting and shipping and of course less sales, result in higher costs.

posted on 16 Feb 2015, 19:03

45. Muzhhur (Posts: 260; Member since: 14 Sep 2012)


Mexico Asamble iphones, so why you shoudl pay exporting fees?

posted on 25 Sep 2014, 04:57 2

3. StraightEdgeNexus (Posts: 3689; Member since: 14 Feb 2014)


And the indian guys trolled poor Motorola yesterday for Moto X being expensive (which it isn't) lol.

posted on 25 Sep 2014, 05:01 8

4. HugoBarraCyanogenmod (limited) (Posts: 1133; Member since: 06 Jul 2014)


Feel free to compare it with the mi4, heck mi3 only cost rs15k cheaper than Moto g

Indian are smart when it comes to comparison

posted on 25 Sep 2014, 05:17 1

9. anirudhshirsat97 (Posts: 408; Member since: 24 May 2011)


It's not expensive, but personally I felt the HTC one E8 is a better choice at that price. But both phones pale when compared to the bang for the buck Mi3 and One plus one provide.

posted on 25 Sep 2014, 06:19 4

17. srprashant91 (Posts: 3; Member since: 24 Sep 2014)


32K for a phone with only 16 gigs of onboard memory is over priced period. I would even overlook the shortcomings of the camera a battery life. Whats the point of offering 4K video when u are offering only 16 gigs of which only 12 gigs is ususable?

posted on 25 Sep 2014, 07:30

25. sgodsell (Posts: 3647; Member since: 16 Mar 2013)


There is a 32gb moto x as well. Not to mention for $50, just get a Sandisk Connect that will give you remote access to a micro SD slot for not only the moto x, but any Android, iOS, PC or laptop. You can just leave it on your key chain. Also the moto x supports USB otg.
http://www.phonearena.com/reviews/SanDisk-Connect-Wireless-Flash-Drive-Review_id3570

posted on 25 Sep 2014, 05:02 1

5. WakaFlakaD (Posts: 481; Member since: 30 Apr 2011)


I have to agree. Even though smartphones are big part of our life already, but man $700USD for a phone is a big price for it. Nexus 5 works just fine and only cost like 325. Let's wait for a few more years lol.

posted on 25 Sep 2014, 07:07

21. JC557 (Posts: 1520; Member since: 07 Dec 2011)


The prices should come down but the $350 range of the Nexus phones are due to Google selling it for a really low profit and instead make money off of ads and businesses related to it. Phones may cost $150 - 250 to make but that doesn't factor in marketing, warehousing, distribution channels and support (however limited). I think $500 is fair for a flagship mini computer that also makes phone calls and OTA messages. They just better earn that price point by actually being a flagship with top notch components. Budget phones obviously won't be so scrutinized but they should have a price to match.

Laptops manage to be cheap is due to those things being subsidized by Windows bundling and various trial programs. The whole device doesn't have to be inspected by the FCC, just the individual parts that pertain to communication.

posted on 25 Sep 2014, 12:27 1

37. timukh (Posts: 294; Member since: 04 Feb 2013)


I agree with you. Just look at apple. Their phones cost $200 to make. But still they sell it for $1000 or more based on diff countries. This kind of profit is absurd. They can sell it for $400 and still make double profti of what they spent. Same goes for all the other manufacturers. But the thing is that people are still spending that kind of money and as long as they continue to spent, prices will not go down.

posted on 25 Sep 2014, 05:07 5

6. NokiaFTW (Posts: 2071; Member since: 24 Oct 2012)


He's right. People are realizing that paying 700 bucks for a smartphone isn't worth since you get same and even more functionality with something that is priced 300-400 dollars. But of course there are a lot of people who want fruit logos on the back of their phones, and they will keep on paying 700-1000 dollars for it. But I still feel, even though Apple are reaping profits like never before and selling iPhones faster than hot cakes, their current business model is bound to doom them one day.

posted on 25 Sep 2014, 05:30

11. marcski07 (Posts: 598; Member since: 25 Apr 2014)


true.

posted on 25 Sep 2014, 07:29

24. Scott93274 (Posts: 4649; Member since: 06 Aug 2013)


I'm predicting a massive dive in sales next year. Phones are getting more affordable excluding the iPhone brand, and everyone that's wanted a bigger display will have gotten it this year. Many of the people who bought phones this year will wait till their two year contract is up prior to buying a new model, because lets face it, buying an iPhone off contract for the majority of the world is unreasonable. People will lock themselves into a two year contract this year causing them to pass up next year's iPhone release, causing the massive drop is sales. Make sure you sell your stocks before then.

posted on 25 Sep 2014, 05:10

7. FoneAddict (Posts: 259; Member since: 05 Jul 2011)


Totally agree. It's absurd to spend $700 on a phone only for it to be replaced one year later.

posted on 25 Sep 2014, 05:15 7

8. hboy857 (Posts: 349; Member since: 03 Jun 2013)


People will keep buying expensive smartphone to differentiate them-self from the "poor"/"middle class" people. Look at the iPhone, it is already considered to be a "status symbol" in the society. It doesn't matter how pricey the iPhone is (actually the more pricey the iPhone is the more it will consolidate itself as the status symbol) people will buy it. You have to consider the power of "Symbol". Apple establish itself as the most 'premium' electric company in the world and people will keep buying their 650-1100$ smartphone for their 'premium' status. The power of apple logo /symbol will keep them-self alive for a long time.

posted on 25 Sep 2014, 05:19

10. Jobayer (Posts: 167; Member since: 22 Feb 2013)


So true .

posted on 25 Sep 2014, 05:38

12. marcski07 (Posts: 598; Member since: 25 Apr 2014)


let those stupid arse, believe that a smartphone that gets old is a status symbol. social climbers only believes that for example, iphone is a status symbol to be brag about. A status symbol should be timeless, boundless, and doesn't decrease its value in short amount of time, like expensive bags, expensive jewelries, expensive cars, not a techonology that gets old and become half a price 1 or 2 years later. Yes you're right it still gonna sell, but someday, only few stupid people will gonna buy insanely expensive smartphones like that effin fruit. I brag my smartphone not because it is expensive, but it's about value for the money

posted on 25 Sep 2014, 05:47

13. HugoBarraCyanogenmod (limited) (Posts: 1133; Member since: 06 Jul 2014)


Why settle less when you're capable to pay extra, I don't see anything wrong for do so, especially the one percenter

posted on 25 Sep 2014, 06:03 2

15. marcski07 (Posts: 598; Member since: 25 Apr 2014)


sorry, I can't understand what are you pointing out. But I'll try to reply how I'd understand your reply.

"why settle less when you're capable to pay extra" for me, paying extra should be equal to the amount I could get, for example, is paying extra, for your car insurance. but in the case of smartphone, even I'm so insanely rich, I wouldn't buy such an expensive phone that I know I couldn't get what I pay for and I know it will be outdated for short amount of time, I wouldn't mind buying a expensive tv coz it will last long, and very expensive cars, but for smartphone? nah.. it's not very practical.

posted on 25 Sep 2014, 06:08

16. HugoBarraCyanogenmod (limited) (Posts: 1133; Member since: 06 Jul 2014)


One percenter will think otherwise, unless us the 99%, one percenter pay extra to differentiate themselves. Even if you ask them to buy outside Apple, probably Vertu and bb Porsche suits them, other brands to them are designed for poverty like us.

Paying extra already equal the amount that one percenter get, to differentiate themselves compared to us, discrimination is nature just like we against Apple

posted on 25 Sep 2014, 11:17

33. synot (Posts: 277; Member since: 14 Sep 2012)


That is only true on paper, World report says otherwise. Apple only sell 33% of phones last year. After launch weekends ,apple sales starts to diminish each 1/4 every year.

posted on 25 Sep 2014, 06:50

19. Denco (Posts: 118; Member since: 25 Mar 2014)


If this Motorola chief's claim is true, how come some millions of people are still splurging much on the new iPhone 6 duo with the most expensive price tags?

posted on 25 Sep 2014, 06:59

20. zachattack (Posts: 621; Member since: 31 Jul 2013)


Tell that to Samsung and Sony, just because moto makes their crap phones affordable doesn't mean everyone else will

posted on 25 Sep 2014, 07:12

23. JC557 (Posts: 1520; Member since: 07 Dec 2011)


Motorola phones perform just as well as the other upper range phones. They also have a good track record of being pretty durable. Their efficiency is also quite good considering how small the new Moto X's battery is.

posted on 25 Sep 2014, 14:39

40. zachattack (Posts: 621; Member since: 31 Jul 2013)


I never knew a good Motorola phone, feel free to show me reviews but all I see is a big MEH stamped on Motorola devices

posted on 25 Sep 2014, 07:12

22. Napalm_3nema (Posts: 2184; Member since: 14 Jun 2013)


Sour grapes. They released the Moto X last year (which is a very good phone) at flagship prices, and people didn't buy it, but people are still buying, to a lesser extent, the Galaxy models, and to a much greater extent, iPhone models.

I'm not sure the guy working for a company that has been sold twice in the last three years is my "go to" for smartphone pricing trends.

posted on 25 Sep 2014, 07:37

26. jroc74 (Posts: 6005; Member since: 30 Dec 2010)


I hope so, The Moto G was one of the best phones I owned...all it needed was more minimum storage or an SD card.

8GB just doesnt cut it. 16GB should be the absolute minimum.

posted on 25 Sep 2014, 08:01

27. PryvateiDz (Posts: 133; Member since: 31 Jul 2011)


Agreed, on this and the fact that people will continue buying iPhones for any price due to the level of social status it grants them or they believe it does, as well as them separate themselves from "poorer" individuals.

posted on 25 Sep 2014, 08:07 2

28. jimjam (Posts: 257; Member since: 28 Jun 2011)


the smart shopper also looks at resale value. For instance if i buy a $750 iphone 6 and in a year sell it for $500 then it really i only cost me $250 for the year. If I do the same for a nexus 5 for instance it might have cost $150 for the year. $250 vs $150 is a much easier decision than $350 vs $750.

Of course if you hold on to your phone for longer then the cheaper ones become even better value.

posted on 25 Sep 2014, 08:08

29. jimjam (Posts: 257; Member since: 28 Jun 2011)


Some people want the best cameras which tend to be on the highest priced phones

posted on 25 Sep 2014, 09:05 4

31. DocOc (Posts: 138; Member since: 23 Apr 2014)


I'm still baffled that you can get a 55 in. TV for $400, but some 5 in. phones cost $700.

posted on 25 Sep 2014, 11:28

34. Taters (banned) (Posts: 6474; Member since: 28 Jan 2013)


I think some people are underestimating the costs here. TV's have razor thin margins and Sony and Panasonic are losing money. Samsung and LG barely make money on TVs and that's because they manufacture them.

Google can do 349 at cost or a slight loss because they make money off the ads. $349 is the starting point rather than ifixits $200 because Ifixit it doesn't include manufacturing costs and logistics and because we are taking Googles word that they are breaking even or taking a slight loss. Besides, most companies can't really afford to buy in bulk like Apple so they would pay more for their parts.

So 349 + marketing + paying employees + Microsoft Windows patents + protecting yourself from Apple trying to sue you for bulls**t+ Ericcsson patents+ Nokia patents+ Samsung FRAND patents+ profits. Including all of that crap, I think $599 is okay provided the parts are actually top of the line. QHD screen, 3GB of ram, 3000 mah battery etc.

Of course it's not okay if its1810 mah, 1gb of ram, and 750p screen. Apple really needs to die. They are the biggest barrier to a cheap flagship with their rounded corners and swipe to unlock bs. No one wants to pay Apple for that bs. It's like paying the government a tax so you can wipe your ass.

posted on 25 Sep 2014, 11:30

35. Taters (banned) (Posts: 6474; Member since: 28 Jan 2013)


I forgot to mention overhead, returns, office, and building costs.

posted on 25 Sep 2014, 11:33

36. BobbyDigital (Posts: 1930; Member since: 29 May 2014)


I agree that the days of $600-$700 are indeed numbered. Except at Apple. They'll continue to charge a super premium for sub par devices and iFans will continue to pay for it. And it'll drive Apple's market share even lower(to around 12% give or take a percent or two)albeit their dollar share will continue to be high. They'll become a niche, but very expensive, player in the game. Which is exactly how Apple wants it.

posted on 25 Sep 2014, 14:19

39. tacarat (Posts: 770; Member since: 22 Apr 2013)


Walking > bike > scooter > old beater of a car > newer beater of a car > good used car > new budget car > luxury car

All will sell, just to different people. I'd probably still get a fair amount for a used 3GS that's unlocked.

posted on 25 Sep 2014, 17:05

41. shead202 (Posts: 50; Member since: 02 Nov 2013)


I agree with Motorola but...

If you bought a 32 gig Moto X (2014) off contract it would cost 550 and then add on the tax to that... It's somewhere between 580-600

posted on 26 Sep 2014, 08:51

43. Chuck007 (Posts: 1111; Member since: 02 Mar 2014)


I agree, but this is just a clever way to advertise how their phones are below average price. The Sony Xperia Z3 just got a USD130 price cut here in Hong Kong and I bet it'll be a great competitor to the Moto X (2014), which should just cost 50 bucks less.

..and then there's Xiaomi, Oneplus, ZTE and Lenovo (yes I realise the irony) that makes Motorola look like Apple in comparison.

posted on 15 Oct 2014, 19:21

44. alegocru (Posts: 2; Member since: 15 Oct 2014)


Rick Osterloh, is a liar: Motorola Nexus 6 U$650 (32gb) U$700 (64gb)

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