Google's Schmidt says Android models aiming for cheaper price point

Google's Schmidt says Android models aiming for cheaper price point
While the price for mid-range to top-line Android smartphones has been in the $200 to $400 area, we could be on the cusp of a big price drop. This is from the person who should know more about Google pricing than most anybody, Google Executive Chairman Eric Schmidt. According to a report to his clients, Ovum Research analystTony Cripps wrote "Schmidt'sexpectation that Android smartphones will be available between $100-$150 bynext year already looks inevitable and will begin to redefine the handsetmarket as a whole. The eventual goal of seeing the price of Android devices broughtdown into the $70 range also looks realistic to us with the advancement oftechnology and huge economies of scale that are starting to drive the Androideconomy."

Gartner analyst Ken Dulaney notes that Nokia is already offering Symbian powered smartphones at the lower price and that as long as there are customers shelling out $400 for a pair of Nike Air Jordan sneakers, there will be people willing to pay $200 for a smartphone. It's one thing to sell handsets at a low price, but can a company make money at that level? Current Analysis analystAvi Greengart brought up the point that Nokia makes nice profits on its low priced featurephones and as that market slowly moves to smartphones, profits can still be made. Greengart says that this low margin game isn't for every OEM. He says manufacturers that want to assure themselves of high margins should stay out of low margin areas, a game plan used by Apple, notes the analyst. "Apple is slowlypushing down into lower price tiers, but is doing so at its own pace and is notchasing market share or unit volumes if it can't get the margins it wants," said Greengert.

The Current Account analyst also believes that carriers should be happy about lower priced hardware because it leaves the customer with more money to spend on the carrier's data plans. As for Google, Eric Schmidt seems to be on the right path. Lower priced handsets mean huge growth in Android users which means more viewers for mobile ads which means more money in Google's pockets. In fact, our old buddy from Piper Jaffray, Gene Munster, sees Android business reaching $4.5 billion in 2012, up an incredible 80% from 2011. As Ovum Research's Cripps comments, Android's amazing growth thus far may seem modest when compared to what happens in the future.

source: eWeek



1. cepcamba

Posts: 717; Member since: Feb 27, 2012

So next year I'll be able to get a Note for $70??? :p

7. EclipseGSX

Posts: 1777; Member since: Oct 18, 2011

no FREE ;)

2. Chronos

Posts: 258; Member since: Feb 25, 2012

I like the way this man thinks and works.

3. remixfa

Posts: 14605; Member since: Dec 19, 2008

chips become smaller, more powerful, and cheaper at the same time. technology matures. 10 years ago you couldnt buy a desktop for 2000 that equals the power in an average $500 laptop.

8. JeffdaBeat unregistered

Thumbs up man...but although that's very true, we can't discount technology itself advancing. What I mean by that is that smartphones, although very powerful, still don't equate to what an actual computer can do. Our smartphones may drop dramatically in price, but something else will replace it at that higher price point. Maybe we will be able to actually carry the power and function of a computer in our pocket, which will render our current smartphones the equivalent of a feature phone to us today. Technology will always be cheaper (inflation), but it doesn't mean that the best technology on the market will be affordable by everyone. When things become too cheap, manufacturers will add something to drive up the price and give you more options.

4. knights4life03

Posts: 131; Member since: Jun 09, 2011

i really hope the pricing drops...... $200-400 is a mean price for 2 years and actually 400 is near the standard price... so yea ridiculous

5. darac

Posts: 2156; Member since: Oct 17, 2011

yeah, like I said, android will take over the world

6. JBz007

Posts: 63; Member since: Mar 02, 2012

I would probably be happier being able to pay outright for the latest and greatest and it not cost $700. $400 would be much better off contract and then $70 on contract. Win-win for us consumers. until our monthly bill goes up...

9. gallitoking

Posts: 4721; Member since: May 17, 2011

it makes total sense.. most androids phones goes for a penny 2 months after launch... it will be on par with manufacturer cost.. now

11. -box-

Posts: 3991; Member since: Jan 04, 2012

if only apples went for closer to their true cost... That being said, I dream of a day where manufacturers of high-turnover products (like phones) offer them at a lower cost, say no more than $400-500 off contract for the nicest of devices like a Galaxy S2 or a HTC One X or Nokia 808 or 900. I can buy a laptop which does everything a phone does (with video calling) for less than the cost of a smartphone, and it's more capable, will last me longer, and, with the exception of looking ridiculous holding it up to take a picture with a webcam, would do anything a phone does

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