Google's Schmidt says Android models aiming for cheaper price point
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 analyst Avi 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 slowly pushing down into lower price tiers, but is doing so at its own pace and is not chasing 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.