I ran across an interesting article inFierceWireless this week. The article focused on how Tier 2 carriers are pushing handset makers for more smartphone offerings they can provide to their customer base. I’m sure we are all familiar with the smartphones offered by the big three carriers (AT&T, Verizon, and Sprint), and even T-Mobile. We see or hear ads for them all the time on TV, the Internet, and Radio.
What makes this article interesting is that carriers like Metro PCS, US Cellular, and others are on the bandwagon now. And they are on the bandwagon for an obvious reason. They have to offer their customers handsets that are on par, or at least close to on par, with what the larger carriers offer. If they don’t, they stand to lose subscribers to the big boys. To me this makes two things pretty clear.
The first thing it makes clear is that customers of the Tier 2 carriers are demanding smartphones. After all, right now smartphones are more expensive. Since many Tier 2 carriers offer month to month plans, they can’t afford to subsidize the price of smartphones like the big carriers do with 2 year contract customers. So they aren’t going to offer more expensive phones willy nilly…that’s right, I actually used “willy nilly” in a blog post. Since this represents more cost, and therefore more risk, for these Tier 2 carriers, I think it is very safe to assume their customers are pushing them toward smartphones.
The second thing this makes clear is that we are essentially at a tipping point with the move from feature phones to smartphones. Projections from firms like Nielsen predict that smartphones will outnumber feature phones in the US sometime around the end of this year or early next year. We are still a little below 50% saturation with smartphones right now, but Tier 2 carriers offering smartphones should accelerate the move to smartphones. So even though we haven’t quite reached the 50%/50% point yet, I believe this move signals the market will move almost exclusively to smartphones.
I don’t know that we will ever get to 100% smartphones, but I believe we will reach a high enough percentage that feature phones will be a very small, maybe even non-existent, player in the cellular market. And this move is good news for those of use who are deploying customer facing mobile apps for our businesses. What it fundamentally means is that we will eventually be able to reach essentially all cellular subscribers in the US. Given what’s going on inside the Tier 2 carriers, I’d say “eventually” is coming much sooner than many people think.
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