Can't target value segment with a single phone?
Lets ignore for a second that today's Microsoft memo didn't indicate what the product lines would eventually look like under the new shift and assume that, as many are, that this means 1 phone in each segment. Is it possible to build a single value phone?
I get the statement. But it is kind of overlooking reality. There is a cost associated with each new model. The more different each model is from the others, the more the costs go up. The smaller scale production of components can be and the smaller the size of the purchases orders the company can request. This is actually one of the reasons why Apple products have such massive margins. They have very few models, and as a result they can maximize the profit margins within their supply and production chains.
It also means more marketing money. More models really affects the entire production process. And how many models are sustainable is really dependent on the size of your market. If you have a massive market you can target a wide array of price points and still maintain overall profitability. But if your market is smaller, you have to sacrifice some price points (and potentially some customers) to maintain a profitable business.
This was Nokia's problem. The market for their phones wasn't large enough to sustain the number of models that they had. It isn't to say that there is no market which could. The argument was made that Samsung had something like 168 distinct phones in India. Well, India is one of the largest countries in the world, Android is the largest smartphone OS and Samsung is their largest and most successful OEM.
Pointing that out also doesn't mean it is viable or smart for even Samsung. I'll wager a number of those phones weren't profitable and that having not released some of them would have resulted in more profit for Samsung. The fact that phone OEM as large as Samsung can get away with releasing so many phones doesn't mean it is the right move, or even a smart one.
I think one solid model somewhere in the $175-300 range (low enough to be $0 on a contract) that makes other value phones (even if they are less expensive) look like hunks of crap would be the right move and then separate $85-150 for smaller markets and not sold in America. The American version would be the Surface 3 of phones. Good quality, not an arm and a leg, but also FAR from the cheapest device on the market. Gives their OEMs some breathing room.
If Nokia caused one problem for Microsoft aside from the overhead of running such a bloated hardware division, it was that they were always effectively a 1st party OEM even before MS bought them, they were good and they covered the entire market. They suffocated the competition out of the market. And while that may have been good for Nokia, it was probably bad for the platform in the long run.
But, if Microsoft backs away from the sub-$200 value phone market, and only offers one phone in the low-mid portion of the market, it leaves a lot of room for partners to build phones that don't need to be cream of the crop and don't need to compete with a 1st party offering on price.
Yes, its true, with a single price in the value range, they are going to lose sales, but I don't honestly believe that the Windows Phone market is large enough to truly justify anything else.
I get the statement. But it is kind of overlooking reality. There is a cost associated with each new model. The more different each model is from the others, the more the costs go up. The smaller scale production of components can be and the smaller the size of the purchases orders the company can request. This is actually one of the reasons why Apple products have such massive margins. They have very few models, and as a result they can maximize the profit margins within their supply and production chains.
It also means more marketing money. More models really affects the entire production process. And how many models are sustainable is really dependent on the size of your market. If you have a massive market you can target a wide array of price points and still maintain overall profitability. But if your market is smaller, you have to sacrifice some price points (and potentially some customers) to maintain a profitable business.
This was Nokia's problem. The market for their phones wasn't large enough to sustain the number of models that they had. It isn't to say that there is no market which could. The argument was made that Samsung had something like 168 distinct phones in India. Well, India is one of the largest countries in the world, Android is the largest smartphone OS and Samsung is their largest and most successful OEM.
Pointing that out also doesn't mean it is viable or smart for even Samsung. I'll wager a number of those phones weren't profitable and that having not released some of them would have resulted in more profit for Samsung. The fact that phone OEM as large as Samsung can get away with releasing so many phones doesn't mean it is the right move, or even a smart one.
I think one solid model somewhere in the $175-300 range (low enough to be $0 on a contract) that makes other value phones (even if they are less expensive) look like hunks of crap would be the right move and then separate $85-150 for smaller markets and not sold in America. The American version would be the Surface 3 of phones. Good quality, not an arm and a leg, but also FAR from the cheapest device on the market. Gives their OEMs some breathing room.
If Nokia caused one problem for Microsoft aside from the overhead of running such a bloated hardware division, it was that they were always effectively a 1st party OEM even before MS bought them, they were good and they covered the entire market. They suffocated the competition out of the market. And while that may have been good for Nokia, it was probably bad for the platform in the long run.
But, if Microsoft backs away from the sub-$200 value phone market, and only offers one phone in the low-mid portion of the market, it leaves a lot of room for partners to build phones that don't need to be cream of the crop and don't need to compete with a 1st party offering on price.
Yes, its true, with a single price in the value range, they are going to lose sales, but I don't honestly believe that the Windows Phone market is large enough to truly justify anything else.
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