Are mid-range phones on the way out?

Customers who place a high value on their cellular experience will opt for the expensive, top of the line models. So this means paying $450, $500 for a BlackBerry or similar phone. Customers who don’t need the high-end data features will likely opt for a much cheaper model — the ~$100 phones like, as Forbes notes, the Nokia 1200 or the LG Flare. Why spend $300 on a KRZR when you can get similar functionality for much cheaper? Another factor in the demise of the mid-range phone is the cheapening of components.

Jeff Brown, a principal analyst with Portelligence estimates that phone component prices have fallen 10% to 15% annually in recent years. That means manufacturers can add extras, such as games and dictionaries and, in some cases, even FM radios and cameras.

Plus, as Forbes also notes, companies have further incentive to make their cheaper phones more durable.

If anything, low-cost cellphone makers figure their products will have to last even longer than luxury phones, which may get tossed aside as consumers spring to buy the latest model. Koivu says Nokia tries to build phones that will last at least three years by using dust and moisture-resistant keypads and avoiding cheap ink on the keys–it rubs off too quickly. Shaping the phones in the simple candy bar or block form is easier to manufacture than phones with hinges and moving parts–but also makes the device hardier.

If/when we do see a cellular environment where subsidies cease to exist, it stands to reason that mid-range phones will suffer the most. Their cost relative to the features they provide will no longer be economical without a subsidy. There will always be market for high-end phones. There will always be a need for low-cost phones. That’s where it seems our market is heading. If you’re so inclined, you can go check out Forbes 10 Wallet-Friendly Cellphones. It’s a neat slideshow.]]>