Don’t say we didn’t warn you. We have already mentioned repeatedly that the android-based smartphone market is a race to the bottom. It has to be. First and foremost, the operating system is free to manufacturers. So what will happen is that since the software is free that the battleground shifts to the price of the hardware. And this is precisely what’s happening with Samsung. While it has carved out a niche for itself as the premier maker of high-end android-based smartphones, this isn’t gonna cut it. If you have cheaper, low-end hardware that is continuously ramping up in features, usability and budget friendliness. It’s going to have an impact on your bottom line sooner or later, and it appears that based on Samsung’s latest quarterly reports, that moment has come. Samsung has reported a drop in its profit for its mobile unit of 18%. This is very troubling. This is a double digit deep. And if Samsung doesn’t play its cards right, this might become part of a long trend. We don’t really see any way for Samsung to get out of this unless it wants to play the race to the bottom game. In other words, smartphones and mobile devices would behave just like the PC market. The PC market is all about increasing speed increasing functionality, while lowering price. Of course, the biggest winners in this game would probably be Chinese players. Be that as it may, the biggest winner that we see is the consumer. We are hoping that we will reach a point where android devices will be cheaper than 50 dollars, and they would have the functionality of top of the line Galaxy S series handheld units.
If you think, this is a crazy pipe dream, think again. This has been the trajectory of technology, and we don’t see the rules changing for the smartphone market. It is a race to the bottom because of android. Apple will always have a niche. Let’s face it. There will always be people that will pay a few hundred extra dollars just for that nifty little Apple logo in the back and some souped-up apple technology. But at the end of the day, if you’re looking for phone that slices, dices and do 1,000 other things, you’d have an Android phone, and it would not burn a hole through your pocket.