Manufacturers gunning for that $300 to $400 range are going to get a lot of attention this year, and it's clear this is because this market is continuing to expand. More people every day are ditching two-year agreements and monthly contract plans in the U.S., and that means the initial sticker shock of a high-end smartphone is finally setting in. Samsung, LG, Apple, and others are going to spend this year justifying the cost of their hardware to folks who don't see a huge difference between the $400 phone from a smaller brand and a flagship $700 offering.
It's going to get interesting, but it's also going to be chaotic. Navigating this space was already a little on the complicated side, and this year that's only going to get worse.
An issue of U.S. consumers slowly moving away from these two-year agreements in search of a deal is knowing where to shop. Traditionally, phones in the U.S. are sold through carriers and big box stores. There's a physical person there to explain what each phone does, and to steer that user based on their needs. Walk in to any U.S. carrier store and you'll see this process repeat itself a hundred times a day. Unfortunately, a lot of these really great mid-range phones aren't available in this capacity. Google's Nexus phones aren't sitting on shelves at Verizon Wireless or Best Buy, and so many of these customers make purchases without ever knowing they exist.
It's paradise for a smartphone fan, but a ton of noise for someone looking to buy a reasonably-priced phone.
Online sales present another interesting challenge. On the Internet, especially in a purchasing sense, the loudest tends to be the most successful. Take a look at OnePlus, a company that released two decidedly average phones by claiming they were measurably superior. Compared even to some of the other mid-range phones, OnePlus is rarely at the top of the pile. In fact, of the small smartphone companies to wield social presence as the dominant promotion tool, Nextbit is the only company that delivers on the hype.
This year's going to be a little different, though. Sony is a brand with significant consumer trust outside of the smartphone bubble, and their latest phones will live on that. Xiaomi isn't selling in the US, but is drumming up hype here regardless. Huawei's finally got the foot in the door they've been aiming for, and will continue to press on. We're also likely to see offerings from Motorola that challenge this price range later in the year, and all of this is aside from the impressive demonstration by Alcatel at MWC.
The biggest challenge each of these companies face is reaching these new consumers. Google's got the money to blast everyone with TV ads, but frequently the whole point to these inexpensive yet insanely capable mid-range phones is the lack of overhead creating the opportunity for that price point. It's not a unique challenge, but this year will be the year we see each of these companies try to solve the puzzle in unique ways.