Cell Phones Are Going To Start Getting Much Cheaper

Since the rise of the smart phone, cell phones have been crazy expensive.  A good smart phone without a contract will cost around $800, more than a decent laptop.  Since these high end phones are actually quite powerful miniaturized computers with cutting edge technology, this has been understandable.  Smart Phones have been at the front of technology's growth and innovation over the past few years

That, however, is going to begin to change this year.  The main reason cell phone makers have been able to get away with such costs is that much of the cost is hidden in your cell phone bill.  Customers have grown accustomed to getting free cell phones if they are willing to go with last year's model or a mid-level smart phone.  Many pay $200-$300 for a top phone, along with a two year contact.  This, of course, means that much of the actual cost of the phone is buried in those monthly payments made under the two year contract.  

Beginning last years, major cell phone providers have begun phasing out discounted phones which are paid through the monthly contracts.  AT&T just announced it is killing off phone contracts entirely.  Instead, users pay one price for their service and another for the phone, which can be paid for in installments over a year or two.  This change is a good thing.  It provides customers with transparency.  They can see what portion of their monthly costs go to the phone and what goes to service.  More importantly, if they choose not to upgrade, they don't keep paying that hidden cost for an upgraded phone that they never got.  Users can save money by holding onto their phones beyond the two year mark.  Once installment payments are done, they just pay for the service.

Of greater benefit to the consumer is that phones will start to become less expensive.  When users received a free deeply discounted phone, they had no incentive to decide if they could make due with something less powerful and cheaper.  Just get the best free phone, or pay a small sum for a top phone, knowing you could probably get that money back as a trade in on your next upgrade. 

When you actually see what you pay for a phone, you may not be willing to pay quite as much. Picking up a new iPhone or Samsung for $800 may dissuade some buyers, even if they know they can pay for it over two years, especially if they find that a $300 phone can do pretty much everything they want.

How cheap can phones get?  Well let's take a look at a very similar technology that has not had the benefit of cell phone subsidies: tablets.  You can pick up the Amazon Fire HD, a reasonably good Android tablet with a 7" touch screen for $50.  There is no reason you could not make a similar device with phone and 4G data for less than $100.  In some parts of the world today, you can buy a cheap smart phone with a camera and Internet for under $30.  Of course, that price comes with some real compromises in speed and quality.

Most of use will want more power and quality than a $30 smart phone can provide.  But I would not be surprised to see some really nice high end smart phones selling in the $300 range in the next year or two.  Even those really highest end $800 phones may fall closer to the $500 mark.  Today, you can pick up the very nice Nexus 5x for under $400.  

There will be some down sides to these price cuts.  The speed at which phones continue to develop will diminish as phone makes focus more on cost savings and less on improving speed and adding features.  But this new phase was inevitable as smart phones move from being "the new thing" to an everyday appliance.

Wireless Charging: Not Worth The Trouble

Several top end cell phones offer wireless charging now, the Samsung Galaxy S6 probably being the most popular.  Surprisingly , iPhone has not yet jumped on that bandwagon, for which I commend them.  You can buy a case that will allow you to charge your iPhone wirelessly, but I say don't bother with any of it.

The notion of wireless charging is an intriguing one.  I would love it if my phone could charge while in my pocket, while I was using it, or even just sitting on a shelf.  But none of that is a reality with current wireless charging.

As currently available, a wireless phone must be placed, back side down, directly onto the charging pad.  It must be touching the pad at all times in order to charge.  The platform is much larger than a typical charger, making it far less convenient to carry around with you.  Charging also takes longer when done through the wireless interface.  Samsung's wireless charger will also cost you $50.  There some cheaper chargers made by third parties, but all are far more expensive than you would pay for a simply USB charger.

So for wireless charging, there seem to be many negatives:

• I must be very careful how I place my phone on the charging stand.
• The charger is much larger and inconvenient to carry around with me.
• The charger is more expensive than a normal charger
• Charging takes longer
• I cannot pick up and use the phone while it is charging

On the positive side, well I guess it saves me the 5 seconds it takes me to connect my USB charger.

When wireless charging evolves to the point where one can charge efficiently while carrying around a mobile device, I'll be impressed. The current wireless solution is simply a waste of time and money.

Why cell phones should think big

Apple, which has dominated music player and cell phone markets for years now, has received great fanfare for the introduction of the iPad.

This technology is nothing new. Tablets and e-readers have been around for years. Amazon and Sony have been fighting in the e-reader market for years now, with relatively little interest from consumers. More advanced multi-function tablets have been around for years too. Anyone still have their Palm Pilot from the 1980's? Even Apple was doing this 20 years ago (anyone remember the Newton?).

Why then is the iPad being seen as the greatest new invention since the PC? In part, this is due to Apple's well earned reputation for coming out with cool cutting edge technology popular with young people. Part of the reason is also customer confidence in being able to purchase and download interesting media with relative ease. But the other big reason is that Apple is filling a consumer demand that just isn't being met by any other major product.

Until the development of wireless 3G networks, portable streaming video was not a viable technology. The other problem has been that most large media networks are so afraid of piracy that they have been reluctant to much of any content available. While there have been some other attempts at portable video, they have been too small to gain much notice, and have not had access to much digital media of interest.

All that is changing now, and Apple is clearly the first major player out of the gate. It is a wake up call to the rest of the industry to get out there and make something happen.

E-ink readers such as the Amazon Kindle or Sony Reader are seen as the future, but these sorts of devices really fill a different consumer need entirely. They are ok for reading a book straight through, but if you want to jump around pages in a reference book, or store hundreds of documents for reference, these devices fall woefully short. Further, the slowness in updating page changes and inability to move beyond monochrome, makes them look pathetic next to the iPad. Yes, e-ink has great potential because of its ability to use much less electricity than an LCD screen, but if it cannot keep up in performance, it is like comparing an electric golf cart to an SUV. Until performance can meet that of LCD, e-ink is going to be relegated to people who want a very limited use device. They are only going to do that if the cost is much cheaper. Until we see devices selling for well under $100, these will not be of much interest since consumers can read books, and much much more buying a similarly priced iPad.

The technology to take on Apple, however, does already exist for a number of companies. They are called Smartphones. Apple simply took its iPhone OS and put it in a device with a bigger screen. Other companies, Blackberries, Palms, Androids, already exist on phones and are capable of streaming video, organizing documents, playing games, and just about anything else available on the iPad.

Their only major failure? You cannot get one with a screen bigger than about 3". Phone manufacturers have tried to keep their devices pocket sized. There is a large market for these small phones, but many others would be more than happy to carry around a larger device if it had a screen size that let the read documents, watch shows, or play games without having to use a magnifying glass. There is no reason these cell phone makers could not keep pocket sized devices for customers who want that, but put basically the same OS on a 9" screen for customers who want larger screen size. Given that the OS already exists, such a device could be on the market in a matter of months. They could even still work as phones using a head set to the tablet.

Come on cell phone manufacturers - the cell phone market is hugely competitive right now. The tablet market is wide open. You already missed being first into the market. Better to be second than tenth.