LIVE FROM THE FUTURE OF WIRELESS INTERNATIONAL CONFERENCE, CAMBRIDGE: The end of operator subsidies, falling device costs and the rise of middle class consumers in emerging markets will drive the emergence of a “super mid-market” in mobile phones, according to Finbarr Moynihan, general manager for international corporate sales at mobile chipset maker MediaTek (pictured).
Currently, there is high volume at the low and high ends of the mobile device market as consumers in emerging markets use basic and affordable devices, while high-end smartphones benefit from subsidies in most countries.
Moynihan said a number of trends will soon see mid-range devices account for around 80 per cent of handset volume, with low- and high-end phones holding 10 per cent each. “We think it is going to change to the super-mid market,” he noted.
Factors that will drive consumers from the low to mid-market include the increase in processing power for a given cost, making it cheaper to offer more powerful devices to the mid-market. The domination of “harmonised and standardised platforms”, such as Android, will also be a factor.
“What all of these trends are doing basically is driving down device costs. We’re going to see a rapid decline in the average selling price of devices over the next couple of years,” Moynihan explained.
The rise of middle class consumers in emerging markets, most significantly Asia Pacific, means that there will also be more people looking to buy devices with greater capability than the more basic feature phones.
In addition, 3G usage is yet to peak, meaning there is scope for devices that support the earlier technology to sell in volume, while services such as agriculture, healthcare, education and banking will be increasingly enabled by mid-range devices.
In terms of driving people away from top-of-the-range models, MediaTek also predicts an end to operator subsidies. Operators will soon decide they are not prepared to subsidise devices, making the most advanced models more expensive. Moynihan noted that T-Mobile US is already heading in this direction.
The MediaTek executive said the transition to the super mid-market will take place in two or three years, noting that in China, nearly all devices now being sold are smartphones.
And other markets are seeing smartphone sales become more significant: India, Southeast Asia and Russia now see smartphones account for 30-40 per cent of sales, while Africa has 15-20 per cent of mobile phone sales from smartphones.