In the market for Android-based phones, the situation is a little fuzzier. There are so many competing manufacturers that it is nearly impossible for consumers to keep track of which is the latest and greatest Android phone. Samsung’s Galaxy II S was highly anticipated in the US, but the phone did not arrive until late in the quarter. Since its introduction, HTC and Motorola have both announced new products with specs that beat the Samsung phone. As with the iPhone, consumers wait to for the latest product.
The market for smartphones remains enormous. In the US, of the roughly 230 million mobile phones in use, only about a third are smartphones. Globally, the percentage is probably even smaller. But high prices for smartphones are keeping buyers away.
HTC, in its earnings announcement, stated that it has no plans to introduce a cheap — sub-$100 retail smartphone. The company plans to roll out its first 4G LTE phone in the first quarter of 2012. Samsung, Nokia Corp. (NYSE: NOK) and Microsoft Corp. (NASDAQ: MSFT), and Research in Motion Ltd. (NASDAQ: RIMM) all continue to compete at the high-end of the market, where Apple reaps the majority of the profit and the other companies compete for volume in order to make a profit. That competition takes the form of “specsmanship”, which, while not truly a commodity marketplace, certainly resembles one.
The slower projected sales that HTC is predicting probably does not mean that smartphone sales have hit their peak. But cash-strapped customers are not going to be willing to plunk down $300 or more for a phone that could be yesterday’s news before they even get it out of the box. In this weak economy, getting good value is more important to more people than getting the latest technology.
Only Apple may be immune from that, both because of its loyal customers and its image as the industry leader. The Android-based smartphone makers are playing a game of technology leapfrog at a time when wary consumers want to know that they’re getting their money’s worth.