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Thanks for the memories  July 26, 2012

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CNET Editor

Joe capitalises on a life-long love of blinking lights and upbeat MIDI soundtracks covering the latest developments in smartphones and tablet computers. When not ruining his eyesight staring at small screens, Joe ruins his eyesight playing video games and watching movies. Twitter: @Joseph_Hanlon

Loud and Clear

Should all OEMs ditch the budget smartphone?

The low-cost HTC Explorer may never see a successor.
(Credit: HTC/CBSi)

When the term smartphone was first coined, it referred to the best of the best. The Nokia N95 was one of the first examples of a smartphone and had a AU$1379 price tag when it launched in 2007. A lot has changed in the last five years. You can now find a comparable smartphone feature set in phones that cost a mere AU$100. But is this a good thing?

HTC CEO Peter Chou doesn't think so. He recently went on the record to say that the company will not be making any more low-end smartphones, focusing on the top-end of the market instead. There is financial logic behind this as budget phones offer very little margin for profit, but he also believes that cheap models give customers the wrong idea.

"We don't want to destroy our brand image," Chou said in a recent interview.

HTC is in the middle of a downturn, both in profits and, more importantly, in the interest of consumers. This downturn started last year when the company launched a confusing range of handsets — budget versions, like the Facebook phones Salsa and ChaCha, outnumbered HTC's top-tier models. While focusing on its most impressive devices might cut HTC off from a segment of the market, it would also pass on the message that HTC is a premium brand that is offering premium products.

Budget phones, on the other hand, are all about cutting corners, finding cost-savings and passing these on to the customer. In most cases, this involves slower processors, less RAM, small, low-quality screens and almost no internal storage. You still get a lot for your money, like 3G data speeds, Wi-Fi and GPS, and the same great software too. But after the costs are cut, the user experience is far less attractive. Budget phones tend to be sluggish to use, the screens are dull and pixelated and many of the fun 3D games developed for smartphones are unplayable with such low quality hardware to power them.

This would be fine if the customers remembered how much they paid for their phone. You need only to take a look at the comments of apps in the Android app store to get a feeling of disconnect between what customers with budget models expect from their phones and what phones at higher prices are capable of delivering. Smartphones are more like computers than most people consider. Just as you'd never expect to play The Witcher 2 on a budget-priced netbook, you can't expect the cheapest smartphone to deliver lag-free performance in 3D games and other visually intensive apps.

Make no mistake, this is an extremely brand conscious tech category. Phone makers rarely get three-strikes with new customers — every flaw in their experience is remembered and informs their next purchasing decision. Take my brother as an example. He switched phones 12-months ago, saying that he was sick of his old phone and the various problems he had with it. He switched to a new manufacturer, but after several months he started experiencing software glitches with his new phone. He's now fed up; he wants to change again and it would be highly unlikely for him to buy new models made by either of these previous manufacturers in the near future. Though, at this rate, he'll have given up on mobile phones altogether by 2015.

HTC's premium-only model may win over smartphone shoppers like my brother. After his run with phones, it would only take one great experience to keep him loyal to a brand for the forseeable future. Should the other OEMs follow suit?

Budget smartphones will be around for as long as we have companies like Huawei and ZTE making new products. But should the big brands like Samsung, Sony and Motorola avoid diluting their ranges with low-powered variants?

Have you sworn off a brand after a bad experience with a budget model? Let me know in the comments below.

Add Your Comment 7

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Chaplain posted a comment   

Huawei, ------- Now there's a nightmare! Paid an arm and a leg for one that lasted just 6 weeks of which I actually got to make some 8 calls, so it went back for a full refund


WayneF1 posted a comment   

NOKIA: I had horrendous problems with Nokia (N93i couple of minor problems, N95 software issue, and lastly N95 8GB) and with the latter alone driving over 2,400km back and forth to their repair centre 120km away. It took forever for them to believe and finally admit the phone would just turn itself off randomly up to 4 times a day. They would SMS me and say it was fixed. After a string of Nokia only phones right from analogue models NEVER AGAIN!!!!


clairence posted a comment   

I agree, people too quickly forget how much they pay for their budget phone and expect too much of it.
As someone who sells them, when people come back with problems in the budget phones too often they are laggy and slow and can give people a bad impression of the brand even though their more expensive phones are amazing.


eDDie posted a comment   

I think this is a smart move.
I've heard of people say they've owned a HTC and said it sucked, but when they tell me which one it's a real budget HTC they got from over a year ago . . .
But Samsung seems to be doing it okay. They have crappy budget phones, but it hasn't ruined their name, however their high end phones a good and cheap anyone so no one really buys their budget phones . . .
So in HTC's position I think it may be a good idea


BrockU posted a comment   

Honestly who can even name a budget phone? I got my SGS2 for free and it blows my mind daily. The only issue is all android keyboards suck. I can't name a single phone that isn't tagged Galaxy, razr, one, lumia, etc.


ChristopherM2 posted a comment   

I think the problem is that the bigger OEMs are just trying to shrink their flagship phone into an unsuitable package, it needs to be built from the ground up for a successful budget phone, gimmicks like the Salsa don't help.


roshie posted a comment   

Sworn off Apple after their shitty update to 3.0 when I had the iPhone 3G.

Don't trust a company who want you to update to the latest firmware and then say, actually, you should replace your phone while you are at it.

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