The low-cost HTC Explorer may never see a successor.
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.