Cheap Or Inexpensive Phones: Does It Matter Anymore?

These words are used routinely ad nauseam by many marketers. However, they truly do have different meanings. Especially when being used to describe a brand.

One organization might want potential customers to respond with a knee jerk impression of cheap as in costs little to buy. Another might want the exact opposite response. i.e., Cheaper than it usually sells for.

Inexpensive seems to fill more of a utilitarian or generic usage more than anything else. An example here might be, “Computers today are inexpensive and affordable.”  Again, the actual “cost” isn’t as relevant as compared to how your brand is seen to fit in a customer’s mind.

Apple® this month launched two new phones to very mixed reviews. Some complained there wasn’t all “that much there, there.” Though far and above the criticism was pointedly directed at the new “cheaper” 5C®.

It would seem all the scorn fell pretty much into two camps. One – it wasn’t cheap enough. The other – it seemed to cheapen the iPhone brand itself. Personally I see this playing out the same way iPad® was received when first launched. Different playing field, yes, some different rules and players, again yes.  But, (and it is a very big but) the bigger game is being missed by many in my view.

This is nothing about phones per se. It’s all about iOS7® and ecosystem dominance. The phone launch was a sideshow. The hardware game is last years battle in my view. Hardware improvements now offer only incremental returns or benefits that may be viewed as negligible to both consumer as well as manufacturer. The game has changed and, is also afoot.

For most people the term “mobile” means phones. Phones as in the device. Again that battle has been fought and won by Apple. Every other device both on the market, as well as what’s in the works is battling over the ground left behind by Apple.

You can get just about any other phone on the market for basically “free.” The only difference? It needs to run on either Android® or some other platform. If you have made the switch to an iOS® (Apple’s platform) or iOS has been your only platform by default. One thing you are not going to do is switch. (Save the hate emails of those that have. In the big picture it’s negligible at best.)

Some may think I’m biased or pushing my opinion in an “Apple fan-boy” styled take. Although I now use Apple products to near exclusion of all others it’s for a very good reason – I’ve used all the others. And, just like when everyone snarled, and speared the launch of iPad. I was one of the very few that wrote and spoke publicly, “It was a game changer.” And – it was.

Let me share with you a statement that props up my hypothesis about why I believe people, as well as companies, that are still focused on the hardware race (as in physical phone) rather than the platform (as in operating system) are missing the boat.

This week on the television show Bloomberg West™ they had an open discussion between a few mobile platform App developers. When one was questioned why their iOS version was being developed more intensely than its equivalent Android version, the answer to my ears was Earth shaking. He said, (I’m paraphrasing)
“People who use iOS (iPhones, iPads, etc.) purchase through their devices via ads placed or displayed at a ratio of 9 to 1.”

Again, let me repeat this point only I’ll phase it a little differently so you can get the true implications from this one statement.

  • In the race for ad dollars. The race that ALL valuations, and future valuations of today’s most technologically driven Wall Street darlings such as Facebook® and others. The ad dollars that are being placed in speculation (or hope) that they will someday turn eyeballs into customers. (people who actually buy something they like, not “like” something and never buy) For every 1 they convert on an Android platform – there are 9 times more people parting with actual legal tender through an Apple device.

Do the math. Any way one slices those numbers, along with the implications, they are staggering.
You want to place ads for a $100K market? Or, a near $1 million market?
A $1 million potential customer market? Or $10 million?
These comparisons are not to be trifled with or brushed aside.

A $100 million dollar potential customer conversion is nothing to sneeze at. However, one might just feel the need to cough when the other competitor states their potential conversion rate is closer to $1 Billion dollars.

If you have a few million to spend on an ad campaign – who do you want to listen to? That is where the game is now.

Cheap phones in the hands of the multitudes may now have varying negative implications to advertisers and their ad dollars. Which is exactly the opposite they once touted to get these very same advertisers to spend money with them.

The sales schtick at one time was about, “We’re in just as many if not more hands than them. Think of the potential sales!” That mantra can quickly be morphing into a negative rather than a positive.

In many advertising boardrooms, what was once a selling point may now bring out considerations of: Cheap phones = cheap customers. Or worse: Eyes that don’t buy.

Eyeballs (or device) count mean nothing as compared to their implications just 3 years ago. It’s now 1 to 1. i.e., Conversions. How many saw – then bought. Period.

If it turns out 9 to 1 is applicable across the mobile spectrum. Then Cook and company may just be playing the game more correctly than a lot are giving them credit for. Only time will tell however, that time frame is definitely getting more, and more condensed as advertisers are not just going to keep throwing good money after bad “in hopes” they get conversions. Especially in today’s squeezed ad revenue space.

The first to the punch demonstrating unquestionable data is going to land knock out blows. And, if it’s all about which brand (or platform) delivers, with a verifiable customer loyalty (again brand or platform) equivalent. Loyalty and brand dominance may be taken to an other level we still have yet to see.

This can’t be understated in today’s game of devices such as Apple and the others. There’s a refinement once you are within Apples ecosystem with cross device functionality that is just not present as compared to anything Android or Windows® based.

Things just aren’t as seamless, or responsive, or available. At some point you stop wanting to fool around or, worrying about or, having to think about what you need or want your device to do. You just want it to do it – and do it well. And, by far the biggest point of all is: I (or you) will spend money to fill that need.

I buy value today. And what I value more than anything in my time. And what I don’t have time for is trying to save a few dollars by spending hours looking for a cheaper or free version of something. I buy an App in Apple’s App Store because it works across my devices. Whether it’s .99 cents or. $19.95.

Usually they work, do what I want them to do, and I don’t need to be some sort of binary code aficionado to operate them. If I try (and I have with other family members devices) with the other systems. In all of about 5 minutes I’m reminded why I don’t use them.

The experience 9 times out of 10 has been horrendous. And, I was previously a pretty adept Windows-based user. Yet, once I made the change, I was reminded why I made that change, just by interacting with any former brand.

Again, that point can not be understated. For if my hypothesis has merit, the ramifications will become apparent very shortly. And the reasoning wont be hypothetical. They’ll be quantifiable and empirical.

Ad revenue dollars that will be allocated will need to demonstrate an answer to the question of:
“How many saw – then purchased. And – on what platform?
iOS? Or, Android?”

How many devices sold, distributed, improved, whether cheap, inexpensive, and more will be irrelevant to any future coveted ad sales revenue for mobile dominance. And that changes everything.

Again.

© 2013 Mark St.Cyr