- Smart phone vendors including Samsung, Sony, HTC, Motorola, LG, Dell, Asus, Acer, ZTE, Huawei compete on price, desperately trying to win market share from Apple. They leave the feature phone to the sole Nokia (plus some Asian brands)
- A smart phone is of high(er) value => buyers have the incentive to compare prices before buying. I am assuming an elastic demand market, and one in which buyers are less restricted to carriers.
- Smart phones are attracting attention and coverage of mass and social media => buyers are better informed of prices. For example, I visit at least 5 websites to compare prices and asked numerous times on Facebook before buying my Samsung Galaxy Note.
- It’s not that feature phone buyers lack the money for smart phones, but they simply do not want the complexity of smart phones. This group is willing to pay $25-50 more for convenience (next-door shop) and guarantee (retail brand). Note that big retail brands like TheGioiDiDong.com sells at premium compared to other chains.
- In fact, the feature phone buyers don’t even know or care that they are paying a premium. The common behavior is for a buyer to go to a shop and ask "I want a nice simple phone with camera and music player". The salesperson then guess the budget from the appearance of the buyer and start recommending ones that are most inline with with the retail’s inventory.
Photo: Nokia 6230i, my first feature phone