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June 30, 2005
Mobile handsets and The Innovator's Dilemma
The mobile handset market is an interesting example of the Innovator's Dilemma. Most mobile phones today have more functions than their users can utilize and the market for new customers has pretty much dried up (just check how many mobiles your family has to see what I mean). So now, mobile phone vendors have started addressing the market of non-consumers. By introducing ultra low-cost handsets, they hope to find new customers in the emerging markets. The same approach will also lend itself to introducing even younger (pocket-money budget) people to mobile phones. Especially the kids that like to swap things or have a new phone every other week will like the idea of being able to buy one for 20$ or less.
Fast forward 5 years. Will we see mobile phones as freebies inside cereal packets? Just how will incumbent mobile vendors be able to sustain their growth and business? Will every vendor start introducing cheap phones and hope that they can sell the right number? Or will we see some traditional vendors flee up-market to provide higher-price "mobile devices with phone capabilities"?
Posted by Matthew at June 30, 2005 02:06 PM
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