If it's not a smartphone, it's dumb. Despite current global dominance, basic "feature phones" will give up the ghost in just a few years.
After the Blackberry and then the iPhone created the "smartphone" category, we needed to call the rest of our cellphones something, and "dumbphones" sounded, well, dumb. Thus was born the "feature phone."
While some initially viewed feature phones as an in-between category describing something more than a basic mobile device and less than a full-powered smartphone, the term has generally come to represent everything south of the portable computer-as-cellphone Apple/Android/Windows/Blackberry kinds of devices that get all the media attention. There's still some disagreement, but for the sake of this post, we're talking about anything "non-smart."
In the U.S., we most frequently associate feature phones with cheap prepaid plans and stubborn parents who refuse to upgrade, but in the majority of the world, low-tech (and low priced) remains king. According to Gartner, more than 63% of mobile devices sold in the second quarter of 2012 were feature phones.
Cost is the main reason, followed by durability. In countries without massive carrier subsidies of handsets, both advantages are magnified. And feature phones are also generally better at being, well, phones. If you spend a lot of time actually talking, aclamshell phone feels a lot more natural than squishing a Galaxy Note II up to your cheek.
They're cheap, they're durable, and they work. So why are they on the Deathwatch?
For starters, they've peaked. Feature phones are quickly losing ground to their cleverer cousins. According to that Gartner report, while overall mobile phone device sales were actually down in Q2, smartphone sales jumped 42.7%. While smartphones currently account for only 21% of handsets in the Middle East and Africa, they're on pace to break 50% in just two2 years. In Southeast Asia, smartphones are currently outsold 3-to-1, but sales are growing at 78% per year.
Durable, cheap phones that don't use expensive data don't add up to a very good business. The last thing anyone on the sell side wants is users who talk on their cellphones – and do little else.
Feature phones leave little room beyond ringtones and text messaging for up-sells. Without apps and zippy interfaces for accessing them, theres little differentiation, no long-term platform lock-in and almost no carrier value. That's why Motorola recently joined Sony in winding down feature phone production. (In the short term, that helps Nokia, which is seeing modest growth in feature phone sales, but even it knows the money's in Windows.)
It's not all a supply issue. There's also legitimate demand for smartphones. In the developing world, mobile networks are often the most reliable form of Internet access, and having a phone that can take advantage of those networks is often critical. In the U.S. and Europe, the spread of social networks is helping drive smartphone adoption. And with the cheapest 4G prepaid phones dropping below $100, there's little reason to settle for an old-fashioned burner.
Mass adoption of smartphones continues to drive down component costs, making feature phones even less attractive. By 2020 - eve
n sooner in richer areas - you'll be hard pressed to find them on the street. Within a few years, the TracFone racks at Wal-Mart will be full of low-end and mid-range Android smartphones.
Can This Technology Be Saved?
There will always be a small market for stripped-down phones, particularly in the industrial sector, where rugged design and reliable voice calls trump gesture-aware touchscreens and consumer-friendly glitter. Think Nextel. Still, the clamshells-of-the-future will probably come packed with high-end features, and the average consumer will walk straight past them to the fun stuff.
Previous ReadWrite Technology Deathwatches
One Laptop Per Child (OLPC): No change
In-House Data Centers: No change
Point-and-Shoot Cameras: No change
Video Game Consoles: The utility of bundles apps like Netflix and Vudu seems to be slipping. An NPD Study showed that one in five consumers who view streaming video on their TVs do so without a peripheral device.
Blu-Ray: The same NPD study reveals that "online video is maturing” as users migrate to watching streaming media on their TVs.
QR Codes: It's been a mixed bag. While Bank of America is testing QR codes for mobile payments (good news for the technology), a security researcher demonstrated how a malicious QR code could be used to wipe a Samsung smartphone.
For an update on ReadWrite's baker's dozen of company Deathwatches, check out our updated ReadWriteWeb DeathWatch Update: The Unlucky 13.
Smartphone/feature phone image from Boost Mobile.