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Analyst Angle: The democratization of devices

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.

Ever get a feeling of déjà vu? The longer I spend in the wireless industry (2012 will be 20 years), the more it seems that history repeats itself. This has become apparent recently as we have been looking at the developments in the smartphone market. Rather than being available exclusively at the largest mobile operators, a wide range of market-leading smartphones are now becoming available at tier two and rural operators.

We have seen this before. Remember the Motorola StarTac? Initially, the impossibly-small cell phone was only available from the large operators. This initial period of exclusivity helped drive demand – people’s need seems to increase for things that are in short supply. Once the initial demand had been met, other operators got the chance to offer the StarTac, including the smaller rural carriers.

The same happened with the Palm Treo and RIM BlackBerry devices, the early smartphones. Initially launched with major carriers, they soon worked their way into wider distribution. Obviously, this helps the original equipment manufacturers as well as the operator by increasing sales once the initial growth levels off.

The same is now happening with the latest-and-greatest smartphones. For example, the Samsung Galaxy S II is now available from many rural and smaller operators. And the Apple iPhone is now available from C Spire (you may remember them as Cellular South). And the latest HTC devices are available from multiple operators including U.S. Cellular, C Spire and Cincinnati Bell. If this trend continues, then more subscribers in more of the smaller markets will have much more choice.

This does not mean that the larger operators will not have “exclusive” devices or new devices on limited availability. The OEMs are always going to launch devices with the largest operators to get the biggest initial bang-for-the-buck. But with wider distribution agreements for the latest Apple, Samsung, HTC and Motorola devices, the smaller operators will get their chance to market the devices faster.

Why is this important? Simply because I believe we need the smaller and rural operators to remain competitive and consumers select the carrier based, in part, on the devices they offer. Apple users are famously loyal (we have multiple surveys that show this) and the selection of operator becomes secondary. So for a smaller operator, such as C Spire, the opportunity is there to gain subs, reduce churn, and potentially up-sell their existing base simply from offering the iPhone.

Final point: It is simply a matter of time before the latest smartphones are also available with prepaid or no-contract agreements. Just like the tablets have been sold with no-contract, month-to-month data services and the no-contract business has shown it can sell lower-end smartphones (aka Cricket/Leap and MetroPCS), then it is logical that the higher-end smartphones will follow the same path. The question is “when” and “with whom,” not “if.” At that point, we will reach full circle, when the latest-and-greatest are available to all.

Iain Gillott, the founder and president of iGR and iGR Semiconductor Research Inc., is an acknowledged wireless industry authority and accomplished presenter. iGR was founded in 2000 in order to provide in-depth market analysis and data focused exclusively on the wireless and mobile industry. Prior to founding iGR, Gillott was a Group Vice President in IDC’s Telecommunications practice, managing IDC’s worldwide research on wireless and mobile communications. Gillott has a BSc (Hons) degree in Computer Systems Engineering from the University College of North Wales, Bangor, Wales, with a concentration in hardware and software design.

ABOUT AUTHOR

Iain Gillott
Iain Gillotthttp://www.igr-inc.com
Analyst Angle Contributor to RCR Wireless NewsFounder and President - IGR Research. Iain Gillott is an acknowledged wireless and mobile industry authority and an accomplished presenter. Gillott has been involved in the wireless industry, as both a vendor and analyst, for more than 20 years. IGR was founded in 2000 as iGillottResearch in order to provide in-depth market analysis and data focused exclusively on the wireless and mobile industry. Before founding iGR, Gillott was a Group VP in IDC’s Telecommunications practice, managing IDC’s worldwide research on wireless and mobile communications and Internet access, telecom brands, residential and small business telecommunications and telecom billing services. Prior to joining IDC, Gillott was in various technical roles and a proposal manager at EDS (now Hewlett-Packard), responsible for preparing new business proposals to wireless and mobile operators.