Smartphone Adoption Is Hindered by High Subscription, Service Costs

By Wayne Rash  |  Posted 2010-11-21 Print this article Print

News Analysis: Lowering the cost of a smartphone and keeping subscription costs low foster smartphone use, according to a study by mobile Web advertising company

The price of smartphones plays a major role in adoption according to study by mobile advertising company Smartphone penetration is greatest where the people who need the devices can afford to buy them, and can also afford the monthly subscription charges, concluded the study, which was compiled by Adzookie's Tiffany Trias. 

I suggested that this might be the case when I discussed the new, low-cost Android smartphones being offered by Verizon Wireless and T-Mobile

Shortly after that column ran, Adzookie published its findings which compared the cost of an Apple iPhone against the average annual income for people in each of several countries. As you might expect, when an iPhone costs over 20 percent of the average person's annual income, you don't find a lot of people with iPhones. This cost differential is a critical factor as Trias points out in her study.  

Of course there are two factors in cost in relation to smartphones. The first is the cost to purchase the device itself, and the second is the cost of the data plan. Again, low cost tends to encourage smartphone use.  

Now, before all of those iPhone partisans come running to tell me how the iPhone is the only solution that should ever be considered by anyone, let me explain why it's important to look beyond the iPhone as a solution to access to knowledge globally-or even in the United States for that matter. The iPhone, after all, is inherently an elitist device.  

Regardless of what claims may be made about its perceived quality, it is beyond the means of the vast majority of people on the planet. Worse, the price that people pay in the United States is lower than most places and is kept artificially lower than that through carrier rebates. 

It's also important to know that the data plans in the United States are not the only pricing models available. In most of the world, pricing is usage-based and data use can be fairly inexpensive, especially when you consider that data prices in the United States are higher than they need to be. I suspect that if the carriers weren't subsidizing all those smartphones, prices would be lower. As it is, some U.S. carriers, notably T-Mobile, have extremely inexpensive usage-based plans for those who only need data access occasionally. 

When you look at the role that smartphones play in people's lives outside the United States, it's also important to know that private Internet access is very rare. In many, perhaps most, societies outside of the United States and Western Europe, the only private Internet access is through a smartphone. This in turn means that for many people, the only private, ad hoc access to knowledge is through a smartphone.  

Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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