Consumers have not traditionally bought their mobile phones based on the operating system that powers it. But that might be changing, at least in the smartphone market.

 

“Nearly all consumers used to choose handsets based on the physical characteristics of the hardware, not the software inside,” says Kevin Burden, ABI Research practice director. “The iPhone (News - Alert) has changed this, as more users are now shopping for their handset based on the operating system and software, which is something once thought to be very unlikely,” says Burden.

 

All of that is a reflection of the fact that smartphones are becoming general-purpose computing devices, where the personality and function of a device can be radically differentiated and personalized by each user, based on the content and applications loaded onto that device.

 

Smartphone prices also are falling as shipment volumes increase, and ABI Research (News - Alert) says that 27 percent of smartphones now are available of cost under $200, as compared to 18 percent in 2007.

 

The firm forecasts say that 45 percent of the smartphones shipped will be priced below $200 by 2014. This highlights a rapid change in the attitude of the consumers about smartphones, and a similar shift in vendors’ and mobile operators’ sales and marketing strategies, says Burden.

 

In the future, smartphones and other phones might not be differentiated so much by price as by how users want to use their devices, as more smartphones and conventional phones are now priced in similar ranges.

 

That is not to say there will be no differentiation. Some smartphones are never subsidized, as the high end phones are intended as prestige items or to demonstrate a manufacturer’s design and innovation skills, says Burden. Increasingly, manufacturers want to offer both high-margin, high-priced devices as well as many moderately-priced smartphones that will drive volume.

 

According to ABI Research, the greatest increase in smartphone shipment figures over the next five years will be found in the price range of $100 to $200, for example.

 

“We may never see a $30 smartphone, but over time, smartphones will take a substantial part of the mainstream handset market,” says Burden.

 

The other implication is that the smartphone device creates, reflects and underpins an increasing personalization of the mobile communications experience. Far from becoming a commodity, mobile communications increasingly is a matter of highly-differentiated experiences. The challenge is how well service providers, application developers and device manufacturers can adapt the building blocks to create wildly diverse and rich experiences.