Analyst: The future is bleak for midrange cell phones

By Sharon Fisher, BetaNews

July 2, 2008, 6:02 PM

Midrange semi-intelligent phones such as Motorola's RAZR are gradually going to be subsumed by smart phones based on industry standard operating systems, predicted Kevin Burden, director of mobile devices for ABI Research.

The midrange phone market will dwindle as smart phones with high-level operating systems get pushed down the product line, Burden said. The reason, he explained, is because it is easier for manufacturers to deal with a standard operating system than with a real-time operating system that is often homegrown and that they have to create, update, and maintain themselves.

As examples of this trend, Burden pointed to the Motorola RAZR 2 - which uses an operating system based on Linux - and Nokia's recent purchase of Symbian, as well as its decision to offer it royalty-free.

Smart phones are also being pushed on the consumer side as users become more sophisticated and more comfortable with having this much processing power in their hands, Burden said: "Some people just want to make a phone call, but others demand more functionality." In particular, people -- especially those who use Internet devices such as Nokia tablets -- are demanding better mobile Web browsers (he calls the current proxy browser technology "painful") and notes that eventually, that functionality will be provided on the server level at carriers' sites.

This also means that smart phone prices are likely to be dropping to the mid-tier phone price level, Burden said, noting that the iPhone will now cost $200. There will always be high-end smart phones, he believes, because more processing power means users can run a variety of applications, but now there will also be low-end smart phones.