Smartphone makers: Look at fast food

Smartphone makers: Look at fast food

Summary: Companies making smartphones keep trying to outdo each other with superphones. A trip to the fast food joint shows what might work for smartphone makers.

Trendy vs Fast Food
Image credit: James Kendrick/ZDNet

I'm sitting here eating my lunch in a fast food restaurant (in the image above on the right). Those from the southern US will probably recognize the chain. It's atypical for such a joint, offering decent food at a cheap price unlike some places that just serve lousy food cheap.

What got me thinking, admittedly a dangerous thing, is how it contrasts with the restaurant only 30 feet across the walk (image above left). That one is a trendy, slightly upscale place with a wide variety of really good food. I've eaten there before and always come away satisfied with the quality of the food and the service.

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Notice the big difference between the two businesses? The fast food joint is packed, and the trendy spot only has two diners. It's been like that every time I've eaten in either place over a few months. The fast food place often has customers lined up all the way outside waiting to get in, while the "good" restaurant is sitting almost empty.

There are those who only want the top smartphone on the market, but there are far more out there who are very budget conscious.

While observing this phenomenon, it occurred to me this is much like the smartphone space. The trendy place is like a high-end smartphone, and the fast food joint like a middle-of-the-pack phone. One has all the bells and whistles and the other a good feature set but not top-of-the-line.

The "fast food" phone can't compete with the "trendy" phone on features and capabilities, but it can on price. It beats it handily in this area, matter of fact. That's the sole reason the fast food joint above is packed to the rafters every day and the trendy spot only attracts a few diners. In every way the "good" restaurant is better, but price pushes it out of nearly everybody's consideration.

Perhaps this makes sense for the smartphone space, too. Competition at the upper level of the smartphone game is fierce, and only a few can even play the game. That makes it tough to make money, and exposes each company to a lot of risk should the latest top phone fail.

On the other hand a "fast food" phone might be able to attract a lot of buyers on price alone. The phone would have to have decent quality features like the fast food joint above, but reasonable enough to keep the price down. That would interest far more buyers than the trendy phone.

Another trick from fast food that might work with smartphones is the combo meal. Offer the budget phone with a side of tablet for just a little more. Even offer a super-size combo with a better/bigger tablet. It might not sell but who knows, everybody loves a bargain. 

This is in line with responses I received to a recent article that pointed out I use my smartphone much less due to the tablets I own. It seems I'm not alone in that respect so the phone/tablet combo meal might fly.

Of course, for the fast food strategy to work for a phone, a good advertising blitz would be required. That fast food joint above runs TV ads all the time that make buyers hungry for its food. OEMs would have to do the same thing to create awareness and make buyers pass up that trendy phone next door. Emphasize quality that will do everything the shopper wants to do, at a reasonable price. See if the fast food approach might work in the highly competitive phone market.

There are those who only want the top smartphone on the market, but there are far more out there who are very budget conscious. They'd love to have the lastest whiz-bang phone, but it's not in the budget. These are some of the folks you see in the long drive-through line at the neighborhood fast food joint as you drive by after work. They want a good phone (and food) at a cheap price. Forget about them at your peril.

There's an enterprise angle in this approach. Some of the customers in the fast food joint are buying lunch for groups back at the office. They'll never do that in the trendy place as the cost is far higher for a group. They happily go to the fast food place and get decent quality for a good price. I'll bet the corporate world would do the same for phones if they were good enough but had a fast food price.

Topics: Mobility, Smartphones

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  • Works That Way... every market. More Seiko's sold than Rolexes. More Toyotas than BMW's. More engagement rings sold at Kay's than Tiffany's.

    The problem right now in smart phones, is there is not enough price differentiation. If you buy a phone on contract you pay $200 up front for the premium phone vs $49 or $0 for the el cheapo. Since the cost of service is exactly the same, the lifetime cost of the the two phones is nearly equal. The way carriers are pricing things pushes people to the top line phones because there is so little difference in price.
    • Most people do not amortize the cost of their phone over the life of their

      contract, so your premise is flawed, which would explain why your conclusion is junk as well. Carriers sell a LOT more $0 phones than $200 phones.
  • Can I substitute an apps salad for the side of tablet?

    When I think about all of the nifty capabilities of my Nokia 920 and realize I am using less than half of them with any regularity (if at all) it makes me think that I'll be buying my kids' next handsets at McAndroids not Starphones.
    • Lumia 520

      is a great phone at a great price. I think Nokia will do well internationally with this device.
  • One small problem.

    The trendy phone with more features is also the lowest priced now.

    Apple's phones have fallen behind in features and they're obviously not as trendy as Androids or they wouldn't have been outsold 6:1 the last quarter.
  • Apples an Oranges

    One company that uses this strategy is Apple. Their early dominance allowed them to force carriers to subsidize iPhones more than Android phones and helped their continued (until recently) success. With people moving to better high end Android phones, they appear to be countering with the iPhone 5C (C for cheap).
  • except...

    A meal choice is something you make a few times every single day, so the cost of a 'bad' choice is minimal... you can choose again in a few hours.

    Buying a phone for most people is a two year commitment -- making a bad choice of your phone has a VERY high cost.

    Would you so cavalierly choose Whataburger if you knew you'd be locked in to eating there *every single day* for the next two years?