Qualcomm powered devices are capturing the high end of the device market and this overriding factor has resulted in Qualcomm attracting an average implied subsidy of $530 compared to $341 for other IC vendor based products.
High end devices remain the most profitable part of the mobile device market; however, these margins are increasingly being challenged due to intense competition causing feature creep, i.e. more features are packed into the device, for no extra revenue.
Senior practice director for devices at ABI Research, Nick Spencer stated: “Competition is intense and some feature creep is inevitable, but vendors need consider which features create real value for the end user. The question they should ask themselves is, whether they should add in new features, rather than whether can we add in new features? Not focusing on innovation and value creation will result in a price war and margin erosion.”
While the mobile industry and media tend to focus on the high end of the market, it is worth noting that it is largely a replacement market — most of the future growth in the smart mobile device industry will come from lower priced devices. Stuart Carlaw, chief research officer, added: “Opportunity remains for device vendors and their IC vendor partners who can profitably optimize their product’s feature sets for low-end device markets and price points.”