I can see why at least one phone OEM is not making money

Sun, Dec 8, 2013 3-minute read

I had an interesting conversation with an ‘phone OEM at Droidcon NL which gave me a good idea as to why there may be very few OEMs making money producing ‘phones.

This OEM has a current line of around 15 different devices…. yes… 15. Most of the differences seemed to be cosmetic (e.g. different shells around the same core hardware), which is the kind of thing which should be very low priority if you’re not making money. There was no indication that any of the devices were customised for a specific region, so any one of the devices could have been sold across Europe (where the OEM is based).

One of the biggest problems with any product is letting the public know it’s available, so think about the costs of marketing that many devices. If you have 3 devices aimed at the high, mid-range, and entry-level markets your budget is split in some way between those three. If you have more than that the marketing budget for each device gets smaller, and because you may have multiple devices in some market segments you end up marketing one of your devices against, among other things, your other devices.

Trying to sell 15 products where there are 3 main market segments is crazy.

Marketing problems aside, talking to the OEM brought to light their update policy; They break down update requests by country and will only issue updates in specific countries when they get enough requests from that country! So if a device was sold in the Netherlands, the UK, and Germany, and they only received enough requests from Germany, the UK and Netherlands devices may not get updated even though the OEM has spent the money to create an update.

This policy isn’t on top of the eighteen-month update cycle Google have tried to promote; it’s instead of it.

I’d picked up one of their devices at Amsterdam airport to use with a local SIM (yes, I’d forgotten my Nexus SIM tray pin). It’s a 512 MB RAM device running 4.1.1 (yes, 4.1.1, not 4.1.2) and was released in May this year. Given its release date and specification it seemed an ideal candidate for KitKat, so I went to check with the OEM about their plans. The response; it probably wouldn’t get updated, and they’d be happy to show me their new product line which is “more likely” to get it, but only in countries where they received “enough requests for it” (Note; not definitely, just more likely).

The reason I can see this affecting profitability is because, firstly, they’re selling underpowered devices. The first paragraph of Googles’ page about the KitKat release says;

Android 4.4 is designed to run fast, smooth, and responsively on a much 
broader range of devices than ever before — including on millions of 
entry-level devices around the world that have as little as 512MB RAM.

Which, to me, clearly acknowledges that 512 MB isn’t enough for a device running early 4.x versions.