Microsoft’s $29 Smart Phone and a Non-Obvious Trend

There are a lot of angles at the 2015 CES worth talking about. When I go to a CES show, I look for trends. Sometimes, the things I find could be a trend or be nothing at all. This early in the year it is hard to know. But a number of things happened and some side conversations occurred around a possible trend, or it may just signal one of the primary reasons a buzzworthy product being released in 2015 may need to exist.

It all started with Microsoft’s $29 smart phone. While the Nokia Series 40 platform is not considered a smart phone by most, it is pretty darn close. It has an app store, runs a full web browser and functions just like many smart phones do. Which is why Microsoft releasing it at $29 (before any subsidies) is quite an offering. Especially when it comes with many Microsoft services bundled in. This phone is actually a perfect fit for the next billion users and I actually believe Microsoft can be quite competitive with this offering against Android in the sub-$50 smart phone market. But that should be relatively obvious for those who follow mobile closely. But it is was a different point about this phone that ignited an interesting conversation. It is encapsulated in this quote in the promotional material.

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It is the second value proposition of the sentence that is interesting: a “secondary” smartphone for just about anyone. What are they implying? I had some time with executives from Microsoft to talk about this particular product and an interesting point was made. Some people may want a simple phone, one which doesn’t contain all the bells and whistles (which are often an invitation for distraction) when they go out to dinner, exercise/run, away for the weekend, etc., but would like a smaller, usable phone to make calls, receive texts, and do other simple web stuff.

As phones get bigger, they also get less portable. I ran a 15K race with my family in San Francisco over the weekend and saw numerous people with an iPhone 6 Plus or Galaxy Note strapped to their arm. The sheer size of these phones made this look a bit ridiculous, yet it sort of works. So I can see, for certain things, how a smaller phone with some music capabilities, a SIM card in case of emergencies to make calls, a camera, and some basic web stuff could be useful.

The following day at CES, after meeting Microsoft about their $29 smartphone, my friend Benedict Evans and I were walking around the China/Shenzen manufacturing section and noticed some fascinating little gadgets that contained phone keypads, but were wrapped in things like walnut and other woods, jewelry, clean metal, and other well designed fashionable materials. These devices were essentially diallers paired with your phone that let you use them to make phone calls. You could leave your tablet or phablet in your bag, purse, or pocket and use this elegant little object to make calls. Very similar to this idea from HTC of a few years ago.

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Benedict and I talked through this idea and found it interesting that such a thing was taking place in Asia. It also seemed interesting this was the similar value proposition of developed markets for the Nokia 215. While I am certain the Nokia 215 will be an attractive offering for first time smart phone owners, I’m not sure it is the right product for the secondary phone concept. While I agree with the potential, the discussions around this idea had me thinking, what if this is an area where the smart watch comes in? Apple themselves floated the idea around the Apple Watch that you could leave your iPhone at home and still use it for basic things like music and payments. What if also in version one, you can get the Apple Watch on WiFi in a public area and use it to get iMessages, emails, etc.? Carrying this further, what if the smart watch eventually evolves to fill the use case of a secondary phone you can take with you when you are doing things that don’t require all the bells and whistles of your smart phone and is essentially much more portable?

I’m not sure if there is something to this idea of the need or want of a secondary smart phone-like product for a range of uses but I can make the case there may be something to it. A key thought I’ve had from day one of the Apple Watch reveal is how these much bigger smart phones will make a complimentary small screen product even more valuable. Since I’m an iPhone 6 Plus user, I’m looking forward to testing this when the Apple Watch comes out.

I’ve been forming a number of thoughts on smart watches and was on a panel at CES last week on the subject. I published a report this week on smart watches and you can download it here.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

25 thoughts on “Microsoft’s $29 Smart Phone and a Non-Obvious Trend”

  1. The issues with secondary phones are 1- the network (cost and different phone number), 2- the admin (maintaining the apps and media on the phone, especially since a “traveling/running/going out” phone can’t rely on Cloud). I tried it, found it more trouble and cost than it’s worth.

    That doesn’t make the Nokia thing completely uninteresting, but if secondary phones don’t really fly , as a primary phone it tries to straddle a weird line, of people who want a smart-ish phone, have enough money for a data contract, but don’t have enough money (an extra $70, ie 3 months of data charges ?) to buy an entry-level Lumia or Android. With such a small screen, I’d say it’s only for messaging, except.. T9 ? in 2015 ?

    As for phone-calling.. appendices… apart from that bluetooth handset, you’ve got pens, wired or BT headsets, lanyards, the new ultra small earplug from Motorola…. I’ve tried some, they’re all OK to make and receive calls via voice recog, to read aloud texts, and even though it’s disquieting, to actually send texts. I’m dictating texts IM and mails more often than typing them these days (well, when I’m alone ^^). Plus, “smartphone appendix” is really the only thing smartwatches are good at for now.
    If you want to run very light, there’s even a few smartwatches that are full smartphones, with voice, data, and apps. What’s really killing those for me is the dumb networks that insist on 2 contracts and 2 numbers: I want not only a single number, but also transparent switching to the active device (the rules are fairly easy to work out, plus manual override)

  2. It’s surely not the “ipod shuffle” of smartphones, but it is probably the evolution of where circa 2006 WM3 phones would have gone.

  3. “what if the smart watch eventually evolves to fill the use case of a secondary phone you can take with you when you are doing things that don’t require all the bells and whistles of your smart phone and is essentially much more portable?”

    There was a recent report saying that Samsung was manufacturing Apple’s S1 SoC on a 28nm process. I wouldn’t be surprised to see your scenario happening once Apple gets their S-branded SoC down to 14nm or 10nm.

      1. Yes, but you’d only have to do it once, to put your bluetooth headset on! 🙂 Also, maybe this is where some of the recently speculated bluetooth earings come in. Just another piece of fashion and personalization.

        1. Hey Goedel, if you’re going to use bluetooth headsets then just bring your smartphone and keep it in your pocket or purse.

          If you sit down and think a little bit, the case where you want to own a smart phone but might want to leave it behind under certain situations is few and far between. If the watch completely replaces the iPhone then that makes sense but a watch that occasionally replaces your phone? Such occasions are few and far between and commercially insignificant. What makes me think so? Microsoft came up with the idea.

      2. How is that different from raising a handset to you ear… ???
        Close your hand into a fist, put it against your temple – Voilà !!!

          1. And right below your fist is your wrist.
            If your fist is by your temple, then your wrist (and watch) are right beside your mouth – and ear… Duh.
            And like I said, how is that any different from holding a regular handset ?
            I don’t get tennis elbow doing that, and have never heard of anyone else doing so either.

  4. There is a sizeable market for a smart-ish phone providing services through voice and Wi-Fi networks, without the need for a data plan. I see a great number of folks trying to make a smartphone work without a data plan; currently, it is not at all smooth.

    Also MS speaking about these devices as a secondary phone, may well include those who still see a landline as their primary phone. Yes, outside our tech-obsessed circle, there are still many folks who have a landline as their primary point of communication. Possibly MS goal is to sell a product these folks would find useful, or eventually migrate them to a more expensive, all-encompassing smartphone.

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