Featured: Are the Android Manufacturers Commoditizing Themselves?

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With any OS that is run by more than one company, you will get a hint of commoditization. The more manufacturers are out there and the more models they make. Google clearly wanted to have as many manufacturers as possible using it, so they would've gotten that part of the commoditization anyway. But at least Google made Android open source, and they can do pretty much whatever they want to it, and make Android quite different from what their competitors have.

But having many competitors in the Android ecosystem may not even be the biggest accelerator of commoditization. I think the manufacturers are commoditized themselves  by releasing model after model without too many differences between them. Instead of at least trying to be as profitable as Apple by following part of their model, of releasing one phone per year, they're trying to release dozens per year. I'm not saying they should release only one per year like Apple. They still want to offer phones for lower prices, and Apple will probably do it soon, too, but I don't think offering dozens of phones per year for each $50 tier is the right way to do it either, and that seems to be their strategy right now.

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It would probably be best if they offered only one phone per year for every $150 tier. So for example in 2012 they should offer a very low-end one for $150, then one for $300, another for $450, and finally one for $600, which is the price of the most recent high-end smartphones now. Then in 2013 they would offer a sequel for each one of them, and so on. I think the $150 tiers are close enough to each other so a potential customer could choose between 2 adjacent tiers, but also far apart so they don't confuse the customers too much with all their models, and also to not commoditize themselves.

The more complex their business becomes, the higher the costs will be, and in the same time prices will drop fast. They need to make their phones a little more scarce, so they save money with marketing and allow their customers to actually know what their product line is. With all the models being released every month, it's hard to track them all and know what to expect from them. In the same time the marketing for them because very ineffective because there's little time to promote them, and little money as well, because the more models they try to sell, they less they have to allocate in marketing for each.

I believe Samsung is trying to adopt such a 4 tier model, with their recently announced naming system. The S will continue the Galaxy S legacy, at the very high-end, the R will be for a slightly downgraded S model, so maybe this one will be around $450. The W will be a mid-range phone with an overclocked single core processor, probably around $300, and the Y will be the low-end model. Now, even Samsung doesn't stop there, though. I believe they will still try to make a "Plus" model for each, with slightly upgraded specs, as a stop-gap before the next-gen sequel arrives. They are also planning on making each of them a "Pro" model, too.

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So that would be 4+4+4=12 models each year. It still sounds a little too much to me, although at least they will have some consistency – hopefully. Manufacturers need to be very careful about the complexity of their product lines, or they risk losing money and boring and confusing their customers with a lot of similar phone models.