Considering current offers that include steep discounts (e.g., two-for-one deals) for higher-end smartphones, I don’t think this strategy will get far. Also, as Bill Gates once said to Jim Manzi, back in the early days of productivity application suite competition, “it’s not a good idea to get into price competition with someone who has more money than you do.”
Having ceded much of the high end of the smartphone market to Apple Inc., slower-footed rivals such as Research In Motion Ltd., Nokia Corp. and Motorola Inc. are jostling for what remains up for grabs: cheaper cellphones that still provide Internet capabilities.
The result is a price war in midrange smartphones this holiday season. Wireless carriers and handset makers are focusing on more affordable smartphones—which skimp on features such as screen resolution and camera quality but allow users to surf the Internet and download applications.