Measuring the value of a smartphone

My wife Tam recently decided to replace her phone, and asked me to help her to choose a ‘good phone’. This got me thinking about total cost of ownership for smartphones, value-for-money in 2015, and whether a new iPhone is expensive.

We all know that telcos pitch their phones at a monthly price point. Fortunately, (or unfortunately if you like good coffee) I’m mindful of that oft-repeated financial advice on the total expense that can be racked up by buying (but I really need one!) a takeaway coffee every day for a year.

Assuming that phone contract is even more binding than the contract between caffeine and the human body, it would be a wise decision to consider the total cost before signing up.

Checking Telstra’s mobile phones landing page, choosing a latest model iPhone or Samsung Galaxy on a two year contract carries a commitment to costs of around $2,000 or more.

So, how do we each determine good value and decide how much is the right amount to pay for a smartphone?

Where I live, work and travel to in Melbourne I see a lot of people with high-end phones. Especially on the train. Because almost every single person has theirs out front and centre. So, it seems that any average person who wants a high-end phone must be able to afford one, right?

To consider income per capita for VIC, the base cost of owning a smartphone from Telstra on a halfway decent data allowance would come in at about two percent of average disposable income. I realise that incomes vary, but to ponder average incomes is that a lot or a little to spend? It all depends on the value proposition.

Thirty years from now, smartphones will be #1 on any nostalgia list for the 2010s — as a dominant cultural presence and as a driver of change in social behaviours.

While the computer web browser was (and still is) an amazing tool to access information and transact, smartphones have provided additional levels of utility. For many people now (skewing heavier in younger age segments) smartphones are the avenue to express, manage, and manipulate personal identity. Social networking and the selfie culture enabled by phone cameras have moved smartphone ownership from being a desirable want to a sincere need for an increasing proportion of the population, a non-negotiable essential for social inclusion and participation. (I’ll leave the debate on the pros and cons of social media — as recently highlighted by Essena O’Neill — to the side as a topic for another day.)

So, let’s stack up the value proposition to the average consumer. By merit of the smartphone business model being a lucrative multi-sided platform, we have an abundance of third parties readily providing better and easier ways for people to get things done, be entertained, and socialise. Plus, you can make phone calls and take photos.

Now consider the hardware. High-end phones use premium luxury design cues. These cues complement the refinement of the software, and at their pinnacle provide testimony and reverence to the intimate and personal notes of a person’s life carried within their smartphone.

Smartphones really do well to transcend all other forms of consumer electronics as a coveted item. They provide the strongest emotional drivers I’ve ever seen to surely move the product category from discretionary to essential income spend for many people.

For the individual, the value of a particular brand or model smartphone is ultimately a very subjective decision, and will be heavily influenced by the strength of their emotional connection with the device.

For businesses, brands and start-ups, a successful smartphone presence that acquires and retains users will place that party right within the emotional centre of many people’s lives, next to what matters most to that person, within a device that is literally taken to bed at night and woken up to in the morning. What price can you put on that?

In case you were wondering:

• Doing the maths, the cost of buying a coffee at work every day could be roughly the same as what it costs to own a high-end smartphone.
• Tam became the happy owner of a Motorola Moto G. In our household at least, mid-range is the new high-end ;)