Implications
If handset sales slow down, two things happen, first the hardware manufacturers slow down, but also the revenue stream to the telecoms. If people are not moving up in handsets, they are also not moving up in usage of special expensive add-ons in service.
Analysis
The drop in revenue to the handset manufacturers is of course troubling, but you have to go beyond that and ask what else does this do to the entire telecom community.
One area is that the higher end units with the higher profit margins are going to suffer the most relative to the manufacturers.
But the other area of major concern is what does it do to the service providers and this article leaves them out of the picture. If the higher end handset don't sell the user does not have the option for all the nice extras that the providers can change for and provide a higher end margin. The best way to view this in simple terms is the purchase of a phone or a smartphone. A simple phone has a simple service lets say of just talking minutes, while a smartphone requires not only talking but also data time, download, music, TV, etc. so if you view a very simple plan to a data plan in many cases this is a 5 to 1 ratio of revenue or more.
So for everyone who does not upgrade the provider is not going to see an increase in revenue.
