Feature phone

Differences and similarities between other devices

Feature phones run on proprietary firmware with third-party software support through platforms such as Java ME or BREW.^[2] The proprietary operating systems were not designed in mind to develop nor handle the intensive applications found on iOS and Android, both of which specifically cater to third-party application development which became increasingly important.

Depending on extent of functionality, feature phones may have many of the capabilities of a smartphone, within certain cases.^[3] For example, today's feature phones typically serve as a portable media player, and can have digital cameras, GPS navigation, Wi-Fi and mobile broadband internet access, and mobile gaming through discrete apps. However, feature phones have weak batteries and processors and therefore, video games are rudimentary. Digital cameras, microphones, and speakers are usually are of very low quality.

For manufacturers

Feature phones are often kept in phone manufacturers' lineups for several reasons:

• They are lower priced than smartphones, because:
  • Most patents on basic mobile device technology have expired. Some expired patents make it possible to add more functions in their basic form that before were usually the purview of mid-range or high-end devices. Many standards-essential patents are required to have fair, reasonable, and non-discriminatory licensing (RAND/FRAND), which typically means that license payments for each device using a standards-essential technology must be low enough that it will not disincentivize adoption of a standard or cause legal conflict;
  • Less complexity translates to simpler and cheaper assembly;
  • Relative modularity: a feature phone can be designed around one or two primary functions: flashlight, radio, MicroSD card slot for additional storage, music player, camera, Internet browser, and wireless hotspot for more advanced devices. Many basic phones now include some of that functionality, rendering them as either basic feature phones or smart feature phones—whereas advanced feature phones include all of these and more, but may entail certain other sacrifices at the consumer end.
  • Low cost allows very flexible price ranges from low-end to mid-range. This allows serving low-end markets with basic and feature phones, as people in these market segments cannot afford smartphones;
• The feature phone lineup serves as a backup for critical situations – production delays, import/sales ban levied by competitors through courts or other like institutions.

To consumers

From the point of view of markets and consumers, there are several situations for which feature phones are beneficial:

• Power requirements are typically low, which translates to extended talk and standby times (approximately a month to next recharge). In some cases this makes it possible not to use grid power at all, by recharging through more autonomous means, such as cars and car batteries, solar photo-voltaic cells, or notebook computers, if a phone supports USB charging.
• Anticipated loss, damage, or reasonably rough use: Feature phones are often more durable, less complex, and more affordable, and for these reasons are preferred as travel devices, children's devices, and for field use scenarios. The devices' low cost means that loss of such an item is manageable, and usually serves as a disincentive for theft in mature markets. Feature phones are preferred for travel purposes, as by their nature they can contain little to no sensitive information that government officials, such as border officials, may wish to access for any reason.
• Liberal and mature markets are well-suited for specific functions: In countries where payphones have been discontinued, some operators offer prepaid cellular plans with a SIM card and a basic mobile phone in one package for about the same amount a mid-tier calling card would have cost (€15 for the whole package in some areas). Travelers may often prefer this option, given expensive roaming fees, and that their own device's cellphone functionality might be limited or not work at all, if they have arrived from overseas territories with a device that was only made to work in an incompatible cell network, or if their calling plan does not include roaming.
• Companies and organizations may often want to provide their employees with a simple communications device, and purchase in bulk. This substantially reduces the individual price for each phone.
• For various levels of security, companies may require a phone that is lacking a camera, and/or has little to no storage, or no communications functionality beyond basic talking.

Industry trends

The first cellular phone, the Motorola DynaTAC released in 1984, is considered a basic mobile phone due to its inability to do anything more than making voice calls.

Despite the introduction of smartphones in the mid-1990s, ignited with the August 1994 release of the IBM Simon, Nokia Communicator from 1996 on, and the BlackBerry line of handheld personal digital assistants from Research in Motion, feature phones enjoyed unchallenged popularity into the mid 2000s. In North America, smartphones, such as Palm and BlackBerry, were still considered a niche category for enterprise use. Outside North America, Nokia's Symbian devices had captured the smartphone market, in which price was the only barrier to entry, and Nokia offered smartphones across all feasible price segments. In the mid-2000s, phone makers such as Nokia and Motorola enjoyed record sales of feature phones. In developed economies, fashion and brand drove sales, as markets had matured and people moved to their second and third phones. In the U.S., technological innovation with regard to expanded functionality was a secondary consideration, as phone designs there centered on miniaturisation.^[5][6][7]

However, consumer-oriented smartphones such as the iPhone and those running Android fundamentally changed the market, with Steve Jobs proclaiming in 2007 that "the phone was not just a communication tool but a way of life".^[8] Existing feature-phone operating systems at the time, such as Symbian, were not designed to handle additional tasks beyond communication and basic functions, did not emphasis application developers much, and due to infighting among manufacturers as well as the complex bureaucracy and bloatness of the OS, they never developed a thriving ecosystem like Apple's App Store or Android's Google Play.^[8] By contrast, iPhone OS (renamed iOS in 2010) and Android were designed as a robust OS, embracing third-party apps, and having capabilities such as multitasking and graphics in order to meet future consumer demands.^[9]

There has been an industry shift from feature phones (including low-end smartphones), which rely mainly on volume sales, to high-end flagship smartphones which also enjoy higher margins, thus manufacturers find high-end smartphones much more lucrative than feature phones.^[10] For instance Apple Inc.'s operating margins from the iPhone remain high since these devices have always been sold to carriers at a high enough cost which compels carriers to get wireless customers to sign multiyear contracts.^[11] The shift away from feature phones has forced wireless carriers to increase subsidies of handsets, and the high selling-prices of flagship smartphones have had a negative effect on the wireless carriers (AT&T Mobility, Verizon, and Sprint), who have seen their EBITDA service-margins drop as they sold more smartphones and fewer feature phones.^[12][13][14] Trends have shown that consumers are willing to pay more for smartphones that deliver more features/applications such as 4G LTE and touchscreens, and smartphones have become a part of North American pop-culture (while feature phones are no longer "cool"). Though smartphones cost more to produce, they deliver higher profit-margins than feature phones, thus device makers and wireless carriers have shifted towards smartphones.^[15]

Market share

During the mid-2000s, best-selling feature phones such as the fashionable flip-phone Motorola Razr, multimedia Sony Ericsson W580i, and the LG Black Label Series not only occupied the mid-range pricing in a wireless provider's lineup, they made up the bulk of retail sales as smartphones from BlackBerry and Palm were still considered a niche category for business use. Even as late as 2009, smartphone penetration in North America was low.^[16]

In 2007, Apple introduced the groundbreaking iPhone and by 2009, the iPhone and Google Android shifted the smartphone focus from the enterprise to mass market consumers (at the expense of business-oriented operating systems such as Windows Mobile and BlackBerry).^[17] As a result, smartphones have enjoyed the largest selection and advertising among carriers, who are devoting less and less store space and marketing to feature phones.^[18]

In 2011, feature phones accounted for 60 percent of the mobile telephones in the United States^[19] and 70 percent of mobile phones sold worldwide.^[20] According to Gartner in Q2 2013, 225 million smartphones were sold which represented a 46.5 percent gain over the same period in 2012, while 201 million feature phones were sold which was a decrease of 21 percent year over year, the first time that smartphones have outsold feature phones.^[21][22] Smartphones accounted for 51.8 percent of mobile phone sales in the second quarter of 2013, resulting in smartphone sales surpassing feature phone sales for the first time.^[23]

A survey of 4,001 Canadians by Media Technology Monitor in fall 2012 suggested about 83 per cent of the anglophone population owned a cellphone, up from 80 per cent in 2011 and 74 per cent in 2010. About two thirds of the mobile phone owners polled said they had a smartphone and the other third had feature phones or non-smartphones. According to MTM, non-smartphone users are more likely to be female, older, have a lower income, live in a small community and have less education. The survey found that smartphone owners tend to be male, younger, live in a high-income household with children in the home, and residents of a community of one million or more people. Students also ranked high among smartphone owners.^[24]

Japan

In Japan, mobile phones developed a wide array of features prior to the development of smart phones. The introduction of smart phones has largely displaced these at the high end, though smart phones for the Japanese market often include features first developed on feature phones. Many of these features were and remain specific to Japan, often requiring network support, and the resulting phones, while dominant in Japan, proved unsuccessful abroad. This led to the term "Galápagos syndrome" – specialized development dominant on an island, but not found abroad – and then the term is Gala-phone (ガラケー, gara-kei), blending with "mobile phone" (携帯, keitai), to refer to Japanese feature phones, by contrast with newer smart phones.

United States

When Apple Inc., a company then known for its production of the iPod media player and the iMac personal computer, introduced the iPhone, featuring an all-touch user interface closely based on that of the iPod Touch. The first iPhone had a much more powerful hardware and operating system than contemporary feature phones and smartphones; in fact the hardware/software was derived from the Macintosh personal computer, in contrast to the existing phones which had slow processors and limited applications/firmware to conserve battery life. The iPhone's applications were also much more bandwidth-intensive than contemporary phones which would strain existing wireless networks.^[25][26] Featuring access to millions of mobile apps from Apple's iTunes Store (now the App Store), it was considered to be among the first retail/consumer-oriented smartphones. At the event, Steve Jobs proclaimed that "the phone was not just a communication tool but a way of life".^[8]

At around the same time, Google was developing its Android operating system as a direct competitor to Nokia's Symbian and Microsoft's Windows Mobile operating systems. The iPhone's success lead to the company, led by Larry Page, turning its methodology around, and Android as an open-source software platform for mobile phones was announced in November 2007 together with the founding of the Open Handset Alliance, and the first Android smartphone, the HTC Dream, was released in October 2008 in the US. Google would go on to launch its Nexus line of smart devices and collaborate with various original equipment manufacturers, including popular feature phone manufacturers Samsung, LG, Sony, and Motorola, to adapt Android for devices of varying form factors and computing platforms.

Motorola had stayed too long with its aging RAZR flip phone and missed consumer trends for touchscreens and enhanced multimedia. Nokia and Research in Motion's attempts to implement some of the new capabilities from iPhone and Android to their existing proprietary firmware platforms was mixed, as these earlier operating systems were designed in mind to handle these intensive applications. Nonetheless as the iPhone was initially too expensive for mass market adoption, Nokia and Research in Motion did enjoy expanded sales as their offerings were considered a lower-priced alternative.^[27]

By the turn of the decade, iOS and Android, together with less-common platforms such as BlackBerry 10 and Windows Phone, had shifted the smartphone focus from being a niche to mass market consumers.^[28] Feature phones were primarily designed as communication devices, and manufacturers had, up to that point, been enjoying record sales of cell phones based more on fashion and brand, rather than technological innovation.^[29][8] Though smartphones cost more to produce, they were delivering higher profit margins than feature phones, leading to manufacturers and wireless carriers shifting towards smartphones. As a result, smartphones now have the largest selection and advertising among carriers, which devoted less and less store space and marketing to feature phones.^[18] In 2013, smartphones outsold feature phones for the first time,^[30] accounting for 51.8% of mobile phone sales in the second quarter of that year.^[31]

In an effort to provide parity with smartphones, modern feature phones have also incorporated support for 3G and even 4G connectivity, multi-touch screens of varying sizes, various sensors ranging from proximity sensors and GPS to Bluetooth and NFC, plus access to popular social networking services.^[32] However, their functionality and support for third-party apps purchased or downloaded via an app store or other online distribution platform are still relatively limited in comparison to smartphones.