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Smartphone Revolution

firefox smartphoneThe global economy will change as smartphones get a whole lot cheaper, writes Andy Kessler in The Wall Street Journal (5/13/14). That eventuality is already upon us, with "a Chinese manufacturer … showcasing a $35 smartphone" and Firefox "flirting with selling one for $25." (link) Once "dirt-cheap" smartphones — not cellphones — are widely available, they will become "a productivity platform for wealth creation," Andy writes, as those in "the developing world can build lives with a $35 smartphone."

"Poor villages and townships will finally have a platform to escape despair," says Andy. "Now we need applications to use $5-a-day workers to eyeball documents, photos, blueprints and anything that requires human cognitive skills, things that can’t yet and may never be coded into artificial-intelligence algorithms. This is the greatest challenge for Silicon Valley that it doesn’t even know about." Indeed, the smartphone business currently "is staggeringly lucrative."

According to iSuppli, a research firm, a "16-gigabyte iPhone 5S," selling for $649 without a carrier contract, cost just $191 to build. "The Samsung Galaxy S5 contains $251 of materials." Of course, consumers aren’t just paying for components; we buy "the experience of the look, feel and touch — for the software, operating system, graphical user interface and apps." Andy argues that such distinctions will inevitably dissipate, ushering in a "post-iPhone era," with smartphones re-born as "an antipoverty program."