Wednesday, September 07, 2011

Disruption and 4G

Reading a review of a 4G smartphone today in USA Today,, I was struck again by the strange nature of smartphone reviews.

The conventional wisdom is pretty standard. More features, faster speed, bigger screens are all desirable.

But unless you are grandfathered into an unlimited data plan, the merits of 4G for you as a consumer are somewhat questionable. Video and to a lesser extent music eat up the standard consumer 2 gigabyte plans very quickly. 4G makes a phone more responsive yes, but it also makes it easier to use up your entire allowance.

Only to the extent that that the IP technology of 4G increases the capacity of cell sites and delivers better service does it really provide significant value for most consumers and such a benefit is not likely to be immediate.

My guess is that 4G has much more value for the mobile user of tablets and laptops. And some people may end up substituting a mobile data plan for a fixed data plan, if and only if they have an unlimited plan (as is currently available on Sprint's Wimax network) or if an employer is paying.

Given current pricing models and capacity limitations, my guess is that it makes little sense to upgrade a phone to obtain 4G capabilities for most people in the short term. If 4G does not cost extra, then by all means buy a phone that includes the capability. Supporting this view is the speculation that the iPhone 5 will not include 4G.

For many consumers, a classic overservicing of needs may be occurring. The performance improvement of 4G may be exceeding the needs of many users, particularly those who don't use their phone as their primary data device.

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