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Lots of people thought about doing lots of things. Thinking about doing it and actually successfully doing it are two very, very different things, as any startup entrepreneur can tell you.

> So they're stuck designing an entire phone instead of making a couple of changes to an existing phone, which is a heavy lift for a small company,

Why a big company doesn't do it then? I mean, there are a lot of big companies not having a phone, and a bunch of big companies that used to have a phone and now don't. You'd think they'd do the easy thing and just add the extra 5% and eat Apple's lunch - but somehow they don't. Maybe that lunch is not as easily eatable as you think it is.




> You'd think they'd do the easy thing and just add the extra 5% and eat Apple's lunch - but somehow they don't.

Because the market failure is the size of the companies in the market. If you're big enough to sink the resources to make a competitive phone from scratch then you're expecting to capture a large chunk of the market, in which case you'll behave like a large incumbent with the incentive to sell disposable phones.

To avoid this you need to bust up the vertical integration that makes it hard for small companies to make a competitive phone so that it's possible for a small company to make a device which is overall competitive while they're still hungry enough for market share to give customers what they want.


If you say "people" want something else than what is offered now, then by providing this something else you should be able to capture a lot of the market. Example: Apple produced an iphone, but some people wanted more open, not-so-closed-garden, customizable, moddable phone. And they wanted an OS to go with it. And here it it, Android and a booming Android phone market. Yes, a giant - Google - owns the OS. But another giant - which are many around - could dislodge them if they slept at the wheel.

Another example: Microsoft owned the browser market with their Explorer. Then they fell asleep at the wheel and now Chrome owns the market. Sure, again, it took Google to do it, but it can be done. And it will be done again - when there is a substantial unsatisfied market need.

If this is not happening for a long time, then I think it's time to consider the possibility that it's not that the "market" "fails", but just your ideas about what people should want are not the same as what people actually want. If nobody buys the "ideal" phone somebody built - maybe it's not actually ideal for enough people.


> If you say "people" want something else than what is offered now, then by providing this something else you should be able to capture a lot of the market.

Suppose you could capture a lot of the market in the sense that the installed base of people using your phones goes from 25% to 40%, but then your repeat customer interval goes from an average of 3 years to 9 years. Your future sales outlook would be down. You're not going to do it.

Now suppose that your existing installed base is below 1%, or you're a new company and it's zero, and by doing this you could capture even 3% of the market. Then you do have the incentive to do it, as long as that percentage of the market can recover your R&D for developing a competitive phone to begin with. But what happens if the existing market is vertically integrated, so you have to do a lot of unrelated work from scratch instead of starting with a competitive reference design? Then your R&D costs are much higher and you don't do it.

And then nobody is making the competitive phone that people want.

> If nobody buys the "ideal" phone somebody built - maybe it's not actually ideal for enough people.

Let's pick some random midrange device; Samsung A35. It's ~$265, has 8 cores at >2GHz, 8GB RAM, 128GB storage, 2k display, etc. All I want is that with a removable battery and the ability to run a mainline Linux kernel. These are similar specs to the Fairphone 5, which doesn't yet appear to run a mainline linux kernel (they're working on it), but that's $800. Even at that price they're selling them, but which phone is the open competitor in the A35's price range? Can you identify anyone offering this device?

You can't say the market doesn't want something the market isn't offered.


The vertical integration is why the $110 phone exists in the first place…

If you arbitarily move the pricing bar then of course there may be more competitive small companies, relative to the new baseline.


> The vertical integration is why the $110 phone exists in the first place…

There is no evidence of that. If anything more vertically integrated devices (e.g. iPhone, Samsung flagships) cost more, because a vertically integrated market increases barriers to entry and impairs competition.

A Samsung phone might very well have a Samsung CPU with Samsung RAM and Samsung flash made in Samsung fabs with a Samsung battery and a Samsung screen. Galaxy S24 Ultra, ~$1000.

Meanwhile, the $110 phone was the Moto G Play. That's a Qualcomm CPU with Samsung RAM, a "Motorola"-branded battery which is probably Sanyo or Panasonic, and a third party screen and flash because Motorola doesn't make those either. It's $110 because it's full of fungible commodity parts.

The issue is, some of them -- especially that CPU -- are poorly documented and full of tightly integrated but closed source firmware/drivers. Which has nothing to do with the manufacturing cost of the hardware. A fully-documented open-source RISC-V CPU is not going to cost more.


“No evidence”… according to who?

Based on what arguments that such evidence does not exist?




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