Are the Days of Big Budget Flagship Smartphones Numbered?

It's not too big a surprise that an unheard-of smartphone maker is launching a flagship smartphone that sounds as good as any $600 smartphone out there, but at half the price. We're talking of course about OnePlus, a China-based company that recently came into the limelight with its '2014 Flagship Killer' smartphone.

Another Chinese company Xiaomi was built on this aggressive strategy, resulting in its phones selling out minutes after they go online. Then there's the Chinese OEM turned smartphone juggernaut Gionee, walking a similar walk HTC did years ago.It  too offers 'Tier-1' hardware at a reasonable price point.

But, you might say that Indian phone makers have been offering spec-heavy phones at affordable prices for a long time. But here's the difference, if you look closely, the above phone companies boast of using the same components that big phone makers like Samsung, LG, HTC and Sony. Their product pages speak to the geeks; detailing who manufactured everything from the display to camera sensor, and even mentioning the type and frequency of the RAM used in the smartphone. They like to position themselves above the cheap smartphone makers whilst taking shots at Apple and Samsung, who're ruling at the top.

Here are some examples of 'flagship killer' phones:

1) Xiaomi Mi 3: Xiaomi Mi 3 boasts of a Snapdragon 800 quad-core chip by Qualcomm. The chipmaker has created a brand resonating a feeling of quality (at least in mindshare) where competition like MediaTek have usually been perceived as cost-conscious (inferior even). There's a 5-inch 1080p IPS LCD display made by either Sharp or LG, both of which are known to supply displays to Apple for its iPhone and iPad. The 13-megapixel 5-piece lens is a Sony Exmor sensor (Xiaomi goes to the length of labelling Philips for the dual-LED flash). The rest of the specs are pretty up-to-date too - 2GB of RAM, 16GB or 64GB internal storage, and 3050mAh battery. The last seen price on Xiaomi's store for the M3 was $339.

2) OnePlus One: Being the newest of the lot, the OnePlus One is fitted with the newer Snapdragon 801 chip with 3GB of RAM. One striking implementation is the three microphones with touchless controls, similar to the Moto X. While Xiaomi's Mi 3 runs MIUI, its in-house OS based on Android, the OnePlus One uses a popular third-party Android Custom ROM called CyanogenMod 11S. You can buy this phone only via invite - and the top-line 64GB variant costs as little as $349.

3) Gionee Elife E7: The Gionee Elife E7 again boasts of a similar chipset to the Xiaomi Mi 3. The smartphone's camera system however consists of a 16-megapixel rear sensor and interestingly an 8-megapixel autofocus camera at the front. It costs Rs. 24,900 ($410) in India, which at the moment is the cheapest phone to boast specs of the kind.

4) LG Nexus 5: The Nexus series ought to be given some credit for bolstering this trend - it all started three generations back with a sudden price drop of the Galaxy Nexus to sub-$400 levels. The Nexus 4 and Nexus 5 continued on the path of offering top-notch hardware at a jaw-dropping price point. It is a known fact that Google subsidises the handset in markets like the US (thereby reaching the $349 price tag there) in hopes of getting Android in as many pockets as possible, so that it can make money off of its content platform (Google Play). Even today, the Nexus 5 is quite satisfactory for most people, making people question the value they get by paying tens of thousands more for a proverbial 'top-of-the-line' smartphone.

The question is, how long can most of them last? Granted, most of these companies don't spend much on advertising, marketing, or even building a large offline presence. The too-good-to-be-true price for a quality product generates enough hype around the Internet and a fan following for them. Plus, some have cut the middlemen (like distributors, resellers) by selling the product directly online.

In China, Xiaomi makes money via its services ecosystem, in part thanks to the lack of Google's services in the country. But what happens when it expands beyond China? Biggies like Microsoft and BlackBerry have had a hard time fighting Android. Thus it seems highly unlikely that a company like Xiaomi can do without Google services outside of China. Time will tell if these companies resort to increasing their smartphone prices when they sell outside their own turf (just like how the Nexus 5 costs considerably more in countries like India where Google sees no value in subsidies). Even OnePlus has admitted to selling its smartphone at cost. But it doesn't seem to have a pre-existing revenue strategy like Xiaomi.

Whatever the plans, the consumer is definitely winning. In the past few years, the bar for the top-of-the-line smartphone just kept going higher and higher. Now, even the biggies have started to take notice. Motorola's comeback was largely attributed to their price-barrier-breaking Moto G. The company did comment that the "days of $600 phones are limited". Also, if the upcoming Moto X+1 leaks are to be paid any attention, it would cost south of $600.

So, will Apple and Samsung someday be dragged into making their phones cheaper? Or will the underdogs finally bend to the pressure and will this surge of too-good-to-be-true deals slow down? Let us know what you think in the comments section below.

Rohan Naravane is the Content & Product Head at PriceBaba. He tends to get unsatisfied with technology around him pretty fast, thereby turning to Twitter as his ranting ground.