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Why there is still a profitable future for the feature phone

Manny Pham
June 21, 2018

The return of the Nokia 3310 has put new life into what many thought was a dead segment 

Industry experts have been mainly positive about the future of feature phones despite the forecast of slumping volumes brought by smartphones.

A panel of industry heavyweights and analysts said feature phones will evolve and remain with consumer and B2B for the foreseeable future. But we can expect fewer players as over the years the leading names have remained steadfast, and smartphones continue to dominate.

Doom was predicted for the segment when the mobile landscape was drastically changed, by a little-known Californian manufacturer with a penchant for Apples stole the spotlight in 2007.

Fast forward a few years and the big names began to focus less on feature phones – the world’s second-largest manufacturer Samsung has not launched a new feature phone in the UK since 2015.

In up-to-date figures from analysts IDC, feature phones represented 7.8 per cent (435,295 units) of the UK market in Q1 this year, a quarter-to-quarter drop of 23.9 per cent. However, the average selling price (ASP) for 2017 was £28, showing a 8.4 per cent year-on-year rise, which boosted the value of the market by 17.5 per cent. The ASP for Q1 2018 rose to £30 representing 12.7 per cent year-on-year growth.

Overall, the segment has been obviously declining in volume (see graph, right), however in 2017 the UK sold 2.6 million units, up from 2.4 million in 2016 according to IDC figures. 2017 was also the year we saw the revamp of the classic Nokia 3310. From 2012 to 2016 there had been continuous decline in feature phones. 

IDC records HMD Global as the leading feature phone volume driver in the UK taking 35.3pc in Q1 this year (see graph, left). Doro follows in second with 22.9 per cent and TCL (Alcatel and BlackBerry licensee) has 20.4 per cent. MobiWire and Argos slot in at fourth and fifth respectively (9.2 per cent and 5.5 per cent). Other manufacturers make up 6.7 per cent.

Fellow analyst firm CCS Insight predicts just two million feature phones will be sold in the UK this year, down from 2.4 million last year. CCS Insight chief of research Ben Wood said feature phones will still ship a million units all the way up until 2021.

However, Alcatel UK and Ireland country manager William Paterson, speaking to Mobile News, believes “there’s still lots of revenue to be made” from the segment. TCL-owned Alcatel is the number one seller of feature phones and mobiles overall in the UK, according to GfK stats for Q1.

“The consumer clearly still wants feature phones and the network and retailers still have an appetite for it. I think feature phones have shown an astonishing resistance to the more capable smartphones even in an advanced market like the UK. They’re well priced, simple to use and continue to appeal to certain groups of people. We will continue to make and sell feature phones for the foreseeable future,” said Paterson.

Ovum consumer technology senior analyst Daniel Gleeson disagrees and says feature phones will disappear entirely once smartphones start hitting the low prices of feature phones – the main selling point for your average candy bar and clamshell – coupled with the advancement of emerging technologies.

“Feature phones are declining and there’s no denying that. It’s probably dying even more now and the only companies that see success are the ones catering to a niche or piggybacking off a reputable brand,” said Gleeson.

“In four years’ time feature phones will be almost non-existent in the UK. We’re seeing far too many advancements in smartphones such as artificial intelligence (AI) and augmented reality (AR). That can really hurt that key demographic of seniors that will always want easier to use technology, which feature phones provide.

“Eventually smartphones will be cheaper to manufacturer, which will put feature phones in deeper trouble. We’ve seen Google in the past year make sure Android One runs fairly well on cheap hardware too, so you have decent Android phones with good capabilities such as photo taking – a lot of the things people want on phones.

“People will get this in even cheaper smartphones which will cost £10 more than a feature phone. Let’s not also forget seniors are slowly being accustomed to smartphones and once we’re all in that age bracket seniors will be swiping on touch screens more than ever.”

IDC analyst Marta Pinto argues feature phones serve a need in the market and will continue to have significance beyond five years’ time.

She said: “Feature phones will be here up to 2022 and beyond. We’ve seen them evolve into 4G devices and why is that? They prove to be resilient and serve a great purpose. We thought it would go down a faster pace. While smartphones are getting more intelligent for us, we also see the trend of people wanting to switch off. There will always be space for feature phones, they won’t be extinct in five years. They will evolve and have better operating systems to utilise 4G.”

Industry veteran and Doro UK and Ireland MD Peter Marsden maintains feature phones in the senior segment is going strong and will continue to do so for the next 10 years. He states the demand for feature phones will be constant as the UK population ages.

According to the Office of National Statistics, in 2016 the UK population grew to 65.6 million and population in the UK is getting older with 18 per cent aged 65 and over and 2.4 per cent aged 85 and over.

He said: “We’re a growing and ageing population with great advancement in modern medicine. Ultimately, the demand for niche and feature phone services like Doro’s will grow. That puts us in a strong position and I think we’ve been in the market for 43 years as a company. We’ve been in mobile for a good ten years and what we managed to do is establish ourselves as a very credible handset vendor working in the niche we’re in.”


Gleeson reckons the financial gain of feature phones is not worth the effort in manufacturing, marketing and ranging, as the number one key selling point will always be price, suggesting a race on price is the main may to ship volumes.

“There’s very little money to be made from them in general. HMD Global has a huge chunk of the market and leads. Realistically, very few companies make money on features phones. Nokia makes some money based on the brand but I wouldn’t say manufacturers even make a resolute amount of money from them.

“The biggest financial benefactor would probably be chip manufacturers. And as smartphone margins become even lower, feature phones will be even more competitive. It’s a business I would not recommend any new vendor to get into.” 

Ruggedised mobile phone manufacturer RugGear CEO Oliver Schulte agrees there is little margin to be made in feature phones for those competing in the mainstream/companion space, going up against handsets like the Nokia 8110. Vendors who are not already incumbent in the feature phone marketplace should consider moving efforts towards smartphones. 

“Should manufacturers move their business more to smartphones? Yes and no. I think from a mainstream market perspective the advice is valid, because ultimately when you look into 4G feature phones, you have a lot of the baseline cost of creating a smartphone anyhow.

“Let’s say network operators are looking at that space because ultimately it’s the cost of managing the device, it’s incredibly difficult to migrate a certain user from feature to smart, and it’s more expensive to run a 2G phone on the base than a 4G one from a network infrastructure investment point of view. There’s interest from an operator point of view to look at that market and actively drive conversion to free up bands.

“Europe is behind than other parts of the world where 2G is switched off. In Thailand 2G is being switched off and so is Taiwan and parts of America. Europe is a bit slower, infrastructure MNOs will pursue the mission to convert some of these into 4G customers and there’s a certain level of acceptance that some of the additional services as a smartphone customer will not come in from day one.”


A niche is something that is more imperative in a segment as competitive as feature phones, as well as ultra-low pricing. There are three main areas of feature phones that drive volume – companion phones, ruggedised and seniors.

Schulte said: “If you don’t differentiate, the only other option is the price war. Not every customer wants the same solution. You see it with Doro, which has made its mark in the UK very well. It is making a decent amount of volume in the UK market. More and more integration of services is a challenge but it’s a way to differentiate and open up more revenue.”

GfK technology director Imran Choudhary said for vendors to do well with a feature phone, firms need to drive right into a targeted niche. 

“There’s a couple of key factors vendors need to take into account. They would benefit from focusing on niche groups like older users. Several brands focus on targeting these groups and promote the one or two clear features and use cases these devices are designed to work well in. The other thing to take into account is distribution and pricing and promotional strategy.  Coming in at the right price and offering the right promotion through the right retailer can make a big impact.”

Marsden added: “Having a niche helps. Look at others like Bullitt Group who are doing well with ruggedised. It’s good to be known for something. What Doro is known for is not something you establish overnight and what HMD has done very well is using a strong brand and relaunching some nostalgic products.”

Pinto argues a strong portfolio and value for money will always be key for the feature phone market and also brings up an alternative use for them, as a free accessory to higher margin grabbers, smartphones.

“My advice would be to not just go for a niche segment in feature phones. Build a portfolio around what your consumer needs. For me a great offer would be to buy a Nokia smartphone and have a companion Nokia feature phone. For example, just bundle it like you bundle other devices, like you bundle smart bands and headphones. Why not bundle feature phones as well? This is an idea that can really drive smartphone volume by having feature phone as that accessory with it. Feature phones cost as much as most free gifts we’re seeing nowadays – you see Huawei and Samsung coupling headphones nearing £100 – why not put in feature phones on a deal to drive smartphone volume?


Feature phones are seen as ancient technology, an image that has been further reinforced with their strong appeal to seniors. Also, taking into consideration the advancements seen in smartphones such as face unlock, professional-level photography and online gaming, feature phones seem relatively dated.

Feature phones face their next big challenge when commercial 5G services launch in the UK, probably within the next 18 months. 4G feature phones only started to launch last year and more are slotted for release this year. A hybrid of smart and feature phones branded by some manufacturers as smart feature phones are also slotted for release this year.

Choudhary said feature phones face “tough times” when 5G lands as new technology and innovations will be born from the faster download and latency speeds from it.

“In the longer term with the arrival of 5G you can expect 4G devices to eat into the current feature phone portfolio as these devices could become a lot cheaper and perform the function feature phones do now.  The feature phones surviving are likely to be aimed purely at niche groups like the older age groups, for example.  As time marches on and society becomes used to ever more connectivity and functionality the feature phone will face tough times in developed markets in particular,” he said.

Marsden admits 5G is a low priority for Doro at the moment with the technology not having much relevance in the seniors feature phone space. He cites lack of clarity around the technology from operators and that tier one manufacturers such as Samsung and Apple will pioneer the technology in the mobile space.

“To be honest, 5G is not in our scope right now. We are just launching a smart 4G feature phone. When you look at the IP multimedia system (IMS) and how it works on the network and how every network has different configurations with 2G, 3G and 4G, 5G is so far away its not in our priorities at the moment. When it is mainstream we will look at it, right now it’s out of focus, but firmly in the mind of our research and development team. There is no clear strategy from any of the networks. Until that happens what’s the point of us vendors – except for tier ones – caring about it?”


From a B2B perspective analysts believe the B2B market won’t miss feature phones as businesses strive for the more feature -packed smartphones to better serve their workforce.

Gleeson said: “I don’t think B2B will miss it. One of the trends at the moment is that not only do you have ruggedised phones but also smart and feature versions. We’re getting to a point now where all tools that can be built into a smartphone, meaning the smartphone can be the ultimate tool for a tradesperson.

“Obviously, there is the cost element, but if you consider the fact its replacing several tools as well it makes it more interesting as a proposition. It can send off emails, make calls and scan the walls. No contest, really.”

Choudhary said: “In markets like the UK, it’s fair to say B2B won’t miss the feature phone. As many SMBs and corporate businesses are undergoing digital transformations, mobility and connectivity is at the core of the changes, allowing employees to be able to perform vital services and functions on the go from their mobile devices.  Across the business verticals, smartphones and smart devices are providing real time benefits to companies and it’s fair to say there’s no looking back.”

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