Why 2016 will be the year of the Chinese, unlocked budget smartphone

Samsung, LG, Sony, HTC, and Motorola are all Android names we are all very familiar with. Those tech giants have been making our phones for quite a few years, and have been charging us an arm and a leg for flagship devices, which typically last anywhere from one to three years if you’re lucky. Flagship devices from these manufacturers can cost as low as $450 and can go as high as $850 depending on where you buy them from.

LG’s flagship V10. $599 to $699

In general, most of them perform the same functions since they are all based on Google’s Android platform. And they all keep us pretty happy. Sure there are differences that justify cost differences, and for the most part, most smartphone enthusiasts will always create a market for high-end smartphones. Smartphones are no different than cars – some will prefer sports cars from the likes of Porsche and Ferrari, while other will prefer luxury from Mercedes and Audi. For the vast majority of people, they will stick to their GM, Toyota and Ford made vehicles opting to save a little bit of money in features they do not need. At the end of the day, all cars serve to provide a means of transportation.

Flagship smartphones like the Samsung Galaxy Note5, the LG V10, Moto X Pure, HTC One, and the Sony Xperia Z5 premium are all fantastic devices. They all have high-end processors, super clear and colorful displays up to 4k resolution, fantastic speakers and software features that other mid-range and budget phones do not have. And for many of us enthusiasts, we will ALWAYS buy flagship devices, as we really love technology and maximize our usage from these devices. There is no argument from me that there is value in these flagships. But…

What do most of us use our phones for?

There is a good amount of people who need flagship devices to keep up with their lifestyles. But there are more people who simply use smartphones for phone calls, text messaging, scheduling, social media, photos, email, internet browsing, shopping, and basic gaming. All of the flagship devices do all of those tasks with ease.

The things we hoped smartphones would do, like replace desktop computers simply is not happening and probably won’t happen anytime soon. Whether we have a two year old Nexus 5, Galaxy Note5, or brand new LG V10 all Android devices perform the basics.

The difference in internal hardware is becoming less obvious

A couple of years ago it was very easy to pick up on the differences between phones with big V12 engines like the Samsung Galaxy Note 3, versus the first four cylinder powered Moto G. The Moto G was terrible at gaming, didn’t get LTE data reception, had a very basic camera, and had a poor to average looking display.

1st generation Moto G

The Note 3, on the other hand, had a great looking OLED 1080p display, Snapdragon 800, 3GB of RAM, 32GB of memory, a 3200mAh battery, and a 13MP rear camera. The 2013 Moto G on the other hand had a 720p display, Snapdragon 400, 1GB of RAM, 8GB of memory, 2070mAh battery and a measly 5MP rear camera. The differences in hardware back in 2013 were significant and the price difference justified the performance. Keep in mind the Samsung Galaxy Note 3 was four times more costly than the Moto G.

Note 3

Fast forward to 2015, and compare the Samsung Galaxy Note5 to the Letv 1s. Yeah I know you probably haven’t heard of Letv, but there’s a good chance you didn’t hear of Huawei until this year too. Only until the Nexus 6P did many people in the U.S. take Huawei seriously, even though they had been dominating in China for some time now. They’re a major part of the reason why Samsung’s profits have been on the decline recently.

Both the Letv 1s and the Note5 have octa-core processors and 32GB of internal memory. Yes the processors are made by two different manufacturers, but the difference in processors is slim in real world performance. Both devices have beautiful and durable build quality, with the Letv 1s being made in all metal, and the Galaxy Note5 being a combination of glass and metal. The Letv 1s also comes with the latest USB type-C standard found on the Nexus 6P, Nexus 5X and OnePlus 2. Both smartphones have a fingerprint reader and both currently run Android 5.1. The major differences are the Note 5 has a 16MP rear camera, 2k display and 4GB of RAM, whereas the Letv 1s has a 13MP camera, 1080p display and 3GB of RAM. The biggest difference between the two, is the Letv 1s comes fully unlocked at $180 whereas the Note5 comes in at $750. That’s quite a price difference.

The cost of phone insurance is extremely high

One of the biggest scams in the U.S. mobile industry is smartphone insurance. Most of us cannot afford to replace a $750 phone if we were to drop it or get it wet, so we rely on insurance to get us out of a jam. There are many companies who offer phone insurance. Why? Because they make lots of money on insurance plans. No company would exist if they lost money.

Let’s take a look at Best Buy’s Geek Squad insurance program.

$7.99 per month for insurance actually doesn’t seem too expensive, especially when it covers drops, spill and cracks. But when you factor in the deductible cost of $149.99 per incident on phones up to $800, a new display can cost $150 plus $7.99 in the first month of ownership. If you purchase the insurance and use it 11 months into owning your device, to replace a cracked display, the cost of that protection now is $88($7.99 x 11 months) plus the $149.99 deductible for a grand total of $233. Worse yet, do not use the insurance over two years, and you just paid $192($8 x 24 months) for peace of mind! That peace of mind is more expensive than a brand new and unlocked Letv 1s.

The total cost of ownership for a Samsung Galaxy Note5 over two years with insurance is close to $1000 with taxes. The total cost one Letv smartphone without insurance (no need to buy insurance if it is more expensive than the phone) is five times less expensive. You could spend that $800 in savings on an Android Wear smartwatch of your choice, headphones, wireless speakers, or better yet your child’s college education. Heck, if you want, buy one Letv 1s this year, and buy the upgraded version next year, and you’ll still have an extra $600 in your pocket if we can assume the next generation stays under $200.

Budget smartphones don’t need insurance and you can even make an argument that they don’t even need a screen protector nor cell phone case which is additional savings.

Keep in mind, almost all phones comes with a one year warranty which protects against manufacturer defects. They just don’t cover accidental damage or loss with those warranties.

Regardless of how you buy your phone, through financing or on a two-year contract, you will pay the full price for the device. Cellular providers use confusion to build in costs.

T Mobile has shaken up the cellular industry in many ways, and one of the most significant ways was by blowing up the two-year contract. AT&T and Verizon have contributed to making cell phone plans very confusing through gimmicks such as the two-year contract. The two-year contract offered expensive flagship phones for prices of $200 or less with the actual retail prices being close to $750. Many consumers were fooled into believing a two-year commitment was enough to justify the discounted price of the smartphone.

AT&T and Verizon were not giving the phones away at $500+ discounts out of the kindness of their hearts – they were simply hiding the fees of the phones in other ways. Rather than charge a customer directly for the full price of a smartphone, Verizon and AT&T would, and still do charge higher fees for a “connection.”

For example, let’s buy a Samsung Galaxy Note5 through AT&T.

There are three options to choose from the first of which is buying outright for $739.99 plus tax. Buying outright qualifies the customer to a $25 discount of their smartphone plan. Total cost of the smartphone is $739.99 plus taxes.

The second option is paying $24.67 for 30 months on the Next plan with a $25 monthly discount on your bill, or paying $249.99 down without the $25 discount for 24 months. $24.67 over 30 months works out to be $740.01, but the $25 discount that applies to your bill is given as a “connection fee” discount which normally costs $40 per month. You don’t have to take my word for it, you can read the fine print at at&t.com.

Lastly you can buy the Note5 on a two-year contract for $249.99, plus tax on the full retail value, plus a $45 upgrade fee, and you lose the $25 discount over those 24 months. The cost excluding taxes, since taxes are applicable to all three methods is $845. So you actually pay more when you sign a two-year contract since you lose the $25 per month discount on service.

The take home message, is no matter how you buy a new smartphone, whether being on a two-year contract, or financing the device through the Next program, you will pay the full price of the phone. Again you don’t have to take my word for it, just read the fine print in your contract. If you have an attorney who represents you, I suggest you have him/her read the fine print and explain it to you, because it truly is confusing.

T-Mobile exposed the nature of hidden fees, but that just opened the door for unlocked smartphones.

The problem with unlocked budget smartphones is there are very few trustworthy reviews

The big manufacturers of smartphones like LG and Samsung have been sending reviewers test units for many years now. New and upcoming Chinese smartphone manufacturers don’t have the same budgets that the big players do, and every dollar counts. It’s why OnePlus created the dreaded invite system, so that they don’t over produce smartphones and have to sell them at a loss later.

Profit margins are slim when you make devices under $200. Chinese smartphone manufacturers have to adhere to strict budgets and have not sent U.S. tech reviewers many phones to review. They also do not have a presence in U.S. stores like Best Buy, Frys, or even AT&T, Verizon and T Mobile stores. And many tech reviewers are so spoiled by getting free review units that they won’t spend their own money on unlocked review units. Plus it is a lot more fun to review a full fledged flagship than a sub $200 smartphone.

Many people who buy smartphones come to websites like ours to get unbiased reviews. Without trustworthy reviews, it’s hard to trust a company you have never heard of and I don’t blame you.

Why 2016 will be the year of the unlocked smartphone

Most importantly hardware differentiation between budget and flagship devices are becoming more and more difficult to realize as a user. There is a good chance many of you have not used the latest budget smartphones from Chinese manufacturers like Xiaomi, Letv, Huawei(excluding the Nexus 6P), Doogee(who?), Bluboo, Meizu, Elephone and Ulefone. There’s more than that too. You may have read about them and  have been intrigued by Chinese budget devices, but without having the ability to see one for yourself in person, you probably have not pulled the trigger on actually buying one.

Recently I have had the pleasure of using a couple of these unlocked devices under $200 and they have run Android 5.0 or 5.1, work with LTE on AT&T, and most importantly they can keep up with my needs. I consider myself a power user(subjective of course). By power user, I mean I text frequently, make phone calls, browse the internet, watch movies, play games, email, take pictures and more.

I have been pleasantly surprised to learn that budget phones from China are incredibly well built, use high-end materials, have great displays, have high megapixel cameras,  and are very snappy when it comes to performance.

All metal Letv 1s sub $200 unlocked.

As you readers become more educated in the hidden fees of cell phone ownership, and Chinese manufacturers start to enter the U.S. market, many of you will start experimenting with these devices and spreading the word like wildfire that these phones are highly capable of being daily drivers. I have made a commitment to buy at least four to six devices under $300 from Chinese manufacturers with my own money so I can provide high quality reviews. And to prove my reviews true, I will be giving away each phone after I review it to one lucky reader who can validate or invalidate what I said in my review.

My first two reviews will be of the ASUS Zenfone 2(I know, it is more well known, but I wanted to start with an established brand) and will follow up with the Doogee F5.

Doogee F5

If I’m lucky, many Chinese manufacturers will see the value in my reviews and will maybe provide me with review units at cost or free which means more free devices for you too.

But take my word for it that 2016 will be the year of the unlocked, Chinese budget smartphone. Come back in 2017 and let me know if I’m wrong. Huawei already proved they can build one of the best Android devices by offering us the Nexus 6P, now the doors are wide open for Xiaomi, Letv, Doogee, Meizu and the others to flood the U.S. market with affordable devices that can withstand daily usage. Watch out Samsung, LG, HTC, Motorola – you have a giant target on your back.

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