A few years ago, there was a lot of hype in emerging markets technology was around the US$100 laptop. Getting laptops down to that low cost-point proved tricky but a number of programmes providing people with affordable laptops in emerging markets did roll out. These days, the ambition is the US$50 smartphone and it’s much more achievable.
Vodafone, Samsung and Nokia all have devices that can justifiably be called smartphones available for significantly less than US$100 these days. Chinese brands like Huawei and ZTE, meanwhile have driven down the cost of smartphones even further.
In fact, tech research company Gartner reckons that the US$50 could become prevalent in emerging markets as early as this year. This it says is, at least in part, down to the differing needs of people in emerging markets have enabled the reduction or elimination of certain costly features. Advances in the way internal components are produced meanwhile have allowed semiconductor companies to address the growing low-cost smartphone market.
That goes a long way to explaining why Nokia’s Asha series of phones, which neatly straddles the gap between feature phones and high performance smartphones, has helped the Finnish mobile maker claw its way back from the precipice.
China’s had white-box manufacturers peddling cheap Android devices for a while now. Pressure from the big phone makers though means they’ve had to cut their prices to remain competitive. In Africa meanwhile, sub US$50 smartphones are already selling well, with the likes of Huawei leading the way. It’s simple maths really: the more players there are in a market, offering more or less the same product, the lower the manufacturers have to drive prices in order to remain competitive. This is especially true at the lower end of the market, where you can’t design isn’t as big a differentiator as it is for the likes of Apple at the top end of the market.
“The combination of competitive pricing pressure, open-channel market growth and feature elimination/integration will very soon result in the US$50 smartphone. Semiconductor vendors that serve the mobile handset market must have a product strategy to address the low-cost smartphone platform, with US$50 as a target in 2013,” says Mark Hung, research director at Gartner.
“Global, brand-name smartphone vendors must re-examine their product lineups to determine how their low-end offerings are differentiated from the competitive products offered by low-cost vendors. Otherwise, brand-name smartphone vendors may want to cede this market to the white-box vendors and focus on high-end devices.”