Low cost handsets - How low can you go ?
In this post, I look at the not too glamorous area of low cost handsets, using India as an example.
The breathtaking growth in mobile subscriber growth in India (e.g. close to 8million net additions/month for the past 6 months in India) over the past five years has been accompanied by a sharp decline in handset prices (more than 50%). This period has also seen penetration grow from less than 1% to close to 20%.
A report released by BDA, a consulting organization, in collaboration with Stanford University, also points out some interesting facts about the Indian mobile market. To wit
- 85% of the market is pre-paid, and accounts for 95% of net subscriber adds
- Effective tarrifs/minute have declined by 67% in the past five years
- Almost half of Indian mobile subscribers use Ultra Low Cost Handsets (ULCH) - handsets costing below $35 are typically classified as ULCH, while those under $50 fall into the Low Cost Handset (LCH) category
When you consider India’s per capita income of $4542 in purchasing power parity (PPP) terms and $1089 in nominal terms, the real battlefield is not going to be in the high end phones (like Nokia’s N-series devices or the upcoming Indian launch of the iPhone), but in the LCH/ULCH category.
The Indian market has seen some pretty solid action in the past year when it comes to this category.
- Around the same time as the iPhone was launched in the US in 2007, India’s Reliance Communications launched monochrome handsets (Classic 202/203/204) with one model (the Classic 202) priced at $19 (777 Indian Rupees) , followed later in 2007 by a sub-$25 color handset in the same series.
- Not to be completely outdone, Nokia launched six low cost models, priced in the $50-$90 range (2000-3500 Indian Rupees).
- Vodafone Essar launched two GSM handsets priced in the $30-45 range. This product comes from Vodafone’s collaboration with ZTE to manufacture Vodafone-branded LCH/ULCH for emerging markets.
- Spice Mobile announced at this year’s Mobile World Congress their $20 ‘People’s Phone’. This is the same Spice Mobile that has been in the news recently as being in merger talks with Sony Ericsson, possibly as a way to complement the latter’s portfolio with much needed devices in the lower price range.
As a reference point, Nokia’s recently launched E66 and E71 are priced at close to 23,000 Indian Rupees, while the 8G iPhone is rumored to retail in India for about 30,00 Indian Rupees.
As the BOM (Bill of Materials) for LCH/ULCH has fallen to below $20, device OEMs (and their operator partners) will be eager to push these devices out in emerging markets. But are there some interesting applications that can be provided on these devices - something which these customers really value (besides the low price itself) ?
Could we look to what Dean Bubley writes about - potentially interesting capabilities in Nokia’s Series 40 6th edition ? He specifically points to the following features in S40, which might in the next couple of years, with a potentially new Linux kernel pave the way for mobile internet on the LCH/ULCH landscape :
- Webkit-based browser capable of rendering “the real Internet”
- Support for Adobe Flash Lite 3.0
- Suport for Javascript & Ajax
- Developer support for Nokia’s Widsets widget platform applies to S40 too
