Cheap Smartphones Set to Boom in the Pre-Paid Market
Smartphones are set to become much cheaper as mobile phone vendors try to get data-centric devices in the hands of pre-paid subscribers.
Mon, August 10, 2009
IDG News Service — Smartphones are set to become much cheaper as mobile phone vendors try to get data-centric devices in the hands of pre-paid subscribers.
Slideshow: Smartphones: The 10 Hottest Handhelds
Slideshow: Forget iPhone 3G S: Eight Great New iPhone Alternatives
Smartphones are often thought of as very high-end and expensive devices that sit at the top of vendor portfolios, according to Geoff Blaber, analyst at CCS Insight. In reality that is starting to change, with vendors putting out more devices at much lower prices, he said.
Currently, products based on proprietary operating systems are leading the way. Devices like the QWERTY keyboard equipped KS360 from LG and phones upstart INQ Mobile have put smartphones into the mass market with price tags below €130 (US$180), and that segment is expected to grow significantly, according to Blaber.
But increasingly smartphones based on open operating systems -- including Android and Symbian -- are also coming down in price. "A good example of that is the Nokia 5530, which was launched earlier on in the year," said Blaber.
The Nokia 5530 XpressMusic device costs €199 before taxes and subsidies, and just started shipping in, for example, Europe and China.
But even cheaper phones are on the way. By the end of the year, in time for the holiday shopping season, prices will have come down to €150, according to Ben Wood, at CCS Insight. Models at that price range will still be fairly few and far between, but during next year they will become commonplace, he said.
The vendors also see prices eroding further. Chip maker Qualcomm has predicted that prices for smartphones will drop to US$150 during next year, according to Wood. Samsung Electronics is even more aggressive in its predictions; last week it hinted that consumers will see Android-based phones for less than $100 during next year, according to The New York Times.
The Asian vendors are going to use this shift in the market to get a foot in the door. ZTE and Huawei Technologies will launch smartphones priced between €100 and €150, which most likely will be branded by operators, according to Francisco Jeronimo, research manager at IDC.
Motorola may also play a role in getting the ball rolling on cheaper Android phones. The company is putting a lot of faith in its upcoming roster of smartphones, and operators could put pressure on Motorola to keep costs down if it wants them to carry the phones, said Carolina Milanesi, research director at Gartner.
