Hong Kong: A new wave of cheap smartphones could soon do for the mobile industry what years of hype and investing in pricey 3G systems failed to accomplish, combining must-have chic with affordable prices for data-hungry masses.
China's ZTE, which cut its teeth making phones for price-sensitive emerging markets, aims to repeat that success in the smartphone space with a new model it is putting on trial for about $ 150 per handset, said He Shiyou, head of the company's cellphone division.
The smartphones, which will be based on the WCDMA standard using Google's Android operating system, are expected to start shipping around June and could eventually go global, he said at the Reuters Technology Summit.
The ZTE phones will join a growing crop of cheaper but still intelligent smartphones designed to take on the likes of pricier traditional models such as Apple's iPhone and Research in Motion's BlackBerry, which typically cost $ 250 or more.
"It will have tremendous importance when smartphones come down to maybe $ 100 - $ 150, then you can reach all segments," Johan Wibergh, who heads the mobile networking equipment division at Ericsson, the world's largest cellular equipment maker, said at the Reuters Summit.
ZTE's cheap smartphone, which it is developing for domestic carrier China Unicom, follows similar moves by a range of other companies and could mark the beginning of a new wave of phones to enter the $ 100 - $ 150 sweet spot.
Global cellphone leader Nokia aims to move a model selling for an unsubsidised price of 100 euros ($ 123) by the year-end, and Europe's Telemap hopes to take the category into largely uncharted territory.
"We are going to have an Android device for 85 euros by the end of the year," Telmap Chief Executive Oren Nissim told the Reuters Summit, adding the device would come from a Chinese manufacturer but he declined to name it.
The expected boom should benefit companies such as ZTE, Nokia and China's Huawei that have expertise developing models for cost-sensitive emerging markets and have the manufacturing clout to develop new models cheaply.
It could also benefit carriers with 3G networks who stand to reap more money from the data-rich services, such as online gaming, music streaming and Web surfing, that such smartphones are good at.
Ericsson and other network equipment providers would also benefit, as carriers boost capacity on their networks to accomodate rising demand.
Another one that stands to benefit is Google, as its Android system is fast becoming the preferred choice of many low-end smartphone makers due to its open-source nature, which means it is both flexible and cheap for developers.
"Cheaper smartphone prices are only going to benefit two groups of people: telecoms operators and Google," said Vincent Chen, an analyst at Yuanta Securities in Taipei.
"Falling smartphone prices aren't going to be good for handset brands, and they'll need to get used to these cheaper prices and lower margins soon," he said.
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