August 18, 2005
Cellphone Game Rings In New Niche: Ultracheap
Some of the world's biggest electronics-parts suppliers and gadget makers could get a boost from an unlikely source: A new industry initiative to sell ultracheap cellphones to people in developing nations, reports the WSJ (article is a free link)
U.S. chip maker Texas Instruments and Taiwanese electronics maker Compal Communications, among others, are involved in the first stage of the initiative, which is supplying people in developing countries with six million phones that cost less than $40 to produce, industry analysts say.
The program, called the Emerging Market Handset Initiative, was begun by the London-based GSM Association trade group earlier this year to bring mobile telephony to people who otherwise couldn't afford cellphones.
The low-cost phones, which are marketed by Motorola, have already gone on sale in countries including India, where they were recently selling for about $46. The phones can cost more in other countries because of higher taxes and distribution costs.
What is good for first-time phone buyers may also be good for corporate bottom lines. The low-cost phone initiative is expected to ramp up sales substantially in populous countries such as India, Bangladesh, Indonesia and the Philippines.
And seeing an opportunity for growth, other phone makers besides Motorola are increasingly targeting the low end of the market, too. Many analysts believe they may have little choice, with most growth in cellphone sales now coming from poorer nations.
That could sharply increase revenue for electronics companies that make high-tech parts for the phonea, including semiconductors, plastic casing and liquid-crystal display screens, as well as for some mobile-phone service providers in those countries, analysts say.
... Lowering the price of a phone by just $20 in many poorer countries could increase its affordability by 43%, according to Lehman. Put another way, it would take less than a month's average income for a person to buy a phone if it cost $30, compared with about 1.4 months' salary if it cost $50."
Read on in the WSJ - free access
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