February 27, 2014
Although high-end smartphone makers such as Apple and Samsung usually get the most press, other established companies are attempting to tap into emerging markets by focusing on inexpensive, low-tech versions of their phones. At the annual Mobile World Congress in Barcelona this week, companies including Nokia, Google and BlackBerry displayed phones priced between $100-$200. Other companies are aiming to go even lower, below $100, including China’s ZTE Corp.
Nokia announced a new line of Nokia X smartphones running on Android, starting at around $120. The Finnish company also has some limited-capability, Internet-enabled phones priced as low as $40. Nokia will charge users for apps and content from the Nokia app store.
“The fastest growth really is in the affordable smartphone space,” said Timo Toikkanen, Nokia’s head of mobile phones. “Something that’s not fully appreciated in the Western world is that a couple of bucks makes a huge difference in developing markets.”
BlackBerry unveiled its Z3, which plans to retail for less than $200 when it launches in Indonesia this spring and then Southeast Asia. China’s ZTE unveiled a phone running on Mozilla’s Firefox priced at only $80, while Mozilla plans to team with a Chinese chip maker this year to launch a $25 phone.
“High-end phones from Apple and Samsung dominate developed markets,” reports The Wall Street Journal. “But as component costs drop and features get more similar, making it harder to distinguish between smartphones, pressure on those companies’ pricing power and profit margins could intensify.”
These companies also need to ensure low prices for data as well, since a smartphone is useless without it.
“The trend toward less-expensive phones soon may even take root in the U.S., where carriers have been resisting the long-held practice of subsidizing smartphone purchases in exchange for locking customers into long-term contracts,” notes the article. “As subsidies drop, device prices will likely come under pressure from consumers, said [investment bank] Rutberg’s [Rajeev] Chand.”