Cell Phones For The People

BusinessWeek writes that although a lot of attention is paid to high-end handsets, "increasingly, the real action is at the unglamorous end of the scale, among bare-bones Nokia and Motorola models priced under $50. Sales of such phones, which often handle just voice and text messaging, could grow 100% annually for the next five years."

According to the article, "of the 1 billion cell phones expected to be sold in 2010, half will be in developing economies. Most will cost less than $40 -- still out of reach for the poorest one-third of the world's population but affordable for the middle third." John Jackson at Yankee Group said, "This market is wicked big."

Neil Mawston at Strategy Analytics added, "This market is suited to mega-vendors with economies of scale. Nokia and Motorola will own this segment." The article notes that Samsung, LG and Sony Ericsson are still focused on the mid-to-high end market and haven't announced their strategy for sub-$50 handsets. Carolina Milanesi at Gartner opined, "Samsung needs to do something because its share is not growing."

One concern is what will happen to the handset manufacturers' margins if they tackle the low-end market. Albert Lin at American Technology Research commented, "These phones can actually have higher margins than new high-end models."