12 million Ultra Low Cost Handsets Purchased

Posted on May 3, 2006  /  5 Comments


The GSM Association recently announced that its Emerging Markets Handset program is exceeding expectations: mobile operators in Bangladesh, China, India, and Russia have already purchased 12 million of its Ultra Low Cost Handsets (ULCH). But will the initiative reach the rest of the three billion unconnected peoples in emerging markets? Under current cost models that is unlikely.

The problem is that even at US$30 the ULCH’s price is too high for at least a billion of this population.

The annual gross per capita income in sub-Saharan Africa is just US$371. It is unrealistic to expect people there to spend 10% of their annual income on a mobile phone. So semiconductor vendors, such as Texas Instruments, Freescale, Philips, and Infineon are continuing to reduce the Bill-of-Materials for ULCH even further, heading towards US$20 and US$15 in the next few years.

But will ULCH markets stall before a low enough price is reached? Alan Varghese, Principal Analyst, Wireless, at ABI Research doesn’t think so. “We may see trends similar to those for the conventional handset in the developed world. In the early years, it was purchased primarily to transact business; it was only when prices had dropped that handsets penetrated the mass market.”

Something similar is starting to happen in the developing world. In South Africa, software vendor Sharedphone enables the use of the ULCH as a mobile payphone. Local entrepreneurs buy this phone and sell airtime at the roadside. For such a “service provider,” the $30 price is not prohibitive; it is far cheaper than setting up a conventional payphone.

Because per-minute call charges are high, most calls are short and businesslike: Where can I get the best price? Is my order ready? Meet me tomorrow. The “mobile payphone” is facilitating commerce even in regions otherwise lacking in high technology.

What does this mean to handset vendors such as Nokia, Motorola, Sony-Ericsson, Samsung, and LG Electronics?

Varghese says, “They have to think about how they can further enable varied uses such as the ‘mobile payphone.’ They could add value, for example, with software to manage the whole transaction: making the call, presenting the consumer with a summary of call-times and charges, and keeping track of repeat customers in order to offer discounts.”


  1. Intel has announced that it will make available low-cost, fully featured desktop computers in India, as an effort to bridge the digital divide, according to the TIMES OF INDIA (http://www.samachar.com/showurl.htm?rurl=http://timesofindia.indiatimes.com/articleshow/1544854.cms?headline=Intel~to~make~low-cost,~hi-tech~PCs~in~india)

    The computers will be available in two months time, and will cost 20% less than the ‘present lowest priced feature-rich Intel-based PCs in India.’

    Interestingly, to counter issues of affordability that Alan Varghese raises with regard to the ULCH (which will cost below USD30) ICICI Bank is being brought in to provide loans for people to purchase these desktop computers.

  2. One thing that is good for low cost hand held in developing countries is recycling the massive amounts of unused old cell phones in Europe. Campaigns have been done to donate old phones that made for hundreds of thousands of phones to go there!

  3. Here we are fighting to prevent governments from imposing so called eco taxes to pay for the eliminating the harmful impacts of discarded mobile phones on the environment.

    What sense does it make to import dead/dying phones? Why doesn’t Europe do its own recycling without dumping e-waste in the developing world?

    Anyway, the people who want to do this should check out the draft on mobile disposal and transport under the Basel Convention.

  4. I think that Europe should have the responsibility to recycle and not dump waste to developing world countries. But you have to understand that everyone cannot buy new shiny mobile phones.

    Technology that is obsolete over here, because people want the new best looking phone, does not mean that it doesn’t work and is not useful for normal people. So it’s always a great idea to use the phones and other types of technology until it really breaks, and then you can send it to recycling.

    if you think about the three R of recycling: reduce, reuse and recycle.with these three points everyone can become much more efficient and that is where the truth power of recycling comes, not with throwing things away.

    It’s much harder for people in developing countries to buy top-notch technology material, so why shouldn’t this happen?

  5. With luck, a handset will last three years. Anything older than 1.5 years should not be sent for reuse. Whatever you choose to call it, that is equivalent to dumping garbage in someone else’s country. Recycle or reuse there; don’t pass on the problem to us.

    We will soon have data on the sophistication of the handsets used at the bottom of the pyramid in six Asian countries. I predict the results will be surprising.