Tuesday, June 28, 2016

This company is making a $4 smartphone

India SmartphoneBII

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Smartphones typically cost in the triple digits, but one company is looking to drastically reduce that price tag.

Indian company Ringing Bells will start shipping the Freedom 251, an Android-based smartphone that will sell for an almost unthinkable $4. The company expects to ship 200,000 smartphones starting on June 30, reports Engadget.

The phone has generated controversy since it was revealed in February because of confusion about the incredibly low price and the fact that it's almost identical to the Chinese phone Adcom Ikon 4 that retails for $54.

Ringing Bells CEO Mohet Goel said in a recent interview that the company actually loses approximately $2 per handset sold. But the company wants to make up for this loss by increasing how many handsets it sells through bulk orders, by forging partnerships with app developers to put products on its phone, and by using subsidies from the Indian government or private donors.

The technical specifications of the phone are not all that impressive. It has a 4-inch 960x540 screen, a 1.3GHz quad-core processor, 1GB memory with 8GB expandable storage, an 8-megapixel rear camera, and a 3.2 megapixel front camera. The phone uses Android Lollipop 5.1 with 3G capabilities.

Analysts have understandably questioned if Ringing Bells' business model is sustainable. Regardless, the Indian market is the second-largest smartphone market in the world after China and is also one of the fastest-growing international markets.

Smartphone manufacturers that can manufacture inexpensive devices have a tremendous opportunity, as the Indian market for smartphones that cost less than $150 is expected to grow 44% in 2016.

This is crucial because the global smartphone market is expected to slow considerably over the next few years. Despite a record-setting holiday quarter, 2015 was likely the last year of double-digit growth for smartphone shipments.

Mature markets were at the heart of this year's deceleration. Adoption has reached new highs in key markets in the United States, Europe, and China. The pool of first-time buyers in these countries is shrinking rapidly, and sales are now primarily coming from phone upgrades.

Meanwhile, emerging markets will continue to see robust shipment growth. India and Indonesia, in particular, will help fuel a large share of the shipments growth within the global smartphone market over the next few years.

Will McKitterick, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on smartphones by country that forecasts the market through 2021 to reflect slower, stabilizing growth in the long term.

Here are some key points from the report:

  • The global smartphone market is still growing at a steady pace due to more widespread adoption in emerging markets. We estimate the global market will hit about 2.1 billion units shipped in 2021.
  • Shipments growth over the past few years has been driven by the falling price of smartphones, which has made handsets more accessible in emerging markets. The average selling price of a smartphone in India nearly halved between 2010 and 2015.
  • With relatively low smartphone penetration, we forecast Indian smartphone shipments to grow rapidly over the next five years. Nevertheless, India has a long way to go before it surpasses China as the world's leading market for smart handsets. India is estimated to account for roughly 10% of the global smartphone market in 2016, considerably less than China's 30% share.
  • The global platform wars are over, even as smartphone adoption continues to rise across various markets worldwide. Android and iOS are estimated to account for 97.3% of global platform market share in 2015, compared to 96.3% last year.
  • Apple closed the year with another strong quarter on the back of its iPhone 6s and iPhone 6s Plus launches. Still, the vendor saw a slight decline in YoY growth of its share of the market in the face of stiff competition from Samsung and Chinese vendors such as Huawei.
  • In full, the report:

  • Forecasts global smartphone shipments through 2021.
  • Explores why India is the next high-growth smartphone market.
  • Breaks down the global smartphone platform wars.
  • Discusses smartphone vendor performance market share.
  • To get your copy of this invaluable guide, choose one of these options:

  • Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
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  • The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the smartphone market.


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