Motorola will deliver a sub-$40 (£21) mobile phone, the Emerging Market Handset, for customers in the developing world, it announced this week at the 3GSM World Congress in Cannes. However, that's still not cheap enough for the GSM Association, which wants Motorola to produce one for $30 (£15).
The association, whose members are mobile network operators, invited phone manufacturers to tender for a project to build a low-cost mobile phone to improve access to telecommunications services in developing countries. The project evolved in response to the concerns of network operators in those countries, which identified the cost of handsets as a major obstacle to market growth.
Already, there are 1.25bn users of GSM (Global System for Mobile Communications) phones around the world, according to the association.
"This is about where we are going to get the second billion customers from," says Craig Ehrlich, chairman of the association.
A group of operators in developing countries agreed to procure handsets together, and came up with a joint specification for a basic handset with a robust candy-bar form, weighing around 3.5oz and costing just $30.
They wanted the phone to run for two hours in use or 50 hours on standby, store up to 250 numbers in its phone book, keep a record of the last 10 numbers dialled or missed, and offer SMS (Short Message Service) and voice mail, among other functions. They also wanted phone's on-screen menus to be available in English, French, Arabic, Thai, Russian, Spanish, Portuguese and Turkish.
The association then invited 18 manufacturers to tender for the project.
The association chose Motorola's bid as best meeting the criteria – although the company had a head start, having decided in 2002 to begin work on a similar project, according to Ron Garriques, president of Motorola's personal devices business unit and an executive vice president.
The company unveiled its C100-series ultra-low-cost handset Monday at the 3GSM World Congress. Garriques expects to be able to sell these in quantity for under $40 this year. "In 2006 we can hit $30," he says.
Sunil Bharti Mittal, chief executive of Indian network operator Bharti Televentures, is pleased to see a $40 handset on the way.
"I think this will get in an extra 50 to 100 million customers," he says.
"People ask me, 'How can you sustain a business at two cents a minute?' We can do it no problem. The inhibition was the cost of the handset," Bharti says.
In addition to Bharti Televentures, eight other operators have undertaken to purchase the $30 phones, including Globe Telecom of the Philippines, Maxis Communications of Malaysia, Orascom Telecom Holding of Egypt and Singapore Telecom Mobile.