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The rise of the ultra-low-cost mobile phone

Low-cost mobile phone sales to surge

Shipments of ultra-low-cost mobile phones will grow to more than 360 million by 2015, representing a 2010-2015 compound annual growth rate (CAGR) of over 22 percent, while shipments of low-cost handsets will reach 249 million by the same time period.

A new ABI Research report finds that worldwide mobile phones sales are beginning to rebound after the economic downturn as emerging economies will fuel demand for entry-level handsets.

The key markets for these entry-level devices are China, India, Africa, Latin America, and some developing economies in Asia.

While many emerging markets have experienced significant increases in the numbers of mobile subscribers, there remains a large portion of the population that has yet to purchase a mobile device or mobile services.

“Falling prices in this market segment will make mobile phones accessible even to lower income groups in emerging economies,” says ABI vice president Kevin Burden.

“In addition, the features and capabilities of devices in this category continue to improve, delivering a richer and more satisfying end-user experience.”

The downward pressure on entry-level device prices will persist for years to come. The low-cost sub-segment is now defined by devices that cost less than US$60, with prices expected to fall to $40 by 2015.

The ultra-low-cost sub-segment, currently comprised of phones with price tags of $25 or less, will see handsets available to the end-user for $16.00 or less.

This segment of the mobile phone market is also characterized by increased competition.

“The entry-level handset space is clearly evolving. New entrants are shaking up the market and chipping away at the dominant market position held by some traditional OEMs,” says Burden.

In order to stay competitive, handset vendors must continue to seek efficiencies in their manufacturing and supply chain processes, while maintaining quality.

In addition, the varied customer bases for entry-level devices require OEMs and ODMs to segment the market to better serve the needs of their customers.

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