Here’s a contention designed to raise your eyebrows and it comes from ABI Research saying that 25% of all mobile handsets shipped in 2011 will cost less than $20. Already many handsets are below $50 and some under $30 ABI says.
ABI says that the global market for sub-$20 ultra low cost handsets (UCLH) will be over 330 million units in 2011 and says that over 50% of these handsets will be shipped in the emerging markets of Asia Pacific, with the remainder in Africa, Middle East, Latin America, and Eastern Europe.
Which perhaps plugs in rather well with the results we looked at today which show that Sony Ericsson is just avoiding this type of business and that Nokia is simply making money on this type of business, while the margin squeeze is hurting Samsung and Motorola.
Nokia’s profits in 4Q06 continued to grow even though a greater portion of its sales came from low-cost handsets. It drove up margin on improved units and cheaper devices.
Mobile operators should expect lower and declining ARPUs in these markets also because ultra low cost handset users are mostly from the low-income communities in the emerging markets with a monthly spend between $2 to $5.
The report says that the ultra low cost handset marketplace is currently dominated by Motorola and Nokia, but other handset manufacturers have started to target it including LG Electronics, BenQ, Samsung, Philips, Ningbo Bird, Haier, and Kyocera.
As the winner of GSMA’s tenders for the Emerging Markets Handset Program, Motorola has already shipped six million sub-$40 handsets the report says, and another six million sub-$30 handsets to key emerging markets including India, Pakistan, Bangladesh, Indonesia, Philippines, Malaysia, Thailand, Turkey, South Africa, Nigeria, Egypt, Algeria, Russia, and Ukraine.
The research says that India will be the biggest market in the next five years, growing from a little over 9 million handsets in 2006 to more than 116 million handsets in 2011.