Low cost smartphones, defined as smartphones with a wholesale ASP below $200, are increasingly appearing in OEM and operator portfolios in both emerging and developed markets. The low hanging fruit for low cost smartphones is to drive smartphone adoption in emerging markets where handset subsidization and disposable income are scarce. Market intelligence firm ABI Research forecasts low cost smartphone shipments to grow from 238 million in 2013 to 758 million by 2018, driven by the low penetration of smartphones and large subscriber bases found in BRIC countries.
“Despite the low cost moniker, research has shown that the feature gap between low- and high-end smartphones is decreasing, making low cost smartphones a ‘good enough’ solution for price sensitive consumers in all markets,” says senior analyst Michael Morgan.
Reference design solutions from Qualcomm and Mediatek are permitting regional and Chinese OEMs to deliver dual and quad core smartphone solutions at or below $200. Furthermore, white label and regional tier II smartphone OEMs are increasingly squeezing device margins to win on price and capture market share from tier I smartphone offerings. Low cost OEMs, such as Alcatel, CoolPad, Huawei, and ZTE are leveraging their increased market share to build brand recognition and move up market, putting pressure on the tier I OEMs to respond.
“We are increasingly seeing low cost smartphones appear as a solution for prepaid operators in developed markets,” adds senior practice director Jeff Orr. “By 2018, ABI Research believes low cost smartphones will account for 44% of all smartphone shipments as the market looks to capture the next billion smartphone users.”