Motorola Introduces Dirt-Cheap Cell Phone For Developing Countries

Taipei, Taiwan — The campaign to provide ultra low-cost handsets to developing markets crossed into its second phase Tuesday (Sept. 27) with Motorola Inc. rolling out several models based on its C11x platform that bring the wholesale cost below $30.

Motorola introduced the new models at the 3GSM World Congress in Singapore when the GSM Association revealed the company had again won the tender to supply handsets to operators in emerging countries. The phones are targeted for markets as diverse as India, South Africa, Nigeria, Bangladesh, Thailand, the Philippines, and Yemen.

“To get below US$30 per handset is a milestone achievement,” said Craig Ehrlich, chairman of the GSM Association, the trade group for the world’s GSM mobile operators. “(This) cements the formation of a whole new market segment for the mobile industry and will bring the benefits of mobile communications to a huge swathe of people in developing countries.”

The GSM Association fueled discussion about handsets for emerging markets earlier this year when it announced that the sub-$40 Motorola C114 phone had won its tender for an estimated 6 million ultra low-cost handsets from eight operators. At the time, the GSMA said it would have a follow-on bid in September in an effort to attract more handset makers and cover more emerging markets.

Although other handset makers made bids, such as China’s TCL & Alcatel Mobile Phones Ltd., the GSM Association decided Motorola’s low-cost platform best fit the needs of difficult to reach emerging market users. Conway said important factors were after-sales support, local service, brand presence and a choice of low-cost handset models, including an exclusive product, the C113a.

Motorola submitted two handsets in its proposal - the C113 and the C113a, which was specifically designed for the Emerging Market Handset program. The C113a offers talk times of up to 450 minutes and up to 330 hours of standby, reducing the need for frequent recharging. The handsets will be available early in 2006.

The 10 operators supporting the second phase of the GSMA’s Emerging Market Handset program again expect to order about 6 million of these low-cost handsets from Motorola. The GSMA project, which is chaired by Erik Aas, the Chief Executive of GrameenPhone Ltd. of Bangladesh, is supported by some of the leading operators in emerging markets – AIS, Bharti, BPL, Globe Telecom, Hutchison Essar, IDEA Cellular, MTN Group, Orascom Telecom, Telenor and Vodacom.

Earlier this year, product-analysis company Portelligent Inc. said that 80 percent of 81 chip and handset makers it surveyed recently thought they could get to a $25 complete BOM for a finished handset by the first quarter of 2007. Fifty-one percent said they could do it by early 2006.

Already, a handful of high-profile IC providers are making good on that prediction, vying for the market with stripped down silicon that brings chip pricing down below $10. Freescale already supplies handset makers in China a sub-$10 chip that combines an ARM7 and single-MAC digital signal processor for low-cost phones with simple slab enclosures and black-and-white LCDs.

Earlier this month, Infineon Technologies said its reference design for phones selling at a retail price just over $20 will hit the market in the first quarter of 2006, before the Motorola platform.

Philips is also a contender, and has promised an aggressively priced sub-$5 hardware and software platform for making ultra-low cost mobile handsets by the end of this year. The ultimate goal at Philips is to get cell phones below $15 with basic feature like voice, SMS and polyphonic ringtones.

John Walko in London contributed to this report