Almost half of all Americans now own a smartphone, and the number of smartphone owners is rising every day. But carriers are struggling with the cost of subsidizing smartphone sales and looking for less expensive ways to attract new customers. Enter the low-end smartphone: a category that has device makers, chip designers and software companies all racing to make products that can compete.
Microsoft (MSFT) sees the lower end of the market as its chance to catch up with Apple’s iPhone(AAPL) and Google’s Android (GOOG). T-Mobile USA currently offers a pair of Windows Phone 7.5 devices for less than $100 with a two-year contract.
But the low-cost smartphone market is still “Android’s to lose,” according to In-Stat Research, a unit of NPD. The group foresees annual shipments of 339 million low-cost Android phones by 2015. Some Android phones currently sell for less than $100 with contracts.
But of course these phones are much costlier before subsidies. This year just 5% of the smartphones expected to ship will be priced below $200 wholesale, according to Informa Telecoms and Media. But four years from now, the research firm expects that percent to grow to 24%.
The ability to put more and more processing power on a single system-on-a-chip is the driving force behind cheaper smartphones. Qualcomm (QCOM) has been a pioneer in this area, but now competitors are nipping at its heels. Two weeks ago Jack Kang, director of Marvell’s (MRVL) applications processor business, told DailyTech that he expects his company’s chips (not Qualcomm’s) to be part of the Windows phone in China. China will be the largest market for lower-priced smartphones, according to Informa.
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