Thursday, July 12, 2007

How Low is low cost

A Few Years ago, while working with a Firm which developed Mobile Phones, the Question always came up how much time before we create a sub Rs. 1000 handset. We already knew Nokia, Motorola and a lot of chinese vendors were working on the same, and firms like TI were developing chipsets for enabling phones. Today, i still dont find a phone like this, but its Definitely Impressive how the Low Cost Market Today is Loaded with Handsets of different Shapes, Sizes, Applications and Brandnames.. Here in India, where a neat phone with a Camera, GPRS and a few Cool Applictions with support for MP3 playback would'nt cost less than Rs. 10000, now we have a huge choice of such products in the sub Rs 5000 range. I recently tried out 2 of the 3 models launched by Reliance: The Classic Handsets(Made by ZTE), and was seriously impressed. I know they are CDMA and a lot less goes into designing these babies, they are developed possibly in China,, and definitely the overall cost of manufacturing is low, but still the consumer really does'nt care. What they see is some cute looking phones, priced around Rs. 1250 and offering plans which really don't burn a hole in the packet... The entry of Chinese vendors in the market is thus in a way a good sign, and I hope the Indian firms developing handsets catch on fast and start releasing their brands fast. There has been news of BPL, Hutch, Reliance, Elcoteq, Ajanta, Digibee, Spice and a whole load of other firms developing Cell phones in India. I'm sure companies like Digibee and Spice will be flooding the market in the near future...I just hope that its fast and its worth it...

// Nrip Nihalani

3 comments:

N.V. said...

Nice article indeed. However it is unlikely that sub-thousand rupees phones would be available in the market. Interesting to note that you don't find those black & White LCDs lately ! The manufacturers do not find attractive to keep that low-cost LCDs where their margins are low. Low-cost market works on volume. For the low-cost to thrive and allow the prices to fall, the major part of the value chain should get alligned to smaller set of vendors so that they can benefit from the volume. As it does not seem to happen now, prices may not fall further. Some players who has the capability to cross-subsidise (E.g. lower the cost of the handset and increase the cost of network infrastructure equipment) across the market segments might still be able to reduce the cost of a phone

Nrip Nihalani said...

Thanks NVB. I subscribe to the comments about Pricing that you present, however, I believe that is applicable only to the phones in the GSM/GPRS/UMTS arena. CDMA phones can and will be available in the sub Rs 1000 segment. Manufacturing costs here are much lower. The Internals are pretty much available from a common source and so the monopolies are able to have Larger scales of Manufacturing translating into much lower costs...

Fitness Freak said...

It was an interesting article to be read...I hope BPL,Reliance and Spice which developing handsets will catch on fast...