14 DAY TRIAL // A recently published study from ABI Research shows that the entry-level mobile phone market is expected to see an impressive growth each year through 2014. According to the research firm, it is expected to register a 24 percent rise over the following five years. Moreover, the firm also says that the wide adoption of such handsets comes as a result of consumers’ low disposable income, and that, although the developing nations and regions prove to be markets with great potential (Asia, Africa, Latin America), the handsets that feature low costs are those that will sell best in these areas.
“The price of a ULCH handset is widely seen as critical to the tipping point for mass adoption in emerging markets,” says industry analyst Michael Morgan. Handsets are rarely subsidized in emerging markets. The GSM Association has pegged the maximum desirable ULCH handset price at $25 through next year and at $20 for 2011-2012. Morgan extends that curve: “I believe in 2013-2014 the top price for a ULCH phone will be no more than $15, which is feasible because some handset models are hitting that price today.”
Low-cost and ultra-low cost (ULCH) mobile phones are expected to help the market surpass some of the barriers that might rise in the development process. In addition, ABI Research also expects value-added data services that make use of locally relevant content to see great adoption in the emerging markets. The firm states that the market growth might also be helped by a reduction of taxes and tariffs on handsets and services that should come from government regulators.
There are several other factors that need to be taken into consideration when talking about emerging markets, ABI Research says, including the fact that vendors will see a small margin when it comes to the low prices of the phones. Nokia is reportedly the out-and-out market leader when all the factors are taken into account, the firm shows. “Entry level handsets must deliver high value to low-income emerging market consumers who want good quality at low cost,” Morgan concludes.
ABI Research’s study, ”Entry Level Devices,” can be found here.