The global market for ultra low cost handsets will reach more than 330 million units in 2011, a new study from ABI Research said.
The study also said over 50% of these handsets, costing less than $20, will be shipped in the emerging markets of Asia Pacific and the remainder in markets of Africa, Middle East, Latin America, and Eastern Europe.
'The growing demand for ultra low cost handsets has provided mobile operators and handset vendors with a quick route to a greater share of the emerging markets,' research analyst Shailendra Pandey said. 'The downside is that they are manufacturing and shipping a greater proportion of low-cost handsets, which can adversely affect their profits.'
Mobile operators will also see declining ARPUs because ultra low cost handset users are mostly from the low-income communities in the emerging markets, ABI Research said.
Their monthly spending will usually range from $2 to $5.
Nevertheless, addressing the ultra low cost market is important for handset vendors and mobile operators to establish their brand and gain long term growth and profitability in emerging markets.
Motorola has already shipped six million sub-$40 handsets and another six million sub-$30 handsets to key emerging markets including India, Pakistan, Bangladesh, Indonesia, Philippines, Malaysia, Thailand, Turkey, South Africa, Nigeria, Egypt, Algeria, Russia, and Ukraine.
ABI Research expects that by 2011, almost one out of every four handset shipped globally will be an ultra low cost handset. The research shows that India will be the biggest market in the next five years, growing from a little over 9 million handsets in 2006 to more than 116 million handsets in 2011.