Coming soon: Brand-new phone for $40

For $40 or roughly P2,200 at current exchange rates, a brand-new Motorola phone can be yours in a few months’ time.

This, after the GSM Association (GSMA), a global trade association of mobile network operators and manufacturers, has chosen Motorola to supply the first "ultra-low cost" handsets for its Emerging Market Handset (EMH) program. The announcement was made at the 3GSM World Congress held in Cannes, France last month.

In a press statement, Motorola said it is committed to start delivering the handsets in the second quarter. But the end goal is to collaborate with GSMA members to develop "follow-on products at sub $30 (P1,650) price points."

"I think this project is a breakthrough in both symbolic and real terms," said Napoleon Nazareno, president and CEO of Smart Communications in the GSMA website. "Introducing low-cost handsets will expand the mobile phone market. It will also demonstrate the industry’s commitment to help bridge the digital divide by putting mobile communications in the hands of those who have long been cut off from the economic mainstream."

GSMA’s EMH program was an offshoot of a commissioned research that showed handset cost as the biggest barrier to mobile phone acquisition in emerging markets such as India, Philippines, Indonesia and Turkey.

Wireless Coverage

GSMA estimates that 80 percent of the world’s population has wireless coverage but only 25 percent actually uses mobile services. In the Philippines alone, there are roughly over 32 million mobile phone users in a population of 82 million. While industry forecasts estimate mobile phone usage to grow at a faster rate in 2005 and beyond, growth is still slow compared to mobile penetration in mature markets like Korea and Japan. And the factor that usually impedes growth is handset cost.

While mobile phone users here are fast switching to camera phones and WAP-enabled units with color screens, the second-hand market is more robust with older phone models being sold at only P1,500 to P2,000 per unit, mostly by unauthorized phone sellers. Many believe that the high incidence of phone theft and smuggling fuels the underground phone market.

"With telecommunications becoming a very basic need for the masses, handset prices were seen as a barrier. With the collective effort of the GSMA’s initiative team, we are positive that pricing will no longer be an obstacle," said Gerry Ablaza, president and CEO of Globe Telecom, also on the GSMA website. "We will further assist the emerging markets by continuously working with partner handset vendors in planning and developing their capability to serve the handset needs of the lower market segment."

Low-Cost Segment

For the EMH initiative, the GSMA gathered its members to develop a product suited to the low-cost market segment. Telecom operators participating in the program include US-based Motorola, AIS Telecom of Thailand, Bharti Televentures of India, Globe Telecom and Smart Communications of the Philippines, Maxis Mobile of Malaysia, Orascom of Egypt, SingTel Mobile of Singapore, Telenor Mobile of Sweden and Turkcell of Turkey.

Motorola was chosen to supply the first GSMA-endorsed handset. Rob Conway, GSMA chief executive officer, cited the company’s vision and strategy which fits with GSMA’s goals.

In its website, Motorola announced that it will be offering "a family of products built on its new, ultra-low cost C114 platform." Target sales volume for the first six months, it said, is around six million handsets, or approximately one percent of the global mobile phone market.

"Connecting the unconnected with new ultra-low cost, high-quality, beautifully designed handsets is a critical component of Motorola’s growth strategy – and it is the right thing for us to do as a good global citizen," said Ed Zander, Motorola chief executive officer.

At the 3GSM World Congress, Motorola has also unveiled its newest products and services. Buoyed by a very strong sales in 2004, Motorola has launched 16 new wireless handsets in the first quarter, all geared toward driving 3G-UMTS, Push-to-Talk over Cellular (PoC), multimedia and mobile music.