Could £26 smartphone signal start of price war?

As manufacturers target developing markets, British consumers could benefit

Updated: 

The £26 Karbonn smartphone

Don't have a few hundred quid to spare for the latest iPhone? Help is at hand. Indian company Karbonn Mobiles has launched a smartphone costing just £26.

While the phone is available only in India, it's possible to order it online for delivery to an Indian courier firm and have it forwarded on - and because it's so cheap there's no duty to pay. It can be used on most UK networks with a pay-as-you-go card.
The Karbonn A50S, which runs the Android operating system, has a very respectable list of features, including a 3.5-inch touchscreen display, Wifi and two Sim-card slots. It's based on a dual-core 1.2Ghz processor and comes with 256MB RAM, 512MB internal memory and a two-megapixel camera - not quite up to the standard of an iPhone or Samsung Galaxy S5, it has to be said, but perfectly adequate for most.

But the Karbonn phone is just one of a large number of low-cost handsets to hit the market this year. With the mobile phone boom in China now slowing, manufacturers are targeting the rest of Asia, together with the Middle East and Africa, Central and Eastern Europe, and Latin America.

And this means keeping prices down: according to research firm IDC, nearly half of all mobile phones sold worldwide now cost less than $100, with two thirds of these under $50. Most are feature phones - but in India, already, nearly half the smartphones shipped in India in 2013 cost less than US$120.

In Asia, prices have been driven down hard, with phones from Xiaomi, Cherry Mobile, Micromax and Q-Smart available for as little as $30.

As technology improves, the cost of components is falling - particularly those that are no longer cutting-edge. Even the latest technology, though, is generally subject to an enormous mark-up. The iPhone 5S, for example, costs £549, but has a bill of materials of just £122, according to specialist analysis firm IHS.

And while Western companies will no doubt continue to push top-end models in the UK, they are unlikely to cede the low-cost market altogether, meaning that British consumers could be set to benefit.

Earlier this year, for example, Mozilla - the company behind the popular Firefox browser - announced plans to design a $25 handset through a deal with Chinese chipmaker Spreadtrum. The designs would be available to manufacturers worldwide. "Turnkey solutions benefit the vast majority of small handset makers by reducing the time and cost involved in bringing new devices to market," comments Stuart Robinson, analyst at Strategy Analytics.

What do you think? Will super cheap smartphones challenge the dominance of Apple and Samsung? Would you buy one, or are you concerned about the quality? Let us know your thoughts in the comments section below
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