Sub-$40 handset market hotting up

INFINEON IS planning to be a major player in a market sector which it has labelled the 'ultra-low-cost' (ULL) mobile phone sector. It has announced that samples of its E-Goldradio chip will be available this quarter (Q4 2005).

The most impressive bit is that Infineon believes this chip can result in a basic GSM handset with a built cost of below $20. That implies a retail cost of sub $40.

The chip itself was announced back in February. It packs a GSM/GPRS capability into a single chip that combines a quad-band radio transceiver with a base-band processor. With a single chip that is less than 4 cm squared, handset manufactures can reduce the size of their circuit boards by 30 per cent, Infineon claims.

The E-Goldradio chip is a key component of its reference platform solution, the BP3. The INQ was unable to discover who the 'several' customers for the chip actually were.

Significantly back in September [2005], the GSM Association (GSMA) announced that it had selected Motorola to supply a sub $30 handset for its programme to make mobile telephony affordable in developing countries.

The Motorola design that won the tender was the C113a. The handsets should become available in Q1-Q2 2006. The programme is being supported by ten mobile operators in emerging markets - AIS, Bharti, BPL, Globe Telecom, Hutchison Essar, IDEA Cellular, MTN Group, Orascom Telecom, Telenor and Vodacom.

An earlier version of the programme was won by another Motorola handset - the C115. Its arrival in India helped boost Indian GSM operators' monthly net customer additions by one third to 1.6 million in June 2005, according to a report by Lehman Brothers.

The GSMA also highly commended a low-cost handset proposal from TCL & Alcatel Mobile Phones. However, when the INQ recently asked Sony Ericsson if it would be playing in this market, it insisted that it latest entry level handset models - the weren't intended to be sub-$40 at all.

The INQ wonders what might happen if handsets like the C115 were grey imported into mature markets such as Europe. Consumers would be delighted but retailers horrified. µ