Blog Post

In praise of the $50 smartphone

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

It’s time to stop what may be the most offensive, yet generally accepted, bias from smartphone analysts: “don’t get caught in a race to the bottom.” It’s a sneering dismissal of the people and companies that are building advanced, feature-packed mini-mobile computers with little to no margin — and of those who might benefit from their use.

Newsflash: The vast majority of the world is “the bottom.” Like me, like you, they also deserve a smartphone. Mocking the companies that are making this happen is misguided, to say the least.

Now for the good news — very low cost smartphones are within reach. Last month, Google announced it was revamping its Android One initiative to help bring the cost of devices to below $100. For this price, the buyer gets Google Play, search, maps, apps, camera, and more. The effort originally launched in India though will now include parts of Africa. Combined, these regions have a population nearing 2 billion.

Unfortunately, even $100 for a smartphone is still too expensive for many. Rajan Anandan, Google’s managing director in India and Southeast Asia, told the Financial Times that the “sweet spot” for Android One is 2,000 – 3,000 rupees. That’s about $30 – $50. Anandan says getting to this price will take “the next few years.” I expect it much sooner.

Consider the Micromax Canvas A1, typical of current Android One devices:

  • 5mp rear-facing and 2mp front-facing camera
  • 4.5″ VGA display
  • 1 GB RAM
  • 4 GB storage (expandable)
  • 1700 mAh lithium-ion battery
  • Text type by voice
  • 3G
  • Android 5.1 Lollipop

That’s better than the second iPhone — which cost $600 off-contract in 2008. The A1 costs $92.

A Google spokesperson told me the company is now “working closely with phone and silicon chip makers to share reference designs and select components,” hoping to drive prices even lower. The effort is paying off. For example, the Infinix HOT 2, a new Android One device, has a quad-core MediaTek processor with 1GM memory, dual SIM support, and is assured of running Android Marshmallow, the latest build. It costs just $88. The HOT 2 is available for sale in Nigeria, Ghana, Ivory Coast, Kenya, Egypt, and Morocco.

And we are being told to mock these efforts? To praise those companies that are focused on “profit share?” Why? The great magic of technology is not just that it aids our life but that it spreads, oftentimes quickly, to the poor, the marginalized, the non-connected.

No doubt, Android One is an attempt by Google to effectively port its search and maps dominance from desktop to mobile to the entire world. So what? That’s business. Too often, we focus on these short-term plays rather than the long-term potential. A $50 smartphone!

The company told me that “really good phones at great prices” will bring the web to more people. “Access to the web changes the way we live for the better — whether it’s connecting with different people, exploring foreign countries, identifying new educational opportunities, or simply watching a movie with your family.”

Google is just one of many making the low-cost smartphone a reality. Xiaomi has teamed with Foxconn, which manufactures the iPhone, to assemble smartphones in India. Their first phone, the Redmi2 Prime, costs $110. Perhaps next year it will be less than $90.

Why then are so many analysts and tech bloggers not praising these efforts? Earlier this year, TechCrunch lauded Apple’s capturing of “89% of all smartphone profits,” while noting that “Android handset makers are in something of a race to the bottom.”

In 2014, it was repeatedly asked by numerous business and tech sites: “Is it now a race to the bottom in the smartphone market?” A post in Techcrunch titled “Samsung’s race to the bottom” opined:

In a market saturated with essentially undifferentiated players (and again you can argue this point and you will lose that argument), the main differentiator is price. And that’s never the game a smart hardware maker wants to play but, in the end, it is a game they will be forced to play in the coming year. And it won’t be pretty.

Not pretty? It’s beautiful!

This is exactly how technology is supposed to work. Yet, this “race to the bottom” meme continues, and with it a host of negative connotations. It’s not just the tech press. Last year, the Telegraph decried how “smartphone makers (are) stuck in ‘race to the bottom’ on price.”

In 2013, Bloomberg ran a piece filled with trepidation: “Is Apple Really Going to Join a Race to the Bottom?” Even way back in 2010, Fast Company lauded Apple for avoiding the “race to the bottom” in the smartphone market.

There are numerous other examples.

As Google notes, only 1 in 4 people own a smartphone. How long do you go without your smartphone? A week? A day? An hour? These devices have transformed our work, our learning, our play, how we connect, and from where. We are on the cusp of a world where it’s possible for most people to have the same amazing tool at their disposal. The $50 smartphone deserves to be celebrated. Embrace the race to the bottom.

5 Responses to “In praise of the $50 smartphone”

  1. Michael Blackburn

    Of course media don’t want to join a “Race to the Bottom” either. They depend on their position as arbiters and analysts for the devices to be complicated, feature-rich and incomparable. If the only difference between two devices is price, we don'[t need them, and they don’t get our eyeballs.

  2. i am a software dev. a techie. My smartphone is just a phone and occasional texting device and email device. and every once in a while when i am bored – i use the browser. When i text, i mostly use voice to text. I paid $50 for my last phone – total. I can’t see paying 600 for one. If i ever need to do more with it, i will tether my tablet. I can almost see what is on it and almost type on it.

  3. Cold Spring

    Well said. Already new “flagships” are $150 phones. I can’t tell much difference between $700 apple flagship iphone 6 compared to $150 xiaomi Redmi Note. Hope price drops even further so everyone can enjoy a great Android phone (although Apple undoubtedly will be keeping it’s products at premium pricing forever)

  4. It’s quite fantastic that there are sub-$100 smartphones being developed currently or have already come out. I feel that everyone should be able to use a smartphone, so making cheap ones will certainly change the fact that only 1 in 4 people own such useful pieces of technology.

  5. Except Android One is not competitive in most markets and it’s the wrong thing to look at. The effort is mockable since it doesn’t help anyone except Google push it’s services and users have to pay a premium for it.