Why are we still waiting for the sub-$250 Android super phones?

Posted by – August 1, 2010

New Android super phones are arriving on the market every few weeks, promoted by all carriers and selling twice as fast as the iPhone. We are also seeing a few lower cost Android phones being sold with smaller resistive screens, using slower processors. Specialist sites like isuppli.com have analyzed the Bill Of Material of all those phones and they are saying that even the top of the line of Android super phones can be manufactured for $165 or below. My question is then still, as we are seeing more and more competition in the Android market, when are we going to be able to buy all those Android super phones at below $250, with unlocked 3G and 4G SIM card slots and no obligation to sign up for 2 years of very expensive, often over $2000 of subscriber contracts?

Before the official release of the Nexus One, I had speculated that it may be sold by Google directly to consumers below $200, as I thought that Google wouldn’t be interested in making a profit on the hardware as their strategy is to make a profit on advertising and online services. With probable pressure from manufacturers such as HTC, and from pressure by the big carriers, Google has not been allowed to yet introduce such a disruptive business model to the Android super phone market, at least not yet. It’s the same thing Andy Rubin told me off camera at Mobile World Congress, that Google wasn’t the one deciding what should be the pricing of the Nexus One.

It’s not only consumers in Europe and the USA who I think would be glad to get cheaper unlocked Android super phones, I believe there is a gigantic market available right there to the Android super phone manufacturers if they would aim to provide sub-$250 unlocked Android super phones to the people of developing countries. Each year, over 1 billion phones are bought by consumers worldwide, in fact, mostly in developing countries right now. Those handsets are mostly low cost Nokia phones and the likes. Super phones may be reaching only 100 million units sold each year so far. But that could easily double or triple from one year to the next, as soon as manufacturers decide to sell them at more reasonable cost to the consumers who want unlocked or who only care for pre-paid mobile plans. Most of the world’s nearly 5 billion mobile phone users are using pre-paid plans.

Shanzai.com recently published an editorial analyzing the upcoming wave of sub-$100 Android phones that could be coming based on the new low cost ST Ericsson 416MHz T6719 platform that I filmed in the Acer beTouch E120 and Acer beTouch E130 at Computex. Marvell may also be preparing a lower cost Android super phone platform as demonstrated in the O Phones line of Android super phones that is sold only in China for now. Texas Instruments, Qualcomm, Freescale and others surely have some low cost Android super phone platform plans that they must be preparing.

The issue is the conflict of interest that there might be between Android super phone’s current customers, which are the major European and American carriers, and the interest of consumers worldwide to see lower cost Android super phones with less constraints, less obligations and less contracts. Many consumers in Europe and the USA are paying the equivalent of 3 or 4 months rent every year just for their mobile phone contracts, which is insanely expensive when you think about it.

Wouldn’t it be nice if one could get a $250 unlocked Android super phone, with all the latest capacitive screens and fastest available ARM processors, also with 2 SIM card slots, one for eventual pre-paid or subscription based voice/sms SIM card, and the other for an eventual data-centric 3G or 4G service. On top of which it would still have all the WiFi and Bluetooth features, as well as video-chat that works on any network, and fully unlimited and unlocked features of tethering, Mifi function and HD video streaming, also coming on any networks. All that with HDMI output if needed and HD camcorders right there inside. Then also, sub-$125, there would be smaller resistive screens and lower performance ARM and single SIM normal devices but also unlocked and usable for pre-paid plans. Shanzai.com and Visionmobile.com speculate that advanced features can be included on the cheaper Android hardware using Mobile Virtualization.

Virtualization is new to mobile, but established in the data center, fundamental in cloud computing and increasingly popular on the desktop.

Mobile Virtualization lets handset OEMs, operators/carriers and end-users get more out of mobile hardware. It decouples mobile OSes and applications from the hardware they run on, enabling secure applications and services on less expensive devices today and deployment on advanced hardware tomorrow.

Without much of the cheap Android phones yet on the market, already Android is selling twice as fast as the iPhone. Imagine how much faster they will sell once the cheaper Android super phone prices start to be released. Perhaps a bit more competition in this market is needed to trigger this, perhaps manufacturers and carriers will be careful not to cannibalize their huge profit margins in Europe and USA while some of them will launch hundreds of millions of cheaper Android handset options in the developing countries.