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Why Cheap Smartphones Are Going To Upset the Industry

An anonymous reader writes "Just when people got used to good smartphones costing $200 with a 2-year contract, they also started to realize that those 2-year contracts were bad news. Still, it's often more palatable than fronting $600 for good, new hardware. But that's starting to change. Cell phone internals are getting cheap enough that prices for capable devices have been creeping downward below $200 without a contract. We ran into something similar with the PC industry some years back — previous-gen chips had no trouble running next-gen software (excluding games with bleeding-edge graphics), and so the impetus to keep getting the latest-and-greatest hardware disappeared for a lot of people. That revolution is underway now for smartphones, and it's going to shake things up for everybody, including Apple and Samsung. But the biggest effects will be felt in the developing world: '[F]or a vast number of people in a vast number of countries, the cheap handset will be the first screen, and the only screen. Their primary interface with the world. A way of connecting to the Internet where there are no telephone lines or coaxial cables or even electricity. In nations without subsidized cell phone contracts or access to consumer credit, the $50-and-you-own-it handset is going to be transformative.'"

40 of 234 comments (clear)

  1. Upset the industry? by anubi · · Score: 4, Insightful

    I would not be surprised in the least to find voice over internet protocol (VOIP) completely taking over once everyone has access to this technology.

    Who needs a cellphone carrier if they have access to the internet?

    The providers as we know them now may go back to selling buggy-whips for all I know...

    --
    "Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]

    1. Re:Upset the industry? by Anonymous Coward · · Score: 5, Informative

      Who needs a cellphone carrier if they have access to the internet?

      To acually get to the Inernet when there is not any WiFi around?

    2. Re:Upset the industry? by K.+S.+Kyosuke · · Score: 2

      In Africa, you get things like community mesh networks spreading. Especially with recent codecs like Codec2 (hi, Bruce Perens! ;-)), you should need even less bandwidth than GSM for reasonable-quality VOIP apps.

      --
      Ezekiel 23:20
    3. Re:Upset the industry? by K.+S.+Kyosuke · · Score: 4, Insightful

      You do realize that Africa is far from being this homogeneous place where everyone has the same problems?

      --
      Ezekiel 23:20
    4. Re:Upset the industry? by ebno-10db · · Score: 4, Insightful

      I would not be surprised in the least to find voice over internet protocol (VOIP) completely taking over once everyone has access to this technology.

      There is nothing about VoIP that's inherently cheaper than straight digitized voice streams. VoIP eats up more bandwidth (all the headers and stuff), and RF bandwidth is the most precious commodity there is in wireless. They've done a great job w/ better modulation and coding techniques, but Shannon and Nyquist are still right. Getting more RF bandwidth is great too, but there are still limits. Maybe someday we'll use mm wave for cell phones, but we're a long way from that.

      VoIP makes sense for fixed point connections where umpteen zigabit/sec (or whatever they're up to this week) makes bandwidth extremely cheap, but otherwise it sucks. And I haven't even mentioned latency requirements yet.

    5. Re:Upset the industry? by Rising+Ape · · Score: 2

      I tried one of those Chinese smartphones. Absolute pile of crap - technically it worked but it was so slow and frustrating that trying to use it was an utter chore. My Nexus 5 cost three times as much but is easily worth it.

      Agree on the contracts though - my monthly bill on Three PAYG is about £5-10.

    6. Re:Upset the industry? by rasmusbr · · Score: 2

      Nothing to eat, your kids are dying of some horrible disease and you can't the medicine they need, but the datacomm is improving every day! I really, really hate to admit it, but for once Bill Gates is right.

      Right about what? Bill Gates has been one of the main public proponents of the importance of cheap smartphones and cellular networks in the poorest countries. If you don't have reasonably fast and reliable communication technology you can't solve any of the other problems.

      For example rail lines and steam engines pretty much solved the communications problem in western Europe and North America in the 19:th century, along with telegraph lines for shorter messages.

    7. Re:Upset the industry? by alen · · Score: 2

      every carrier in the USA gives you unlimited minutes and texts
      what's voip supposed to be used for again except international calls?

    8. Re:Upset the industry? by Anne+Thwacks · · Score: 2
      Not only that: Uzbekistan lacks a No 1 Ladies Detective Agency.

      Lagos probably has more Blackberries than London.

      --
      Sent from my ASR33 using ASCII
    9. Re:Upset the industry? by gnasher719 · · Score: 5, Insightful

      Nothing to eat, your kids are dying of some horrible disease and you can't the medicine they need, but the datacomm is improving every day! I really, really hate to admit it, but for once Bill Gates is right.

      Should be downvoted as downright stupid. If one of the three towns 20 miles footwalk away has the medicine your kid needs and the other two don't, then having a phone to find out which one can save your kid's life. People in Africa use phones to get information about markets so they can go to the right market to buy or sell things. You really can't imagine that people in bad living conditions could use the power of communication supplied by a phone to improve their living conditions?

    10. Re:Upset the industry? by Ol+Olsoc · · Score: 3, Insightful

      You really can't imagine that people in bad living conditions could use the power of communication supplied by a phone to improve their living conditions?

      This is slashdot you know, the one time technical sit now populated by the most short-sighted asshats on the intertoobz.

      Moped Jesus could be handing out free beer and they'd bitch about the brand and the temperature, and how the beer disproves Global warming, and that godammed Jesus is just a hill for the NSA.

      People who are way behind in technology should not have some slashdotter declare that they shouldn't have that technology.

      Let's say you are a poor farmer in Africa. You might be able to get information on crop planting, as in weather events that might affect your harvest - you want to wait a day or two if a big storm that would wash away your planting was going to happen.

      With only a little imagination, it becomes obvious that smartphones will be a very positive effect in poor people's lives.

      --
      The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
    11. Re:Upset the industry? by ebno-10db · · Score: 5, Interesting

      First "someone" isn't enough. It needs to be someone sufficiently educated.

      Yes, it's called a virtuous cycle. Educate some people, they can teach more people, etc. It's worked pretty well for thousands of years.

      And you need one for about every 30 children or so. And if you are unlucky, all you get out of it is maybe 10 educated people, the others either can't attend, at least not regularly, get too sick, die, ...

      That was my point about people needing enough to eat and being in good enough health to learn something.

      It is incredibly expensive ...

      Labor rates are pretty cheap there.

      simply doesn't scale and as a result in general just does not happen

      That must explain why, for example, in colonial America most people were illiterate. Oh, wait, the American colonies were known for having a very high literacy rate, and people from the mother country who came here were amazed at not just the literacy rate, even amongst the poor, but how well read and informed many of them were. And it was done with, wait for this, drum roll ... one room school houses. Apparently some of the people who learned there, got a little more education, and then taught in other schools. It was amazing! I forgot to add: they didn't have cell phones or the Internet. Apparently they thought indoor plumbing was a higher priority. Such ignorant fools!

      Even in 21st century America cell phones, the Internet, laptops, etc. have done remarkably little to improve education. Do you know that when TV first came along they thought it would be a great educational tool. Long distance classes and so forth may be great at a college level, but do you really think that'll work for a bunch of grade school kids? Maybe when they improve image recognition enough so that it can figure out whether little Bobby in the back needs to go #1 or #2.

    12. Re:Upset the industry? by ebno-10db · · Score: 3, Informative

      You know in the dark ages of Europe people were dying of plague.

      The "dark ages"? Nobody who knows anything about history has used that absurd term in at least 50 years. It referred to the early middle ages, roughly 500-100 A.D. If you're referring to the Black Death, that happened about 350 years later. And as to your notion that trade so improved Europe, trade was precisely what caused that epidemic. Italian traders brought it over from the Black Sea, and additional trade spread it throughout Europe. Exception: Poland, because they were smart enough to cut of all trade when it happened, and had very few deaths as a result.

      You know what changed the future of Europe? Trade

      Long distance trade, that brought spices and silks to the rich, and the plague to Europe? Or are you talking about the post-Columbus trade with the Americas, which brought metals of no practical value to the rich, caused rampant inflation as a result instead of any material benefit, and resulted in up to 90% of the Amerindian population dying from Old World diseases.

      the printing press

      Hmm, maybe that explains my advocacy of books.

      not changes in political systems

      You mean the changes in the British political system that allowed for competitive markets, which was a key factor in the Industrial Revolution? The thing that lifted the majority of people out of the poverty that they'd been living in for many centuries was the Industrial Revolution, and its necessary precursors, like the British Agricultural Revolution, and less heralded things like 17th-18th century improvements in smelting metals.

    13. Re:Upset the industry? by TheRaven64 · · Score: 2

      Most of the carriers use VoIP internally now anyway - the entire BT backbone in the UK has been VoIP for a long time. The difference between VoIP over the phone company's phone plan and over their data plan is the QoS. It is inherently cheaper to send data when you don't have latency and jitter guarantees, because you need to reserve spectrum for the duration of the call to be able to guarantee meeting the maximum jitter requirement, and if you miss it then people complain. For VoIP over a data plan, people just accept the lower quality. Termination charges can also be expensive, especially in another country (where you don't get the peering-like agreements) so if a call is not using a POTS end point then you can avoid paying that.

      --
      I am TheRaven on Soylent News
    14. Re:Upset the industry? by CohibaVancouver · · Score: 2

      How do you think the rest of the world got so far ahead of these remote african locations?

      By exploiting the hell out of regions like Africa for 500 years, then casting them aside when we're done and moving on to the next one.

    15. Re:Upset the industry? by CohibaVancouver · · Score: 2

      I imagine even the Hitchiker's Guide To The Galaxy faded away if you took it 'out of range.'

      I got the sense that in Adams's vision of "The Guide" all the data was locally cached.

    16. Re:Upset the industry? by mlts · · Score: 2

      You hit the nail on the head. In a way, it is a razor and blade school of marketing. The phones are cheap, but if you want to use any data with it, you will be paying upwards of a C-note a month, regardless of using T-Mobile, Sprint, AT&T, Verizon, CREDO, Millenicom, or the other MVNOs. It used to be that there were unlimited data plans, but the tier 1 providers dropped the hammer on the MVNOs to disallow it.

      Google seems to have good intentions with wanting to get rid of the SD card, but realistically with the bandwidth issues in the US and down under, the SD card is a necessary evil. It would be nice if Android had an option to revert back to its previous functionality level with the card as well, without needing a rooted app (like NextApp SDFix) to re-enable disabled functionality.

      Maybe Google should allow SD cards to be formatted with ext3/ext4 so Linux/Android permissions could be applied. That would provide fine-grained protection to keep rogue apps from accessing other app data. With the exiting MTP/PTP functionality in Android 4.4.2, one still has the ability to copy files back and forth, although the SD card couldn't be used directly as a USB flash drive.

    17. Re:Upset the industry? by K.+S.+Kyosuke · · Score: 2

      You really think that most of the progress (at least in Europe) before the 20th century was conditional upon exploiting Africa? Did Watt need rare minerals to construct his steam engine? Did Galileo need African ivory for his telescope handles? Did Newton need African slaves to work their brains off on his arithmetic plantations?

      --
      Ezekiel 23:20
  2. Upset the industry? by Anonymous Coward · · Score: 4, Interesting

    Except in places where data is limited to a fault, ie anywhere that isn't urban america and/or some other afluent cities (like London). Same reason why SDCards aren't going to die for android, as much as google might want you to stream your music it just isn't possible and a sub 2gig plan. Even then it's still stupid. So long as there are stupid caps to the level of data that companies will give people nothing like this will take off. Take my plan for example. I live in Australia and all the plans from every comapny around $30AUS a month have about 200-400 MB worht of data. to get anything worth while you have to go up to $60 a month which for a lot of people isn't something they can do. It's similarly shitty in a lot of other countries too

  3. Solar power and diesel generators. by WegianWarrior · · Score: 4, Informative

    While I can't comment on the third world in general, I saw a lot of solar cell setups for charging cell phones in South Sudan - people even ran solar charging as a business; a solar panel, some car batteries, a black box of electronics and 3 to 5 South Sudanese pound for a full charge.
    Also saw plenty of cell towers with solar panels and battery banks, with diesel generators for backup. Not as clean or tidy as plugging into the grid, granted... but it works. Was a life line for me for a year spent down there, and twice so for the people who lives their whole life there.
    Just because you can't plug something into a national grid, don't mean you can't get power... often cheaper and more reliable than the grid too - at least in Juba.

    --
    Everything in the world is controlled by a small, evil group to which, unfortunately, no one you know belongs.
  4. Sigh by ledow · · Score: 4, Insightful

    What else, precisely, were you expecting?

    That we all continue to pay for the latest-and-greatest no matter what for ever and ever? Smartphones are plateauing, like any other technology. They are now so ubiquitous that there's little point spending a fortune for something that can do the same, but "slightly faster" or with more megapixels, or whatever.

    Sure, there are evolutions, and merges of technology, and lots of new developments still to come but if the phones don't have something new, then they are all just the same as each other, give or take a few statistics here or there.

    Smartphones beat out ordinary mobile phones, that's for sure, but it was a long while coming. Tablets are in the same place at the moment - they are powerful enough to run almost anything and so there's little to distinguish them except for company name and some random technical specifications.

    Welcome to the era of ubiquitous computing, where my mobile phone can plot a course across Europe, suck down traffic data and tell people on Facebook when I'm going to arrive quicker than I could do it myself on a full PC. While also handling all my calls, monitoring my car engine, checking my Exchange accounts, etc.

    The problem we have now is not pricing - the cost of something going down is rarely a problem for the consumers or the manufacturers and their suppliers. The problem we have now is what comes next? We all have Turing-capable machines that run at stupendous speeds, and most of us actually have several. The question is how do you design your services to take account of this - TV streaming, etc. is still in its infancy and pretty much in denial at the moment.

    1. Re:Sigh by ebno-10db · · Score: 5, Interesting

      You're absolutely right, but in addition to that the cellphone business (smart or dumb) has always been a crazy business to be in, even crazier than PC/laptop's. There it was about price, so the change was always slower and smoother (might take 5 years to be put out of business).

      The cellphone biz is insane. Remember when Nokia was king of the hill? Blackberry, Motorola, etc., etc. It's probably better business to be a component supplier. The margins may get thin as the prices go down, but it's all about performance and price. Chip sets (the RF/DSP stuff, not ARM's), displays, etc.

      Electronics: the only business where prices go down.

      I wish there were more like it. They keep telling us that inflation is low because smart phones are getting cheaper, and a pair of socks is $0.05 cheaper because they're now made in a country where people earn $2/day instead of $3. Never mind that nobody can afford medical insurance (yes, before Obamacare too, w/ double-digit inflation), and going to college (let alone grad school) means mortgaging your children's children.

      Here's one for you who complain about old fart stories. Between a partial scholarship, federal grants (yes grants, not loans, and my family was working class, not poor) and employer tuition payments (100% if you got a 'B' or better), I got my BSEE and MSEE without paying a cent in tuition. I'm not gloating, because it was not because of anything brilliant that I did. I wish we still had it because my kids are approaching college age. But inflation is low!

    2. Re:Sigh by 140Mandak262Jamuna · · Score: 2, Insightful
      Reagan set the stage. Clinton triangulated the Democrats and aligned himself with the Republicans. Though the Democrats love the "Big Dog", he was the one who decimated welfare as we knew it, killed Glass-Stegal, exempted derivatives from regulations, and permitted regulator shopping among the financial institutions. 100 billion dollar insurance companies register themselves as thrifts to escape oversight, for example. All through the 90s there was systemic wealth transfer from the bottom 80% to the top 20%. Most of the tax cuts ended up with the top 2% but rest of the top 20% got some bones and they played along. Then came 2000s where the top 2% systemically transferred wealth from the 80%-98% to the top 2%. Even inside that bracket it ended up in the top 0.1% disproportionately. Now we have America where the networth of bottom 50% is zero. In the last five years the net worth of people in the tranche of 98% to 99% stagnted, 99% to 99.5% tranche got modest wealth gains, 99.5% to 99.9% got some significant gains and the top 0.1% got most of the gains.

      Now even the net worth 1 million to 4 million group itself is feeling the effects of income/wealth inequality. The most solid middle class of america, net worth between 0.5 million to 2 million (including home equity) is feeling the pinch. Obama is following Clinton footsteps, keep Democrats happy with social liberalism and but let Wall street rule the roost. Hilary is far more astute than the Big Dog, but she too, along with Obama, trust the Wall Street connected advisers too much. Elizabeth Warren is not an anomaly. Pretty soon all the politicians will realize the value of running against Wall Street, genuinely against Wall Street.

      --
      sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
    3. Re:Sigh by ebno-10db · · Score: 4, Funny

      Clinton was a Democrat? Are you sure?

  5. Re:Dear google, we love sdcards , idiot CEOs by smittyoneeach · · Score: 5, Funny

    Oh to have a string! All I have is this lone integer, you insensitive clod!

    --
    Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
  6. But you already can get good cheap phones... by hamster_nz · · Score: 3, Interesting

    ... it is just that the phone networks don't want you to have them.

    I have a 5", quad core, 2GB RAM, 32GB Flash smart phone from Chinavasion. It is much like a Samsung S4, and cost US$250. Unlocked as a standard feature, and with dual SIM, Took five days to from order to doorstep. Plugged in my work SIM and my own SIM and gave back a my work's S3.

    A cheap 4" can be had for under $70.

    1. Re:But you already can get good cheap phones... by Thruen · · Score: 2

      But the Chinese might be spying on you!

      Hah, gave myself a good chuckle with that one.

  7. Re:Only in USA by HuguesT · · Score: 2, Insightful

    Not really no, it is common in many parts of the world.

  8. Shame Google dumped Motorola by sirwired · · Score: 3, Informative

    In the US anyway, Google/Motorola has been raising the bar on what's possible with inexpensive smartphones. I have a Moto G targeted to the Boost no-contract plan for which I paid $80, out the door. It has a decent (if non-removable) battery, excellent screen of a decent size, runs KitKat/Dual-Core/1GB RAM, and is even waterproof (plenty of YouTube videos showing the phone functioning in a bowl of water.) The next version (coming out soon) will add a much-needed MicroSD slot and LTE. The only significant con is the camera, which is pretty mediocre (but what do you expect for that price?)

    The CDMA one I bought was easily flashed over to PagePlus/Verizon (Boost inexplicably did not request Moto permanently lock the bootloader; you can obtain a bootloader unlock code for free from Moto.) The GSM version is sold unlocked directly by Google for all of $180; the 4G will be $220.

    And they just announced the Moto E; a slightly lower-spec phone for only a puny $130.

    There's rampant speculation if Lenovo will continue this trend of well-spec'd cheap phones. The consensus seems to be no, given how Lenovo actually wants to make money on the purchase, and nobody thinks Google has any kind of usable margin on these superb value-priced phones.

    1. Re:Shame Google dumped Motorola by ifiwereasculptor · · Score: 3, Informative

      The Moto G is actually a quad-core. I have a Nexus 4, but I envy Moto G owners mostly because the phone is undistinguishably speedy, its battery lasts longer and it's unbelievably cheaper. Lenovo would be crazy not to continue the trend, because what Moto needs now is market and mind share. They attempted to make good phones with good margins (I'm thinking of the RAZRs) and they were doing way, way worse than with the Moto G/E.

      And what Google did with Moto was so simple it's laughable. Just remove the cruft (stop wasting resources with kevlar backs or MotoBlur), simplify and optimize the software and you can actually surpass the competition while using cheaper components. They could sell the Moto G for $300 and it would still be a good value if you compared it with the competition. LG's G2 Mini is pretty much the same phone, but priced at $400.

  9. Re:Dear google, we love sdcards , idiot CEOs by Moonrazor · · Score: 5, Funny

    An integer ?! All we had was a bit! We used to dream of having an integer. Would've been like a palace for us!

    --
    Burn the land and boil the sea........
  10. WTF does that even mean? by gelfling · · Score: 5, Insightful

    Transformative? Every time some semi alcoholic blogging 'communications major' from Vassar or some such place wanders into the mall and discovers that last year's models can be had, from a third party kiosk for near-free they immediately whip out their own brand new iPhone to proclaim a Golden Age is Upon Us.

    Cheap smartphones have been around for years and years you retard. The problem is the NETWORK.

  11. Upset the Industry? Gosh! by PopeRatzo · · Score: 3, Funny

    Can I go on record as giving not one single fuck if the "industry" is "upset"?

    You want upset? Talk to my wife when she finds out I plan to spend my afternoon watching the Blackhawks, napping on the couch and playing Dark Souls II.

    --
    You are welcome on my lawn.
  12. Re:Africa by ShanghaiBill · · Score: 2

    Map makers have messed up the world for years...but years of kids looking at maps, ...

    I am extremely skeptical of the explanation that "map makers" cause geographical ignorance. I think it is far more likely that people who can't find their own country on the map, simply don't study maps at all, and have no interest in doing so.

  13. Re:Upset the Industry? Gosh! by bluegutang · · Score: 2

    I work in the industry. If the industry is upset, there is a good chance of me being upset :)

  14. What century is this article from? by Lumpy · · Score: 4, Insightful

    You have been able to get"free" or $59 or $99 smartphones for the past 5 years.
    There is nothing at all new about this, they were last year models or strip down models. EXACTLY what they are proposing.

    Next up on Slashdot we discuss something from 5 years ago as if it is going to happen soon!

    --
    Do not look at laser with remaining good eye.
  15. Can't wait by riis138 · · Score: 2

    I used to be one of those people who had to have the latest flagship phone on a 2 year plan. Then I wised up, realized I could buy a $200 phone with a quad core cpu and plenty of storage via removable SD card, and pay $50 a month for service. My current moto android running kit kat is every bit as good as the latest iOS device and Samsung flagship, and I paid half the price. I think we are about to see a huge drop in price as more people come to the realization that many of the features on flagship phones these days are gimmicks that only 1% of users with actually take advantage of.

    --
    Somewhere, something incredible is waiting to be known. -Carl Sagan
  16. Re:Dear google, we love sdcards , idiot CEOs by Fjandr · · Score: 2

    A bit? We had to make do with either a one or a zero! A bit would have been a luxury!

  17. Re:Dear google, we love sdcards , idiot CEOs by thesupraman · · Score: 2

    You got a choice? pure luxury! Oh to have had a choice.. We just got zeros, and were damn happy to have em.

  18. not bad news, but a rip-off by ruir · · Score: 2

    Lets get real. A $200 phone in a contract is a ripoff. By the time you have finished the contact, in reality you might have paid for your phone between $1000 to $2000. Better buy a new one without a fixed contract and use it with a cheap operator/plan.