Price not main driver for low-end 3G handsets

Compelling and affordable services and near-ubiquitous network coverage more important than price to entice consumers in emerging markets to switch to low-end 3G handsets, observers say.

More mobile makers such as Huawei and Miramax are looking to corner low-end 3G handsets market in emerging markets such as India and Indonesia, but compelling services and ubiquitous coverage more important drivers for adoption than cheaper prices, observers stated.

According to Shiv Putcha, principal analyst for emerging markets at Ovum, low-end 3G smartphones are only starting to make an appearance in Asia, with markets such as India and Indonesia embracing entrance of sub-US$100 devices.

However, in these emerging markets, the prepaid subscriber base is very high and operators are loath to subsidize handsets too heavily, he noted. As such, an attractive price point may entice some consumers to upgrade to a 3G smartphone but it is not enough to generate mass market appeal.

Service, ubiquitous coverage more important
"In this environment, other strategies must be adopted to stimulate consumption of smartphones and data services," Putcha stated. "Beyond price, you need compelling and affordable services that are backed by wide, near-ubiquitous [network] coverage."

At this point, 3G networks are not a must-have for many Asian markets as consumers are value-conscious and aware of the limited coverage, he added.

Benedict Hong, regional account director for telecommunication at GfK Asia, added that while a 3G network is "definitely a plus" for users, it is not the only network that smartphones can operate in.

"Even the best infrastructure will be limited by the speeds of the smartphones and vice versa. The number of mobile broadband users on a network can also result in bandwidth clogging, which will result in less-than-optimal user experiences," he said in his e-mail.

Putcha went on to identify Research In Motion's (RIM) BlackBerry device as an example of a smartphone that has garnered success in an emerging market, namely Indonesia, because it has a compelling service proposition that had done incredibly well with only EDGE, or 2G, network coverage.

Hong also said having differentiated price points for different consumer segments is a strategy that is important in emerging market, especially since operators are not heavily subsidizing the costs of smartphones.

He said in his e-mail that Apple's strategy to offer its older iPhone 3GS model for free with carrier subscription is an example of operators and manufacturers coming together to bring 3G smartphones to customers at more affordable prices.

Lesser-known manufacturers such as Huawei and Micromax are also working hard to push entry-level 3G smartphones, alongside more established brands such as Samsung and HTC, and Hong expects significant activities from this segment in the coming quarters.


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