According to iSuppli Corp , mobile phones are becoming increasingly ubiquitous, even among low-income subscribers in the Third World. For mobile-phone makers, this phenomenon is posing both challenges and opportunities as they strive to offer lower cost products that appeal to developing nations. Speaking at the iSuppli 2006 North American conference, iSuppli analysts discussed the emerging market for such inexpensive phones, including a new breed of ultralow-cost handsets. "The level of penetration globally for wireless communications is astounding," said Dale Ford, vice president of market intelligence for iSuppli. "Nothing, except for electrical power, comes close."

The number of worldwide subscribers for wireless-communications services is expected to increase to 4 billion by 2010, up from 2.6 billion in 2006, according to iSuppli. New subscribers in developing nations are largely responsible for this growth. Key regions, including Africa, the Middle East, and India, are driving this growth. Despite this increase in the number of subscribers in these countries, global wireless-communications-subscriber growth is decelerating as markets in developed nations become increasingly saturated. This fact makes the developing regions vitally important to the continued growth of the mobile-phone business.

India is one of the key regions driving subscription growth, according to Jagdish Rebello, PhD, director and principal analyst for iSuppli, who also spoke at the 2006 North American Briefing. "India had more than 6 million new mobile-phone subscriber additions in September, making it the fastest-growing wireless market in the world," Rebello said. He cited an iSuppli forecast showing that India will have 405 million mobile-phone subscribers by 2010, up from 140 at the end of 2006. "By 2010, iSuppli predicts, one of every 10 mobile phones sold will be sold in India," Rebello said. The major factor behind this growth is the advent of the ultralow-cost handsets and other low-cost phones. "For India, low-end phones will drive the next phase of growth. To serve this area, manufacturers have to drive down their phone costs," he said.

The impact of low-cost phones extends far beyond the Indian market, according to Ford. He says that mass-market handsets and ultralow-cost handsets are driving the growth of the mobile-phone market. Because of these factors, ultralow-cost-handset phones have become an area of greater focus for wireless-handset OEMs. However, a challenge for these OEMs is defining these handsets and their features. "The official definition of an ultralow-cost handset is a phone with less than $30 cost," Ford said. "Manufacturers can now take costs below that figure. There have been reports of phones with manufacturing costs less than $20, and, just last week, Motorola was discussing a $15 product. But what are these products like, and what features will they have? You can miss the market by aiming too low. What is the magic price point and feature set that can bring in new subscribers and increase the reach of wireless while not undercutting the market?"

Companies that can successfully balance these considerations will be the winners in this market, Ford said. The company predicts that ultralow-cost handsets will rise to account for more than 9% of total mobile-phone units produced in 2010, up from less than 1% in 2006.