Smartphone rates may slip below Rs 2.5k by year-end

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smart-phonesNEW DELHI: Come 2014-end, you could buy a fully-equipped smartphone for as low as Rs 2,350. The costs of making smart devices are poised to fall further, allowing handset makers to cut prices, which would be a further boost to India’s fastgrowing smartphone market that is already doubling year on year.

Analysts tracking India’s billion-dollar handset industry predict that entry-level yet full blown smartphones would be sold at Rs 2,350 to Rs 2,450 by the end of 2014, as cost of chipset is expected to come down, bringing down the total cost of making the devices. “Prices of smartphones have been decreasing rapidly in the recent years, with the entry-level smartphones currently being available for as low as $50 (Rs 3,000).

We expect the entry-level smartphone prices to settle at $38 to $40,” said Convergence Catalyst’s co-founder and partner Jayanth Kolla. The telecom research firm’s recent study showed that “there is room for chipset prices to decline,” while prices of display, memory and battery are near to the ground. He added that the smartphones at these price points will be able to give the complete high speed mobile internet experience, as opposed to present entry-level smartphones that have a lot of limitations, including speed.

Chipset, display (touchscreen), memory and battery are the key components that contribute to the smartphone cost. Chipset is one of the most critical components that allows the mobile phone to perform functions.

Chipset makers Qualcomm, Mediatek, Spreadtrum and Broadcom compete in this space, with most international companies depending on USbased Qualcomm. Local vendors like Micromax, Karbonn and Lava largely use cheaper chipsets, including those from MediaTek and Spreadtrum. Last month, Spreadtrum and operating system maker Firefox said they were partnering on a chipset that would bring down the cost of the device to $25 (Rs 1,520). However, this price includes subsidies and the India prices could well be around $45.

Also, handset makers’ moves to sell devices online with ecommerce companies like Flipkart will lead to a “lean supply chain”, Convergence said. Sashin Devsare, executive director at home-bred handset market Karbonn Mobiles, expects to launch smartphones in the Rs 2,300-Rs 2,400 category in some time. But “we will not compromise on screen size — meaning that screen size will not be less than 3 inches”.

ET