Google Looking To Launch $50 Smartphone As Sales Start To Tank

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After years of record growth smartphone sales are set to slow due to the devices reaching saturation point in Australia, at the same time Google is looking to launch a $50 modular smartphone.

According to research group IDC 2013 saw
smartphones pass the billion-units-sold mark, a massive 39 percent increase
over the previous year. But IDC expects that growth rate to halve globally to
around 19 percent this year – and even drop to single digits in mature markets
like Australia where smartphone penetration is already high.

Also evaporating is smartphone margins with
nearly a third of entry level mobile devices selling last year for under $150,
now companies like Google is aiming at putting smartphones out there for as low
as $50.

Google’s new modular smartphone could end
up being an extremely cheap device at launch, according to Project Ara lead
Paul Eremenko.

The basic entry-level model of the device
may be priced as low as $50 if Google gets its way, providing customers a
touchscreen and basic components it requires to function, though it will just
have Wi-Fi instead of radios for a cellular connection.

In an interview with Time Magazine,
Eremenko advised that the Advanced Technology and Projects group is hoping to
have a marketable product ready by next year, and a functional prototype
operational within weeks.

The modular system could help bring more
people into the smartphone market with a far lower cost of ownership, by
allowing anyone to create modules for the open hardware platform.

 

“The question was basically, could we
do for hardware what Android and other platforms have done for software?”
asked Eremenko, “which means lower the barrier to entry to such a degree
that you could have tens of thousands or hundreds of thousands of developers as
opposed to just five or six big [manufacturers] that could participate in the
hardware space.” Google recently announced it will be putting on a series
of developer conferences to help companies start to create modules for the
project.

Annual smartphone growth in 2014 is
expected to be 19.3% and then decline to 6.2% in 2018, IDC said in a report.
That follows a 39.2% jump in 2013 when smartphone shipments topped 1 billion
units for the first time.

The forecast reinforces concerns with
analysts that the explosion in smartphones that began with Apple’s iPhone in
2007 is coming to an end, at least in markets like Australia where consumers favour
pricey, top-tier handsets.

Smartphone growth in Australia is expected
to shrink to single digits and Japan could even see a slight slowdown in
shipments in the next few years, IDC said.

Manufacturers are increasingly focusing on
China where many consumers are upgrading from basic mobiles to smartphones
selling for under $300.

“New markets for growth bring
different rules to play by and ‘premium’ will not be a major factor in the
regions driving overall market growth,” IDC analyst Ryan Reith said in a
report.

The average smartphone selling price for
last year was $335, already far below flagship devices like the iPhone 5S or
Samsung Galaxy S4, and will fall to $260 by 2018, IDC said.

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