Ultra-low-cost (ULC) handsets, a hot topic in the past three years, can be built for $20 or less and represent a unique segment of the cellular market but require a unique set of strategies for success.
The typical buyers of ULC handsets have limited average disposable income and are difficult to track due to a lack of the necessary infrastructure and systems required. Therefore, it does not make economic sense for operators to significantly subsidize a phone in the hope that they will recover the revenue in service fees.
Operators are further reluctant to subsidize since the majority of ULC revenue is from relatively inexpensive pure voice and SMS services rather than from data services.
Despite the "˜low-cost' nature of the ULC market, it is absolutely unacceptable to have a poorly performing phone since the user will tend to keep the same handset for a long time. And in a competitive market, little prevents a user from switching providers by simply getting a new SIM card.
Therefore, it's critical for an operator to support as many simultaneous users as possible without adverse side effects such as dropped calls, as well as allow the use of the phone wherever needed. These factors are largely network-centric, but there is much that can be done on the handset side as well.
Designing the ULC
There are four key drivers essential to creating a winning ULC product: radio performance, power consumption, features and total cost.
In emerging markets, the 2.5G (GSM/GPRS/EDGE) cellular infrastructure is often bought from Western nations that are migrating to next generation technologies such as 3G. In ULC markets, this leads to an interesting deployment of infrastructure manufactured by a variety of vendors that each implement the GSM specification slightly differently.
Emerging market networks suffer from problems r
Also, the need for stringent radio performance is further amplified in ULC markets, particularly in rural areas where the existence of a good and always-available electricity source cannot be guaranteed. A smaller battery with fewer milliamp-hour can be used in the phone, which allows for smaller phone form factors to drive stylish designs aside from driving down the total cost of the phone.
Further, ULC doesn't have to be ultra-boring if, instead of a staid feature set comprising of just voice, SMS and a monochrome white screen, a ULC phone were to have a color screen, FM tuner, music playback and even data services like WAP and MMS.
From an operator point of view, additional features present the possibility of additional ARPU. Aggressive cellular service subsidy models are being experimented with, where operators lock the phone solely to their network and then provide the phone to subscribers at either a discount or even for free, and then realize revenue through the ARPU. With this business model, it is imperative that the phone cannot be hacked.
Lastly, the confluence of high mixed-signal integration with low-cost semiconductor processes has ushered in a new era of available "˜single-chip' cellular chipset solutions where all the major subsystems of a phone have been integrated on a single CMOS die. It has been also possible to integrate a large proportion of the erstwhile discrete electronic components.
When not to compromise
The most often compromised metrics in single-chip solutions is RF performance, partially due to the fundamental challenge in integrating RF with the cellular baseband processor. It is also because for most baseband players, RF is an afterthought since it traditionally came from a specialist RF supplier.
NXP Semiconductors, with its AeroFONE line of single-chip products, has taken quite the opposite approach. AeroFONE has a complete product line r
Another good example of mixed signal innovation is the integration of the power management unit (PMU) on the same CMOS die as the RF and baseband. NXP's AeroFONE products are the only single-chip products available today that integrate a complete PMU that includes a DC-DC converter and the battery charger on the same monolithic die as the other subsystems, including RF and the digital baseband. The AeroFONE single-chip solution has one of the best power consumption metrics in the world today.
Also, the AeroFONE PNX 4901 is the first commercially available cell phone platform to ship on a cost-effective 4-layer PCB, further reducing the total cost.
Higher-end phone features is expected to continue to trickle down into the ULC market, which will continue to see innovative products that deliver even higher integration, richer multimedia and even faster data throughput capabilities.
Clearly, cost is one of the biggest drivers in this market segment. However, the astute handset manufacturer will insist on ensuring that key ULC metrics are not compromised and will look at the total cost, including component costs, battery costs and the time to market.
Sanjay Noronha is a product manager for NXP Semiconductors