ARM expects a $20 smartphone to hit the market in the next few months

A smartphone that sells for around $20 is likely going to hit the market within the next months, according to a presentation from chipset designer ARM Holdings. Such a device would herald the declining average selling price for smartphones many analysts have long predicted as smartphones become more ubiquitous around the world, especially in emerging markets.

According to AnandTech,  ARM predicted that a $20 phone, likely running Android and with a single-core Cortex A5-based chip will go on sale in the next few months. Other companies are already pushing in that direction. Mozilla, for instance, is partnering with Shanghai-based Spreadtrum to help drive down the costs of chipsets for smartphones and make the $25 price point a reality for phones running the Firefox OS. However, the obvious tradeoff is that phones at those price points do not have the specifications and processing capabilities of higher-end devices.

Overall, ARM believes smartphone prices will continue to drop and that by 2018 ARM expects more than 1 billion entry-level smartphones costing less than $150 on an unsubsidized basis to be shipped every year, around twice the current rate. Apple (NASDAQ: AAPL), Qualcomm (NASDAQ:QCOM), Broadcom, Nvidia and many others use ARM designs in their chipsets, and ARM would clearly benefit from falling smartphone costs and wider adoption.

The revolution in mobile processor design the last several years and increasing economies of scale have made producing smartphones a much cheaper proposition, driving down ASPs. AnandTech notes that a single-core Cortex A5 is a faster processor than the ARM11 in the original iPhone, which retailed for $599 in 2007.

Sales of smartphones at more mid-range prices are starting to take off as well. For example, the Moto G from Google's (NASDAQ: GOOG) soon to be sold Motorola unit was a winner for Motorola, which sold 6.5 million devices in the first quarter. The Moto G, which sports a 4.5-inch 720p screen, 1.2 GHz quad-core processor, Android 4.4 KitKat and a 5-megapixel camera, sells for $180 on an unsubsidized basis. Motorola has also recently announced that in London on May 13 it will unveil a new phone that is going to be "made to last" and "priced for all."

Research firms have been predicting that inexpensive smartphones will soon dominate the market.  ABI Research predicted in April 2013 that smartphones costing $250 or less before carrier subsidies will make up 46 percent of all global smartphone shipments by 2018, up from 28 percent in 2012.

For more:
- see this AnandTech article
- see this Ars Technica article 

Related Articles:
Analysts: Huawei, Lenovo and LG dig into Samsung and Apple's market share
Analysts: Samsung, Apple keep smartphone grip, but lower-end rivals are nipping
Mozilla sets sights on $25 smartphone with Firefox OS
IDC: Smartphones to cost an average of just $265 by 2017
ABI: Smartphones under $250 to make up 46% of smartphone shipments by 2018
Report: Most smartphones to cost under $150 in 2017

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