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Qualcomm says $50-$70 Android phones are on their way

Fancy a cheap smartphone? Of course you do. And the chances are that you’re going to be spoiled for choice in the near future, as smartphone manufacturers increase the number of ‘white label’ phones that they offer to the public.

‘White labelling’ is when a supplier buys a fully manufactured but unbranded product and puts their own logo on the side. Generally speaking, white labelled phones aren’t as powerful as the top brand handsets, but they are a lot cheaper. With the tech that will be readily available over the next few months, however, the trade-off between price and performance will decrease sharply.

Or at least, that’s what James Munn – vice president of business development for sub-Saharan Africa at Qualcomm – told us. Qualcomm is the firm that manufacturers ‘Snapdragon’ system-on-a-chip processors to smartphone manufacturers. He says that operators can buy reference design phones for between $50-$70 (depending on the exchange rate and import variables) and have them in their stores within six weeks. Munn says that Qualcomm also produces a white label tablet, which costs around $150.

“White labelling is going to take off,” Munn told us yesterday, as we watched giant dinosaurs and rhinos snuggle shoppers.

Importantly, says Munn, the gap between performance and battery life of budget phones and high end smartphones will drop dramatically over the next year, as phones built around new processors like the 28nm Snapdragon 200 and 400 become available at those sorts of prices.

“The technology is reaching an inflection point where everything is now really fast,” he said.

Brand names and high-end smartphones will be with us for the foreseeable future, Munn explained, but the big opportunity for operators to start moving customers onto data tariffs. With almost half a billion phones now working on older GSM networks across sub-Saharan, there are several incentives to get customers on to smartphones.

“You have operators with large coverage areas, a network they have to monetise and pressure on GSM traffic,” says Munn, “So you move customers into a smartphone environment and start monetising off of data services. I see a big shift coming now. A lot of the operators we speak to are gunning for this entry level 3G smartphone segment and want to know how to make it work.”

Munn argues that while the $50-70 prices are at the factory door, it’s in the operator’s interests to get them on sale for as close to cost as possible. Vodacom already has an R799 phone on the shelves, albeit one running a lower power Mediatek processor. We’ve had it in the office and were very impressed.

So far, this strategy is playing out well in Nigeria and Kenya, where operators Airtel and Safaricom are pushing low cost handsets and data. Qualcomm’s research in Kenya revealed that the average tablet sale results in eleven times more data usage than that of a smartphone, so there’s a big push to get users onto new devices and networks fast.

“We’ve had amazing success with Tecno in Nigeria,” Munn said.

As part of its dual-pronged strategy to go after both high end consumers and entry-level smartphones with chips from its Snapdtagon range, Munn also pointed out that the company has invested in Firefox OS development, which could yet be a major disruptor at the lower end. The first Firefox-powered phones (from ZTE) sold out almost instantly in the UK and US recently. The firm is supporting app development through sponsorship of events like Start-up Weekend. By encouraging more locally developed, relevant apps, argues Munn, more people will want to buy smartphones.

That’s not entirely altruistic gesture towards other chip manufacturers either. As the holder of many patents relating to radio communications Qualcomm is in a winner no matter which phone you buy. Every smartphone sale is more money for Qualcomm, as a colleague put it.

Qualcomm has had a successful year. Not only does it dominate mobile chipset sales with around 69% of tablets and phones using its technology, it recently overtook AMD for sales of microprocessors as a whole too.  Given that the firm has effectively seen off the challenge posed to it by the NVIDIA Tegra processors in the mobile space – it’s significant that ASUS’ Nexus 7 has defected to Snapdragon this year – we asked Munn how he felt about Intel’s up-and-coming ‘Cloverview’ Atom processors which will coild potentially deliver true PC performance in mobile handset.

He remains confident, he says, because Intel can’t yet integrate an LTE modem into its processor – and it’s the all-in-one feature of the current Snapdragon range which has enabled Qualcomm to maintain a presence even in Samsung’s high end phones. The Korean company’s eight-core Exynos is limited to 3G connectivity, which is why there are two versions of the Galaxy S4 and it doesn’t appear in the S4 Active. That’s the reason it is one of the few tech companies to have beaten its profit estimates this year, and that it remains high on the lists of many pundits’ stocks to buy despite a relatively unmoving share price.

“Manufacturers only want single chips,” Munn said, smiling.

qualcom rhinos

One further strategy for fending off future competition is to try and increase the company’s profile. While Qualcomm has been successful, it’s the most successful company a lot of people will never have heard of. It’s hoping to rectify this, however, with a marketing campaign to raise its profile. The National Geographic tie-in in Menlyn mall (above) is just one prong of attack – the company is also spending money on training retail staff in several African countries to better understand the technology inside phones. Significantly, no-one in South Africa is doing this yet, says Munn, partly because of the high turnover of sales staff. South Africa is, however, the first country in which Qualcomm has bought TV advertising.

It’s a tough sell though. Even with dramatic sequences like the ad below, getting phone buyers in Africa to understand ‘Qualcomm Inside’ – which was Intel’s brand that broke into the mainstream – will people ever really care what chip is in their phones? Hard to say – but we’ll be checking back to find out in about a year.

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