Ericsson sees $70 3G mobiles possible next year

Telefonaktiebolaget LM Ericsson believes companies will be able to make 3G (third generation) mobile phones for as little as $70 next year as component makers step up their efforts to simplify the handsets, an executive said.

The low-cost 3G handset would likely allow users to browse the Internet, and use messaging and voice services, according to Sean Gowran, president of Ericsson Taiwan.

Low-cost handsets have been a buzzword in the industry for the past few years as a way to tune more people into the existing global GSM (Global System for Mobile Communications) wireless network. The GSM Association (GSMA) has even launched a contest to inspire mobile phone makers to create a low-cost 3G handset, an idea similar to their contest a year ago aimed at producing a GSM handset for under $30. Motorola won that contest.

Demand for the low cost GSM phones has been brisk in emerging markets such as China and India this year, where mobile phone use is growing at frantic pace.

India recently announced its strongest month ever for wireless subscriber growth, at 6.71 million people in October. The figure brings its total to 136.22 million subscribers, up from 75.9 million at the end of last year, according to the Telecom Regulatory Authority of India.

By 2010, there will be 405 million mobile phone subscribers in India, according to market researcher iSuppli, thanks to ultra-low-cost handsets.

In China, the number of wireless handset users climbed to 449.02 million at the end of October, up from 393 million at the end of last year, according to the Ministry of Information Industry, that country's telecom industry regulator.

Ericsson believes that efforts to reduce costs have had a big impact on the mobile phone industry. Cheaper components, and fewer components will be vital to efforts to develop a $70 3G handset.

"The number of components is dropping dramatically," said Gowran. Fewer components reduces manufacturing complexity and can allow handset makers to reduce materials costs.

The difference between a low-cost 3G handset and a high-end one will be huge, he said. An advanced handset with all the latest features, smart phone computing capabilities, the latest digital camera functions, multimedia applications with plenty of memory and the ability to use push mail and mobile TV will still be more expensive at around $500.

Gowran also clarified that the $70 target is not an end-user price, but a cost-to-make price, and that Ericsson would not be producing such phones since it does not build mobile handsets anymore. The Sony Ericsson Mobile Communications joint venture with Sony took over all Ericsson handset production, and Gowran said he could not speak on behalf of the company.

The original talk regarding low-cost 3G handsets was given by Robert Puskaric, the head of the mobile platforms division at Ericsson, at the International Telecommunication Union (ITU) Telecom World 2006 conference in Hong Kong. The exhibition runs through Friday.