Update: Motorola wins sub-$30 mobile phone competition

Motorola won a competition to develop a sub-$30 mobile phone for poor countries, the GSM Association (GSMA) said Tuesday.

The association, whose members include mobile network operators and equipment makers, challenged phone manufacturers to develop mobile handsets with a wholesale price of under $30 each earlier this year to improve access to telecommunications services in developing countries.

"To get below $30 per handset is a milestone achievement," said Craig Ehrlich, chairman of GSMA, during a news conference in Singapore.

The low-cost handsets will help get mobile phones into the hands of around 1 billion people in developing countries like India, Bangladesh, China and elsewhere, giving them greater access to opportunity, he said. There are already about 1.5 billion users of GSM (Global System for Mobile Communications) phones around the world, according to the association.

Motorola won with handset model C113, which has a black-and-white screen and offers talk times of 340 to 700 minutes or standby times of 175 to 450 hours on a single battery charge.

Battery performance is vital in poor countries where power supplies are unreliable and users may have to go for long periods between recharges, said David Taylor, director of strategic operations in the mobile devices division at Motorola India.

Another important feature in a mobile phone aimed at developing countries is strong plastic to counteract wear and tear, as well as dust proofing. The cost limits the number of features on the phones, which don't have cameras or color screens, but voice is the most important function for most users in developing countries, he said.

Although the emerging market mobile phones aren't big money makers for companies like Motorola, the challenge of creating a low-cost phone and getting it into the hands of so many new users is compelling.

"We want to get them, we want to make sure it's a Motorola phone," said Taylor. As part of the competition, a group of 10 operators in developing countries had agreed to buy around 6 million of the sub-$30 handsets,

Norway's Telenor, which holds stakes in about 11 mobile phone service providers worldwide, has already signed up for some of the Motorola C113 phones, said Kjell Nordhagen, procurement director at the company. The phones could be used in as many as seven of the companies in which Telenor holds shares, in countries like Pakistan, Bangladesh, Russia, Ukraine, Thailand, Malaysia, and Montenegro.

Motorola announced two ultra low cost handsets on Tuesday, the C113 and its slightly more sophisticated cousin, the C113a. Both phones are expected to be available in the first quarter of 2006.

Motorola executives declined to comment on how much the C113a would cost, but said it would not meet the sub-$30 price point.

The two phones have few differences. The C113a is slightly heavier, at 86.3 grams versus 80 grams for the C113, but the rest of the specs are nearly identical. The C113a is simply being marketed as a more stylish phone. A Motorola advertisement says: "If staying connected and looking good are important, then the C113a is the mobile for you."

Both of the phones carry Motorola's top-of-the-line battery, said Taylor.

The idea for the low-cost phone evolved in response to the concerns of network operators in developing countries, which identified the cost of handsets as a major obstacle to market growth.

A group of operators in developing countries agreed to procure handsets together, and came up with a joint specification for a basic low-cost handset. The original specification called for a robust candy-bar form, weighing around 100 grams and costing below $30. They wanted the phone to run for two hours in use or 50 hours on standby, store up to 250 numbers in its phone book, keep a record of the last 10 numbers dialled or missed, and offer SMS (Short Message Service) and voice mail, among other functions. They also wanted the phone's on-screen menus to be available in English, French, Arabic, Thai, Russian, Spanish, Portuguese, and Turkish.