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News Release from: Informa Telecoms and Media
Edited by the Electronicstalk Editorial
Team on 14 December 2006
The industry's view on the latest GSM
initiative
The GSM Association has been forced to defend the viability of its low-cost-WCDMA-handset program, 3G for All, after leading vendor Motorola announced that it is not taking part.
The GSM Association has been forced to defend the viability of its low-cost-WCDMA-handset program, 3G for All, after leading vendor Motorola announced that it is not taking part The US vendor was the winner of both tenders in the GSMA's Emerging Mobile Handsets initiative in 2005, which aimed to produce a 2G handset that cost less than US$30, for developing markets
This article was originally published on Electronicstalk on 26 Jun 2008 at 8.00am (UK)
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"Motorola's strong support for the EMH initiative means its decision not to take part in 3G for All is a major blow to the GSMA's ambitions for the project" comments Michael Carroll, editor of Mobile Handset Analyst.
Sony Ericsson is also unlikely to have submitted a bid, having told MHA that it aims to have a presence across all tiers of the handset market except for the sub-USD40 bracket.
Nokia has declined to comment about 3G for All, but its caution should not be taken as proof that the Finnish vendor is not interested in the program.
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Nevertheless, top vendors appear to be less than enthusiastic about the GSMA's latest initiative.
Motorola spokeswoman Una Kent says the firm's decision not to participate in the program does not indicate a rift with the GSMA.
Kent told MHA that the firm is continuing to invest in the GSMA's first ultra-low-cost handset program, calling it a great success.
"We will continue to invest in the [EMH] initiative while extending and unveiling new programs to realise our global vision to connect the next billion [subscribers]," she said.
"While we have selected on this occasion, not to bid for the GSMA 3G for All initiative, we continue to explore and work closely with the association on other strategic projects".
The GSMA estimates that 12 million of Motorola's EMH C115 devices have been sold, though Motorola says the number is closer to 20 million.
Figures from MHA publisher Informa Telecoms and Media show that Motorola netted about US$32 million through sales of its EMH handsets, using the assumption that 12 million units were shipped at an average selling price of US$34 across both rounds and that the average cost of production - including the bill of materials, assembly, testing and packaging, before adding the vendor's margin - was USD31.27.
The EMH program appears to have been good news for Motorola, but the lack of a target price point for 3G for All makes it almost impossible to predict the income of the winning vendor.
The bill-of-materials cost alone for a basic 3G handset is about US$150, though Informa predicts that the number will fall to USD89 in 2007 and USD55 in 2008.
If predictions regarding ASPs prove accurate, the margins for the vendor that wins the 3G for All tender will certainly be generous.
But doubts remain about the level of shipments the vendor could expect its low-cost 3G handset to achieve, and skepticism about the GSMA's program as a whole remains rife in the industry.
"It's all well and good trying to build a lower-price tier for 3G, but what is the point?" says Brett Simpson, a director at Arete Research.
"The 2G-lowcost effort was about making mobile voice more affordable in emerging markets".
"For 3G, I am still struggling to find proof points around where 3G is adding value to consumers".
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