When we first started covering mobile, nearly every silicon vendor I spoke with issued the same statement: eventually, all phones are smartphones. Continued scaling on process technology, combined continued development of small/power efficient CPU cores, will ensure that even the lowest cost mobile devices will be smartphones.

At its second ever Tech Day, ARM shared some data about how the smartphone market is evolving. We often mention that the growth in the smartphone industry will shift from high-end devices to mid-range and entry level devices. The graph above shows just that. By 2018 ARM expects over a billion entry level (< $150) smartphone shipments per year, around 2x what it is today.

Two factors will drive entry level shipments: the performance of entry-level devices, and their overall cost. ARM believes the floor for an entry level smartphone running Android (today with a single-core Cortex A5 based SoC) is $20, and that we'll see the first devices on sale at that price point in the next few months. Manufacturing limits will likely prevent cost scaling below $20. Keep in mind that a single Cortex A5 is faster than the ARM11 in the original iPhone, which retailed for $599 in 2007.

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  • DanNeely - Tuesday, May 6, 2014 - link

    Somewhere else I recently saw a version of the Gartner forcast that split the smartphone price range into 6(?) buckets instead of only 3 that was even more telling. It showed the top bucket (halo devices) staying about the same size or growing very slightly; but the two buckets below it actually shrinking as people who're willing to spend enough for a "good enough" phone are able to find satisfactory options at lower price levels.
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  • icrf - Tuesday, May 6, 2014 - link

    I think the problem isn't the hardware cost of a smart phone over a feature phone, it's the cost of the plan that you have to get with said smart phone. Looking at Verizon, lowest possible monthly bill goes from $35 with a feature phone to $55 with a smart phone. That's a jump my dad would have no interest in making, even if the phone only cost $20.
  • Ian Cutress - Tuesday, May 6, 2014 - link

    I doubt these $20 smartphones will make it to North America or most of Europe. Think more pan-Asia or Africa, where costs are more pay-as-you-go rather than contracts and overall incomes are lower.
  • ShieTar - Tuesday, May 6, 2014 - link

    I wouldn't say that. Poverty is growing fast in both Regions, median household incomes are constant or even decreasing in many regions since almost 30 years now, despite a aggregated GDP per capita growth of 50% to 100% over the same time.

    In the combined markets of NA and EU, with its 1.25 billion people, there should be at least 250 million people who consider 20$ to be a significant amount of money. And I don't know whats happening in the US, but in Germany politicians are working hard to increase this number.
  • Murloc - Wednesday, May 7, 2014 - link

    20$ is 3 pizzas in Italy in a take-away place with seats, drinks not included. It is not a significant amount of money and people are worse off than in Germany.

    These phones will just replace the cheap non-smartphones.
  • StevoLincolnite - Tuesday, May 13, 2014 - link

    Even if incomes remain constant, inflation makes the dollar stretch.
  • icrf - Tuesday, May 6, 2014 - link

    I was thinking more of the general trend that "eventually, all phones are smartphones" which would have to apply to the developed world, too.
  • f700es - Wednesday, May 7, 2014 - link

    Why not? My 14 year old child was going on a D.C. class trip and I went and bought him a $30 Virgin Mobile smartphone from BestBuy to take with him. Was it an iPhone? No way but the Kyocera Event was all he needed. He could make calls, e-mail, text, use wifi and even had a GPS. Better to replace a $30 phone if he lost or broke it than to replace an expensive model.
  • Murloc - Wednesday, May 7, 2014 - link

    there's a certain amount of people who have the cheapest phones and are on pre-paid plans, mainly old people and the very poor.
    Those phones will get replaced too by these cheap smartphones at some point. There is a market, so I don't doubt that cheaper phones will come to Europe, although not at $20 because they can ask higher prices here, I've never seen $20 phones of any kind. I bet they make those prices in the third world and give up a bit of the margin because otherwise people just can't afford the globalized prices of consumer electronics.

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