How low can a smartphone price go?

According to news reports,Mozilla, the non-profit created by Netscape Communications (purveyor of the world’s first Internet Browser—barring Mosiac its progenitor) in early 1998 is now setting its sights on phone dominance in India through the introduction of a phone so cheaply priced that it belies imagination.

In an almost earth-shattering revelation, Mozilla announced several months ago that it would be introducing phones based on its HTML5 web-based mobile operating system for a rock-bottom US$25, and now, just a few days ago, revealed that the plan would be kickstarted in India via an arrangement with Indian companies Index and Spice who would make the phones.

So far, Mozilla has launched several low-cost smartphones with Firefox OS onboard, including the US$100 ZTE Open C and the company will release the Alcatel One Touch Fire E and the ZTE Open II this summer. These phones haven't exactly set the world on fire in Europe and the United States according to reports and maybe that’s because the specs of these phones, while nothing to sneer at in emerging economies with frugal consumers, are not cutting edge enough for the majority of the developing world's population: the ZTE Open C version with the Firefox OS sported a 4-inch screen with a 480 x 800 pixel resolution, a 1.2GHz dual-core Snapdragon 200 chip, 512MB of RAM, 4GB of internal memory, a 3-megapixel camera (no front-facing camera) and a 1400mAh battery.

India however, is a different consumer market and a US$25 phone could radically transform it. Reason is, anywhere from 80 percent to 90 percent of the market is still feature-phone heavy, and most of them cost just about what the Firefox phone does. And with the smartphone market growing at over 200 percent, the concept of owning a smartphone at the price of a feature phone, in rural and small town India (which comprises 80 percent of the country), will have an undeniable allure, indicated by the fact that there was an 18 percent decline in feature phone shipments in Q1 2014 YoY, according to research outfit IDC.

Consequently, Mozilla is apparently expecting 10 million units of the phone to ship over the next 12 months. If this happens, Nokia, which still makes its bread and butter selling feature phones in India will be looking at a potential Armageddon and Samsung, another big feature phone seller will probably also take a substantial hit. Even Indian brands such as Micromax, Karbonn and Lava stand to get affected.

So, what kind of a phone does one get at US$25? A US$80 version of the Firefox phone (The Open)according to this review is useable with a great battery, Bluetooth and an FM radio, but not that hot for the following reasons: a smudge-prone 3.5 inch 480 x 320 screen, a 1GHz Snapdragon processor that couldn't play H. 264 encoded 720p videos (web browsing is ok but Apps take time toload), a terrible 2 MP camera with noise and color inaccuracies, crappy video recording at 352 x 188.

The big question is what will the 80 percent of the population want in the next year or so, what kind of phone Mozilla be able to offer them for US$25 (shitty parts or good value?) and will the others who are continually redefining the budget smartphone space—such as Nokia X (US$103) and the MotoE (US$125)—be able to bring out a product that vows the masses with a price that is a market-beater even if it isn’t as low as the Firefox phone?

The answers to these will determine what kind of impact the US$25 Firefox phone will really have in India. With smartphones like the Micromax Bolt and the popular Asha 502 available, many with screen sizes between 4 and 5 inches, front facing camera and dual core processors, the discerning Indian consumer may just prefer a little more bang for his or her buck, even if it costs another month or two's salary or savings. And cameras that don't shoot crisp images and web surfing that is less than adequate will ultimately impact rural sales just as much as it will the urban, perhaps more.

Something that Firefox would do well to keep in mind.

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