John Paul

Cheap, but are they marketable?

Two articles about low-cost cell phones were posted to the Newsroom this week. The first talks about plans by the GSM Association’s Emerging Market Handset Program to purchase 6 million of Motorola’s new phones, expected to wholesale below $30. The article mentions several other chip and handset makers that are aggressively developing lower cost platforms, including Philips, whose goal is to get cell phones below $15 “with basic feature like voice, SMS and polyphonic ringtones.”

The second cautions that the program, which relies on telecom operators for distribution, has not been as successful in China as had been hoped:

“In China, telecom carriers are not interested in the program, and consumers are unwilling to buy such cheap mobile phones for comparing with what others bought.”

I’ve heard a similar story from a colleague who is researching housing preferences of the poor. Despite the cost savings, consumers are reluctant to purchase products if their look or designs are different from their more wealthy neighbors. No one wants to own something that immediately labels him or her as ’poor’.

Although the GSMA intends to push on in China by “strengthening cooperation on promotion with home telecom operators,” the example illustrates another good point: marketing strategies developed for one country may not work wholesale in another.