Last week, I read about what’s supposed to be the cheapest android smartphone ever. In case you didn’t hear about it, it’s called the Freedom 251, and it retails at $3.7 (that’s N800, or Ksh. 377) a pop. That’s insane. No other explanation for it.
In the first place, the cost of the parts to go into the smartphone chassis comes to around $20 at best. That’s not including design/development charges, inventory, marketing, staff salaries, and after-sales services. Notice how I didn’t mention profit?
Well, that’s because the Android smartphone business is a generally unprofitable one to go into. Even the most profitable of them is merely running to stand still – treadmill style. Yet, for some reason, OEMs are joining the race to the bottom in droves. Another day, another Android device. Don’t bother asking me why.
So, how does a little company from India plan to sell a phone at a fraction of its cost price, and…you know…not die?
Well, it could be heavily subsidized by the Indian government.
It’s no secret that the Government of India is a heavy proponent of its own Make In India campaign, which exists to encourage local production (and appears a lot less inane to me, than its Nigerian counterpart). In theory, it’s a good idea. Such a move would make the smartphone – and by extension, internet connectivity – accessible to a much poorer (read: much larger, and with the most voting power) demographic.
This all makes sense, except that the company has said that there’s no official government support for, or involvement in the venture.
Or, it could be subsidized by a carrier.
Another theory is that, like the US carrier system, customers will be allowed to purchase the device at a ridiculously cheap rate, as long as they agree to use the device with only that carrier, and pay off the rest of the value over a fixed period of time. Thing is, the kinds of people to benefit from pricing this low, likely earn daily wages. So, they are unlikely to opt for long term contracts. Furthermore, no carrier has come forward to announce a partnership with Ringing Bells, the company that claims to make these devices. So yeah, we can strike that off the list.
Or the user is the product
Yet another theory is that, like with services like Google search, Gmail, Maps, etc., when you get services for free, then you’re merely the product. The service providers get you to use their products, and in the process give them access to your data, which they can now sell access to. It’s the reason why the second I search for “noise-cancelling headphones” on the internet, not long after, I get bombarded with Skullcandy and Beats by Dre adverts, wherever I go.
Imagine a brand gaining access in this manner to the massive Indian populace. If that’s the case, then Ringing Bells will have struck gold with the Freedom 251. Plausible, but I consider this option very unlikely.
Or did they somehow manage to pull it off?
Not a chance. Many things about this “phone launch” scream “fraud”.
First is the fact that they don’t actually make any of these devices (“Make In India”, LOL). I read that the prototype shown at the “launch event” was an Adcom Ikon 4 (which costs $53), which had the branding covered up with White ink. -_- Not sure who the genius is, that thought it was a good idea to simply paint over the branding of an imported device. Impeccable logic.
— Vishal Mathur (@vishalmathur85) February 18, 2016
The Freedom 251 is the people’s phone, an attempt to bring technology – and internet access – down to the level of the common man. Except that the common man cannot access the device because they aren’t actually sold anywhere.
They have to be ordered over the internet – the same internet the poor man cannot access because, well he doesn’t own a smartphone that costs $4. But he’s supposed to orde…nvm.
Then there’s the fact that the company’s domain was only registered on February 10, and has no contact details, but only a contact form that leads to god-knows-where.
Oh, did I forget to mention that you can order half of the device?
— Reddit India (@redditindia) February 18, 2016
Basically, the phone sounded too good to be true, because it is. There’s only so much you can do to make a device cheaper, so many corners you can cut. And making this phone so cheap that it costs less than the SD card users will put in it, looks nothing more than a publicity stunt, or worse, a hoax.
Beyond the Freedom 251 – whatever it turns out to be – one has to wonder how Android OEMs intend to make a profit in such a crowded space. The low-end smartphone market is a crowded pool, full of fat companies trying to deliver the most value to the highest number of customers, at the lowest price possible. The high-end market is a dogfight between a few Android OEMs, looking to scrape the crumbs that have fallen from the dinner table, at 1 Infinite Loop, Cupertino.
Here’s your bit of trivia for the day: Apple inhales 94% of global smartphone profits.