$4 Smartphone, Anyone?

A startup company based in the second most populous country in the world has just started selling what could be the cheapest smartphone on the face of the planet. Yup, Indian tech firm Ringing Bells has released the Freedom 251 device, a fully functioning smartphone that is powered by Google’s Android mobile operating system, and comes with a really, really friendly price of just 251 rupees, which basically is about $4. 

Freedom 251 may be the world’s cheapest smartphone, but it certainly has generated much buzz. Apparently, the surging interest in the device has caused Ringing Bells’ web site to crash. Nobody knows yet exactly how many units of the handset has been sold so far, but judging from the complaints expressed by mobile users who could not grab one in the startup company’s official Facebook page, it is safe to say that demand for the Freedom 251 has far outpaced the supply. Ringing Bells has since posted via Facebook that its technical crew is now working on restoring the website as well as fixing availability issues for the smartphone.

It is quite remarkable to learn that Ringing Bells has only been around for less than half a year (the company is just five months old) and it is already introducing a smartphone in the Indian market. It is not actually that surprising -- India after all is considered the second biggest smartphone market in the world right now (behind China) and various companies here and there are expected to take advantage of the enormous pool of potential Indian mobile customers. 

The Indian smartphone market is also an ideal venue for selling low cost smartphones. As an emerging and rapidly growing market, its customer base largely consists of first time mobile users who tend to go for less expensive smartphone offerings instead of the flashy and pricey options offered by the Apples and Samsungs of the world. This is why homegrown phone makers in India often sell better compared to established international phone maker brands.

But is selling a $4 smartphone even logistically possible? As explained by a spokesperson for Ringing Bells to the AFP, the company imports parts from overseas and assembles its handsets locally. But it is kind of mind boggling how the phone maker can even make a profit from a four dollar device. This has led certain members of the media in India to speculate that the device may be subsidized by the government. But as told by Ashok Chadha, the president of Ringing Bells, to the Wall Street Journal, profit is possible due to economies of scale and tax breaks for manufacturing.