Why Do Users In Emerging Markets Need 3G Handsets?

The GSM Association announced a plan a long while ago to develop ultra low-cost handsets for emerging markets, in which it set up a competitive bidding program and guaranteed the winner a good number of orders. Motorola got the deal, and sold a huge number of the low-margin handsets which didn’t necessarily boost its profits, but helped its market share. However, the company has now passed on participating in a similar program for 3G handsets, a move which could doom the program. 3G handsets obviously carry higher costs than GSM handsets, and the intellectual property payments required are much more prohibitive as well. The bigger question, though, is why the push for 3G handsets for emerging markets already? The GSM program was couched in all sorts of language about bringing the benefits of mobile communications to developing nations. These benefits are very clear, but is pushing 3G handsets a step too far, too soon? 3G is still working its way to mass-market acceptance in industrialized nations, and the economies of scale required to drive the cost of the cheapest 3G handsets down to the same level as 2G ones don’t yet exist. Certainly there will be mobile data services that will bring some value to users in emerging markets, but somehow, the GSM Association’s plan to sell low-income users 3G handsets comes off as a little less than altruistic.

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