Motorola Inc., which is introducing 20 new cell phones as it tries to avoid slipping to No. 3 in the market, signaled its confidence Wednesday for strong holiday sales and said there are no further product delays in sight.

A year ago, Motorola’s holidays were spoiled by a parts shortage and resulting shipment delays that kept some of its first camera phones—already behind its competitors’—from being available during the biggest season for cell-phone sales.

Voice over Wi-Fi, which enterprise wireless vendors have seized on as this year’s hot sales pitch could be dead in the water, according to rivals.

Even though bandwidth on the office wireless LAN is free, the cost of Wi-Fi voice handsets would wipe out any savings over GSM phones if the operators offered internal GSM at sensible prices, it is claimed.

“There is no charge to use Wi-Fi, but the devices you need to make a true phone solution over it are expensive,” said Jeff Brown, chief executive of Radioframe Networks Inc. “They cost US$500 to $700 each, and you can have a GSM phone for next to nothing. It takes an awfully long time to pay the cost of the Wi-Fi handset back. There is nothing free in this world.”

Radioframe is  a vendor of the in-building GSM products which it is showing off at the 3GSM conference in France next week.

In-building solutions put a GSM base station in the office, managed by the mobile operator but behaving as an office PBX. GSM phones can roam from the public network (expensive) to their private office GSM network (cheap) as easily as moving form one cell to another on the public network. This cuts at a stroke the expensive mobile calls that users make inside their own building (the basis for the voice on Wi-Fi pitch) and lets the mobile phone become the office extension.

The scheme has been tried by Ericsson Inc. and others before (and forms the basis for Ericsson’s continued optimism that mobile operators can see off the office Wi-Fi threat) — but has flopped.

“Nokia (Corp.), Siemens (AG) and Ericsson tend to think about things from the outdoors in,” said Brown. Instead of adapting outdoor systems for the office, they should have a more lightweight approach, he added. The Radioframe system has multi-purpose access points that can hold up to seven radios, for any Wi-Fi flavor, GSM, 3G or other technologies, all of which are controlled by a central rack-mounted box.

The product could soon be in Europe, according to chief executive Jeff Brown. “We’ve completed GSM trials in Europe, and you should see this shortly coming out a number of operators.”

As Wi-Fi handsets come down in price, the dynamics may change, said Brown, but “today it makes more sense to send voice over in-building GSM”.

The study, conducted by ABI Research, has predicted that the worldwide market for mobiles costing less than $20 will reach 330 million units by the end of 2011.

ABI Research expects that more than 50 per cent of these phones will be shipped in the emerging markets of Asia Pacific

Research analyst Shailendra Pandey said: “The growing demand for ultra low-cost handsets has provided mobile operators and handset vendors with a quick route to a greater share of the emerging markets.

“The downside is that they are manufacturing and shipping a greater proportion of low-cost handsets, which can adversely affect their profits.”

Nokia, the world’s largest manufacturer of mobile phones, saw its third-quarter profits for 2006 drop sharply from the same period a year earlier.

This was attributed to the fact that a greater portion of the company’s sales came from low-cost handsets.

And, according to ABI Research, mobile operators will also see a decline in average revenue per user (ARPU) because cheap handset users are mostly from the low-income communities in the emerging markets.

Their monthly spending will usually range from $2 to $5.

Nevertheless, addressing the low-cost mobile market is important for mobile phone manufacturers and mobile operators to establish their brand and gain long-term growth and profitability in emerging markets, ABI Research said.

The low-cost handset market is currently dominated by Motorola and Nokia, but other handset manufacturers such as LG Electronics, Samsung, Philips, Ningbo Bird and Kyocera have also started to target this sector.

The US firm is expected to manufacture six million low-cost phones for sale in 17 countries including India, Nigeria, Bangladesh, Yemen and Kenya.

The cheapest mobile phones using the GSM industry standard now cost between $30 and $40 in emerging markets.
Operators said high taxes still made phones unaffordable in some countries.

Economic stimulus

Motorola will supply the phones to operators in the countries concerned, with shipments starting early next year.
At wholesale prices, the phones will cost less than $30.
Retail prices will vary from market to market, depending on taxes and other factors, but are expected to be below $30 in many cases.
Motorola has already produced about six million low-cost phones through an industry initiative to make mobiles accessible to more people in emerging markets.

The project is designed to capitalise on rising demand for mobile phones in India, the world’s fastest growing mobile market, and other countries in Asia and Africa.

Motorola said low-cost phones were essential to economic development.

“In emerging markets, consumers and operators want mobiles that meet specific performance requirements while exceeding expectations for quality, reliability and design,” said Ron Garriques, president of Motorola Mobile Devices.

“Additionally, they want all of this at a value price.”

The phones will incorporate powerful batteries to ensure they can be used for longer without charging - vital in many communities without access to a reliable power supply.

Reliance has launched the Rs 777 Classic range of mobile phone handsets, aimed at the entry-level market. The cheap Rs 777 Classic cellphones are manufactured by ZTE for Reliance, India’s largest private wireless operator.

The Reliance Classic phones come in three models - Classic 202, Classic 203 and Classic 204. Classic 202 mobile costs Rs 777, Classic 203 Rs 844 and Classic 204 Rs 888. Unlike earlier financing schemes from Reliance Info when the company handsets for a small fee and retrieved the money through installments, the Classic range of mobiles fully belong to the buyer - There is no finance or installments.

With the launch of cheap Rs 777 phones, Reliance has successfully smashed the entry barriers in mobile telephony. Currently, many leading cellphone manufacturers like Nokia and Motorola are struggling to launch sub-Rs 1000 cellphone, even while maintaining profit margins.

Reliance claimed in a press release that this is the cheapest mobile phone in the world. While in the West, cell services and mobile phone come bundled allowing companies to drive down the price, in India, the bundling is limited to CDMA manufacturers. Reliance said that the low mobile price is an introductory offer for Classic.

SP Shukla of Reliance admitted at a press conference that there was an element of subsidy built into the Rs 777 mobile phone price. He added that acquiring a new customer always involved a certain cost.

With Reliance Classic mobile phones which are as cheap as Rs 777, the company plans to attract second-hand mobile buyers and entry level buyers. Reliance sold 12 million handsets last year. The company claims that it has already sold 30 lakh Classic mobile phones. It is planning to push up the sales with the Rs 777 mobile. Reliance estimates the size of the entry-level cellphone market at 80 million.

Within six months of rolling out its new state-of-the-art network for Garuda CDMA (Code Division Multiple Access) mobile subscribers in June last year, Mahanagar Telephone Nigam Limited is gearing up to introduce the new RUIM — Removable User Identity Module — system allowing Garuda users to go in for any handset of their choice.

Currently, subscribers opting for Garuda CDMA mobile service get a pre-programmed mobile phone unlike GSM (global system for mobile communication) service where a chip is inserted in a mobile phone. But now MTNL has decided to shift to the chip system — RUIM — in CDMA phone also so that subscribers can choose from a variety of handsets available in the market and also change it at will without going through the tedious process of programming a CDMA handset. RUIM allows storage of user information and data features on a removable smart card about the size of a postage stamp. Once personal data is stored on RUIM, it can be removed and reinserted in a new device, transferring all the personal data to the new device without programming, thereby eliminating the need to programme phones and other wireless devices multiple times.

“RUIM will lead to a kind of revolution in CDMA mobile market in Delhi. We already have around 1.5-lakh Garuda CDMA subscribers and once RUIM is introduced, it will give a boost to Garuda connections,” says MTNL (Delhi) Executive Director A. K. Arora. Stating that RUIM is equivalent to the GSM Sim card, MTNL-Delhi’s Chief General Manager (Wireless Services) S. P. Pachauri noted that they had already started testing RUIM cards on their network and might start distributing it to their subscribers by March this year. Once this is done, they would also expand their Garuda subscriber base, he added. RUIM enables users to roam between CDMA and GSM networks with a multimode device.