Cell phones your wallet will love

Beyond the basics
Traditionally, the lowest cost phones have scrimped on extra services such as access to the Internet or e-mail. But increasingly, manufacturers are taking advantage of falling component prices to pack even low-priced phones with fun features. Jeff Brown, a principal analyst with Portelligence estimates that phone component prices have fallen 10 percent to 15 percent annually in recent years. That means manufacturers can add extras, such as games and dictionaries and, in some cases, even FM radios and cameras.

Sony Ericsson sells two "radio-centric" phones, the R300 and R306, that have built-in radios and pre-set station buttons. "In Latin America and India, especially, radio is a really compelling feature," says Jon Mulder, product marketing manager for Sony Ericsson North America. "You can plop the phone down and listen to a cricket match."

Ringtones are another cost-efficient way to deliver music. "Many people literally listen to the ringing [the way] young people gather around stereos," says Koivu. Nokia and Samsung include mp3-grade ringtones in their entry-level phones.

Motorola Those who prefer a "clamshell"-shaped phone can opt for the Motorola W270, which is sold in India, Hong Kong, Taiwan and Brazil, and will soon be available in China and Spain. This model is priced from $50 to $100, depending on the region.

The trend has helped Motorola offer an mp3 player phone for under $100. The company also upped the memory in some of its budget phones. Some can now store up to 750 text messages — an important feature in countries like the Philippines, where the average phone user sends 12 to 15 text messages a day.

Nokia says its phones support more than 80 different languages. Even its least expensive phone, the 1200, is packed with useful features. It houses multiple phone books that allows several people to share the phone and keep separate contact lists; a flashlight for blackouts; and a call duration trackers, so users — who typically pay for a set number of minutes — can see how much airtime they have at a glance.

Even budget phones can look cool
Budget phones are getting a bolder streak of fashion, too. Flip and slider-style handsets are becoming more common, as are models with snap-on colored plates. To give a phone a more expensive air, manufacturers are using plastic that resembles metal, adding metal details, and adopting technology originally developed for higher-end devices. Sony Ericsson, for instance, modeled its sleek T280 on its $300 T650 phone. The T280 packs fewer features and costs half the price. "Even a relatively basic phone can look cool and feel nice in the hand," says Sony Ericsson's Mulder.

Replacement purchases are also changing the look and feel of budget phones. Consumers who bought their first phones a few years ago are now shopping for their next handset. These "replacement buyers" often have more money to spend, plan to use their phones differently and want new features — perhaps a bit more style or a camera. Phones aimed at this market are more likely to have cameras, mp3 players, Bluetooth connectivity and expandable memory for storing music and photos. Nokia says that replacement purchases are now on par with first-time sales across emerging markets as a whole.

"Four to five years ago, we wanted to offer the 'best of the basics,'" says Motorola's Lalla. "That's evolved to bringing in more experiences, features and capabilities on top of [that] platform."

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Fresh challenges await. Asia has long represented the largest market for budget handsets. Now Africa is largely fueling sales. A few weeks ago, Nokia launched four low-cost handsets in Johannesburg. Says Koivu: "The boom is moving there."

Soon, the only people who don't have cell phones will have significant reasons — beyond cost — for not signing on to the cellular revolution. They may be illiterate or have impaired hearing or vision with few tools at their disposal. Those next, say, billion and a half users, might need phones with jumbo text, more finely tuned speakers or icon-centric software — still at a low price. "To get to 5 billion phone owners, like we are targeting, you need to do more," says Nokia's Koivu.

Will prices continue to fall? Analyst Brown muses that a phone propelled by kinetic energy could bring down costs by eliminating the battery. So could a screen-less phone. "Do you need a display?" asks Brown. "What if it were voice-activated?"

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