World's cheapest smartphone costs just around $5 and doesn't seem terrible
Given that we regularly pay up to $1000 (NZD$1074) for top-of-the-line smartphones, it would stand to reason that the world's cheapest phone would be underpowered and nigh on unusable.
Yet new Indian company Ringing Bells has this week introduced a $5 smartphone that, at least on paper, seems just fine.
The Freedom 251 was unveiled a day before the launch and, as the name suggests, it's being sold for 251 rupees ($5.12) — a price that sceptics said was far lower than its components would cost.
Bearing more than a passing resemblance to an iPhone 4 - but featuring an Indian flag on the rear — the phone appears to be surprisingly capable considering it costs about the price we might pay for a large coffee in Australia.
Running Android 5.1 Lollipop, the Freedom features a 4-inch touchscreen displaying at the resolution of 960x640, a removable 1450mAh battery and a 3.2-megapixel main camera. It's powered by a 1.3GHz quad-core processor and 1GB of RAM, and has 8GB of internal storage, expandable with a MicroSD card (which would probably cost more thanww the phone itself).
While the Freedom doesn't have all the modern smartphone luxuries - such as 4G/LTE capabilities, an accelerometer or NFC - it's inarguably good for the price.
"We are working on a variety of cost-saving initiatives to keep the cost of the devices lower than its approximate per unit price of 2500 rupees," company president Ashok Chadha told AFP when asked how the phone could be sold so cheaply.
"These include local assembling in India that saves us around 400 rupees, large-scale sourcing that saves around 400-500 rupees, online sales with no on-ground staff that itself saves us around 500 rupees."
Given these numbers, the phones would still cost about 1100 to 1200 rupees per unit to produce, much more than the asking price.
"The rest of the savings come in from an online marketplace that we create on our website by allowing other companies on the platform," Mr Chadha said.
Still, analysts questioned the business model.
"It looks like it's highly subsidised by the company and it's not clear how they plan to sustain this," Tarun Pathak an analyst with Counterpoint Technology Research, said.
Initial demand for the Freedom 251 was so great that the company had to cease taking orders after a few hours because its website crashed.
In a notice to customers, the company said it was receiving 600,000 hits a second on its website, although it did not say how many of those hits converted to real orders.
By comparison, Google processes about 40,000 search requests a second.
"We humbly submit that we are therefore taking a pause," it said.
Previous attempts at frugal engineering in India have not been very successful.
In 2008, the Indian government announced a $10 laptop that ended up costing more than $100 before it made it to market. A $20 Android tablet sold by Indian company Datawind through a government subsidy scheme failed to capture significant market share.
Ringing Bells, whose factory is in the Delhi satellite city of Noida, was set up only last year and the launch event for the new phone this week was attended by a senior leader from Prime Minister Narendra Modi's party.
Mr Chadha said the phone would have pre-installed apps that tie into Modi initiatives such as "Make in India" and "Clean India".
A senior official at Ringing Bells told The Times of India the company was not receiving any government subsidies.