A one-off marketing trick

We told you about Ringing Bells Freedom 251 smartphone, that quad-core processor, 1GB RAM-packing device being sold in India for a measly Rs 251, or just Php 170 bucks. Just like you, we’re scratching our heads at just how the company can sell the smartphone at that ridiculous price, and more importantly, if the same can be done by local brands like Cherry Mobile, MyPhone and Star Mobile.

Well, according to Tech In Asia, the company relies on the many tax cuts that the Indian government is throwing their way for the components of the device and indigenous labor for cheaper manufacturing costs. The company is also relying on selling the phone via the internet and not through traditional channels, and since the phone is part of India’s Make-in-India initiative, the company will also be enjoying further tax reductions from the government. The rest of the cost is expected to be recouped from the economies of scale.

Which is good, since the bill of materials (BOM) for the phone is quite extensive. While the company hasn’t officially made the BOM for the device public, sources from other local brands here in the PH that are familiar with the way manufacturing works paints a very expensive picture. The memory module alone is already $4, while the processor is around $11. The total estimated BOM for the phone is around $35 or Php 1600. This just covers the manufacturing of the device itself and doesn’t take account marketing or support costs. Our source tells us that you can’t even do a $4 featurephone and make a profit, let alone an Android smartphone. To put it simply, Ringing Bells is taking a loss every time it sells a Freedom 251.

Obviously we’re not going to see a device like this, priced that low in the PH anytime soon, but ultra-affordable Android devices are starting to pop up, thanks to subsidies from telcos. Because of the economies of scale and reduced prices of aging hardware, we can probably expect phones that have similar specs to the Freedom 251 to come in the PH with sub Php 800 pricetags, but only if a telcos or other companies are willing to subsidize a huge chunk of the cost.

In other words, that $4 Android smartphone is simply a marketing trick, and won’t be the norm anytime soon.