Yesterday, TheWall Street Journal had an article discussing how Nokia
With smartphone shipments increasing to 81 million units in 2006, and researchers now forecasting that these devices will account for 12% of all wireless shipments in 2007 (up from 8% in 2006), it's a smart move, and one that all the major cell phone manufacturers must pursue in order to stay competitive.
But another article also caught my eye yesterday. This one was from Technology Review, and it reported how Motorola is also bucking the smartphone trend by creating the Motofone, which is cheaper, has fewer features, and is easier to use. In essence, it is a "dumb" phone.
The target market is those developing countries where most people still have no need for a color video screen, a camera, or Internet access on their phones. What they need is a simple, durable, affordable phone with a decent battery that can be easily recharged.
And that is precisely what Motofone seeks to deliver. The display screen is manufactured on something called electronic paper, which is made by a company called E Ink. The screen uses little electricity, because it only needs to flip tiny nanoparticles, which then display information in black, white, and various shades of gray. Because there is no color screen, the phone has the added benefit of requiring no glass -- making it lighter and more durable.
The phone also uses a small battery that provides eight hours of talk time and, perhaps more importantly, it can be recharged by riding a bike -- the primary mode of transportation in India.
The Motofone will undoubtedly face competition from Nokia, but Motorola's move is smart for two reasons. First, the potential market for "dumb" phones is huge. It has been estimated that in India alone there are only 1.2 phones for every 100 people. Secondly, India, which has one of the fastest-growing markets for cell phones, also has the largest middle-class in the world.
As these citizens move up, and the price of cell phones' enabling technology decreases, it is inevitable that "dumb" phones will only get smarter. And as they do, Motorola's early move into low-end markets could pay dividends by ensuring that the company is ready to deliver more souped-up phones when the demand arises.
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Fool contributor Jack Uldrich really only needs a dumb phone. But since he doesn't ride his bike in the winter, he'd have to hook it up to his stationary bike. Jack owns stock in Motorola, but in none of the other companies mentioned in this article. The Fool has a strict disclosure policy.