Chip Vendor Predicts $20 Smartphones This Year

A $20 smartphone — really? Yes, according to mobile devices chip vendor ARM.

AnandTech reports that at its recent “tech day” event, ARM predicted the appearance of a $20 smartphone later this year. To be clear (and fair) that’s the lowest possible cost for an Android-based smartphone, the rock bottom, according to ARM.

More likely, the vendor said, the segment of entry level smartphones retailing for under $150 would dramatically grow to be twice the size it is today by 2018. That prediction is highly plausible and even inevitable.

Today the cost of premium, unlocked smartphones is surprisingly low compared to just a few years ago. In the US, for example, one can buy an 8GB unlocked Moto G for $179. The company ran a $50 off promotion last week for its more “robust” Moto X for $299 (unlocked).

Google’s Nexus 5 (from LG) is $349 without a contract. These prices for phones of this quality were unheard of a couple of years ago.

Amazon is set to introduce a smartphone later this year. As it did with tablets the company could price the handset aggressively (at or under $150). That would potentially force other Android device makers to respond and perhaps accelerate the downward pricing trend that ARM is identifying.

At one point there was speculation that Amazon’s smartphone would be free (entirely subsidized) — a rumor the company later quashed.