Freedom 251 is a dual-SIM 3G smartphone with
a 4-inch IPS touchscreen, 1.3 GHz quad core processor with 1 GB RAM and 8 GB
ROM, with 3.2 MP camera.
After launch Freedom 251 there is
understandable excitement across the country over the price 251 by the Ringing
Bells smartphone. There is disbelief in the smartphone market and in the rest
of the world about its production according to people who are in this business
The cheapest smartphone available in India is the known Trio Trio Smart Touch Phone
Junior 3, priced at Rs 1,449 on Flipkart.That is a 2G phone.
The Freedom 251, on the other hand, is a
dual-SIM 3G smartphone with a 4-inch IPS touchscreen, 1.3 GHz quad core
processor with 1 GB RAM and 8 GB ROM, as well as a 3.2 MP camera.
The cheapest phone with specs like Freedom
251 would be the Rs 2,999 Datawind Pocketsurfer 3G, which has a less powerful
processor and capacitive touchscreen than this
Unbelievable price
Rs 251
is hard to digest for most people in the industry. Indian Cellular Association
president Pankaj Mohindroo said this “pricing is not possible under any condition
even if the components are made in
India”. He said the bill for material for a product like this would be around $
40.
Sunit Singh Tuli, CEO of Datawind, too put a
similar price point, saying a phone with these specs should cost at least 8x
more.
Analyst Sanchit Vir Gogia, CEO & Founder
at Greyhound Knowledge Group, said the lowest price point seen so far was $ 28,
or about Rs 1,700.
Company’s logic Behind Price
Ringing Bells president Ashok Chadha says the
price would be achieved by manufacturing in India at facilities the company is
setting up in UP and Uttarakhand. The economies of scale would kick in once the
company reaches a manufacturing capacity of 5 lakh units a month.
He also
suggests that components would be locally procured, which would help avoid the
13-odd per cent duty on imports.
Experts like Gogia, however, say that even if
components are found locally, they are usually more expensive than imported
parts. Made in India A lot of the benefits will come when the phone is actually
made in India.
How pricing works in manufacturing industries
Phones generally have a bill of material (BoM)
cost on top of which comes the manufacturing cost, plus components like taxes
and duties, and marketing cost and profits — together making up the final
selling price.
In offline sales at least, the dealer has a
considerable margin — which is why you see large variations in prices of the
same product.
Of late, the trend has been to subsidise this
figure to capture markets, especially India.
In the BoM, usually the cellular radio is the
costliest — making up about 30% of the cost. With the processor and rest of the
circuit, this could go up to 50%. The mechanical parts come next, followed by
display, storage/memory and the camera component.
In devices like the Apple iPhone the display could end up being the costliest
component. To give an example, according to US business analysis firm IHS inc
costs for making is around ~$227 to make
an iPhone.
And features of Freedom 251 are:
Display: 4.00-inch
Processor: 1.3GHz
Front Camera: 0.3-megapixel
Resolution: 540x960 pixels
RAM: 1GB
OS: Android 5.1
Storage: 8GB
Rear Camera: 3.2-megapixel
Battery capacity: 1450mAh
And features of Freedom 251 are:
Display: 4.00-inch
Processor: 1.3GHz
Front Camera: 0.3-megapixel
Resolution: 540x960 pixels
RAM: 1GB
OS: Android 5.1
Storage: 8GB
Rear Camera: 3.2-megapixel
Battery capacity: 1450mAh
By this logic, the wireless module of the
Freedom 251 should cost around Rs 65, a fourth of the phone’s price. And the
display should cost even less.
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