In battle for sub-$200 smartphones, consumers will be the winners

By the the end of next year LTE smartphones will cost below $60

If you plan to buy a cheap smartphone next year expect to get LTE, an HD screen and a good-looking device, as competing manufacturers and chip vendors lower prices.

Smartphone manufacturers have always put effort into the development of entry-level smartphones. But growing competition will result in some real improvements for consumers in 2015.

This year, it was disappointing to see that smartphones in the sub-$200 segment didn't get bigger upgrades. Motorola's Moto E and the new Moto G lack LTE, and droves of competing products like including the HTC 510 and LG G2 Mini still have low-resolution screens.

But next year both LTE and high-res displays will become standard features on entry-level smartphones thanks to the availability of better systems-on-a-chip, the basic building blocks of smartphones. For example, Qualcomm's Snapdragon 200 family, which is used by devices like the Moto E and Microsoft's Lumia 535, is getting LTE for the first time next year with the arrival of the 210 model. It will start powering smartphones and tablets during the first half of next year.

Qualcomm isn't the only chip vendor that's helping bring down the cost of LTE smartphones. Competitive pressure from MediaTek is also a key driver, according to Eric Nicolas, head of the ODM device portfolio at telecom operator Orange.

"We will probably get as low as €50 [US$62] by the end of next year and that's without subsidies," for new smartphones, Nicolas said.

Devices based on the Snapdragon 210 processor can have 8-megapixel cameras that can shoot full HD video and screens with a 1280 by 720 pixel resolution. Qualcomm is also adding Quick Charge 2.0, a technology that was designed to reduce the amount of time it takes to recharge batteries. So far, it has only been available on high-end smartphones.

Cheaper screens will make the decision to take advantage of HD resolution support easier. In August, the average price of a 5-inch IPS module had dropped by 44 percent year-on-year to $14, according to market research company NPD DisplaySearch.

Vendors have long been counting on improved smartphone cameras to get consumers to upgrade, and that will be true next year, as well. Better front cameras have been a big trend this year, but mostly on more expensive products. Expect other vendors to follow in the footsteps of Microsoft, which put a wide angle 5-megapixel front camera on the Lumia 535.

It isn't just competition among chip vendors that will result in better products. A showdown between old-school smartphone manufacturers, especially Samsung Electronics, and Chinese newcomers including Xiaomi, Oppo and OnePlus will also spur better designs.

Samsung's current troubles have been well documented. More competitive entry-level and mid-range ($200 to $400) portfolios are part of its comeback plan. Samsung's penchant for using plastic rather than metal has been its main weakness, but that has started to change. The recent launch of the Galaxy A3, which has a metal unibody, shows the company is willing to use premium materials, even on its lower-price devices, to claw back market share.

Also next year, premium designs will mark smartphones across the board, according to Nicolas. Cheaper components leave more room to play with design, including the development of sleeker and slimmer products, he said. Until now, entry-level smartphones have tended to be chunkier than more expensive models.

All this gives consumers a greater degree of freedom. You no longer have to sign a 2-year contract or buy a phone for several hundred dollars to get a good device, and that can only be a good thing.

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