The £99 (US$160) price for U.K. carrier EE's smartphone Kestrel without a contract gives a glimpse of a future with low-cost LTE devices, and is also an aggressive move by Qualcomm as competition in the chipset sector increases.
Smartphones such as the Motorola Moto G and the Lumia 520 from Nokia lack LTE support, but a burgeoning chip war and the technology's growing popularity will help improve their successors. The introduction of Kestrel is an early sign of that development.
In addition to LTE with a theoretical download speed of 150Mbps (bits per second), it has a 4.5-inch screen with 960 x 540 pixel resolution. The phone is made by Huawei Technologies and has a quad-core Snapdragon 400 processor from Qualcomm. It uses Android 4.3 and will start shipping at the end of April.
That Kestrel was launched by a British operator isn't a coincidence, according to Ben Wood, director of research at CCS Insight.
"The U.K. is a hyper-competitive market and this is testament of Everything Everywhere's desire to really ensure it gets a massive lead in 4G subscriptions. ... I am not sure it's going to be the most appealing LTE phone on the planet, it's more about a statement of intent. But I am stunned by the price point," Wood said.
At the same time, it signals accelerating growth for LTE.
"Don't expect to see £99 LTE phones in every market. I think this is something specific for the U.K. market at this point. However, by the end of the year, absolutely, no question at all. This will set a benchmark that won't go unnoticed by other operators around the world," Wood said.
That Kestrel will be powered by a chipset from Qualcomm surprised Wood more than anything else.
"It shows that Qualcomm isn't afraid of a bit of competition and it is stepping up to make sure it remains the undisputed leader in LTE," he said.
The Snapdragon 400 processor that powers Kestrel was announced in June last year with the expressed purpose of bringing down the cost of LTE smartphones. Vendors like Broadcom, Intel, Marvell, MediaTek and Nvidia all see an opportunity to give Qualcomm a run for its money with their own LTE products.
"I can acknowledge there is a price war in terms of components and also supply chain that we can benefit from today and in the next quarters," said Eric Nicolas, head of own-branded devices at Orange, which owns half of EE and has its own LTE networks in countries such as France, Luxembourg, Poland, Spain and Slovakia.
Nicolas expects to see LTE smartphones that retail for €99 ($135) without a contract before the end of the year. Orange already has strong commitments to make that happen, he said.
The drive behind the chipset race isn't just to provide low-cost LTE smartphones for budget conscious consumers in the U.S. and Europe, but also to help the technology take off in emerging countries.
China Mobile, which launched commercial services in December, has been putting a lot of pressure on chipset makers and phone manufacturers to develop the cheaper devices it needs to be successful, said Alan Hadden, president at GSA (Global mobile Suppliers Association). The target is to bring down the cost of a smartphone with LTE to $100, he said.
China Mobile already offers smartphones from Lenovo and Coolpad for about $160 without a contract. The Lenovo A788T and Coolpad 8720L are both powered by a SoC (system-on-a-chip) from Marvell. The scale that China Mobile adds will help bring down the cost of LTE, Hadden and Nicolas agreed.
The total number LTE subscribers had increased to 200.1 million by the end of last year, including 101 million in North America, 77.8 million in the Asia-Pacific region, and about 16.4 million in Europe, according to market research company Informa Telecoms and Media.
Earlier this month, GSA reported that 154 manufacturers had announced 1,563 user devices with LTE, including operator and frequency variants. Of all those products 742 were launched in the past year, representing a 90 percent annual growth. The number of manufacturers increased by 58 percent.
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