Juniper Research forecast that between 2009 and 2014, annual sales of low-cost phones will grow by 22% to over 700 million handsets worldwide. The majority are expected to come from developing markets where discretionary spend on perceived luxuries, like mobile phones is small.

Pre-paid India problem?

While India's mobile market is slowing, the conclusion suggests that providing operators play the long game, the popularity of low-cost pre-paid services in India - currently perceived to be a problem due to low profitability - may provide a solid basis for future profit and growth.

Juniper believe that by end of 2008, only four countries - India, Pakistan, Bangladesh and Sri Lanka - had cracked delivery under the US$ 5 benchmark.

Focus on upgrading subscribers

Andy
Kitson of Juniper makes the point that while pre-paid revenues are low to begin with, revenue is likely to increase as consumption increases and users become more comfortable with the new technology. As a result of this comfort factor and a new reliance on their devices, subscriptions are likely to be upgraded over time.

If correct, focus needs to shift to customer retention (from acquisition) and developing additional services to create incremental revenue growth.

Low cost, long-term value India

The findings echo other recent trends and illustrate that India is a "volume" market where price sensitivity is all important. India's aviation, automotive and property sectors are all set on growth trajectories based on price and volume sales.

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