Budget smartphones attract first-time users

Budget smartphones attract first-time users
FreeBit Co.’s budget smartphone that is aimed at children

An increasing number of firms are launching budget smartphones with enhanced support services aimed at children and beginning users.

With emerging companies and those from different industries entering the mobile phone business, price-cutting competition has intensified. It has therefore become necessary for cell phone companies to enhance their smartphone services in order to differentiate themselves from competitors. As consumers who have not yet used a smartphone are the main targets for budget models, it is also important to offer detailed, user-friendly services.

The monthly telecommunication fee for a budget smartphone generally stands at about ¥3,000 (S$33.69), less than half that of smartphones from major carriers. Mobile virtual network operator (MVNO) companies or major distribution firms aligned with MVNOs often sell budget smartphones and telecommunications services as a set.

MVNOs are wireless communication service providers who borrow network infrastructure from major mobile carriers.

In December, emerging telecommunication carrier FreeBit Co. launched a new service for parents whose children own a smartphone. Parents can remotely control the applications, websites and contact information used or kept on their children's smartphones. Parents can also limit the time their children spend using their smartphones.

"This smartphone allows parents to let their children use it with an easy mind. We'd like to boost sales of smartphones for children," said Atsuki Ishida, the chief executive officer of the carrier.

In mid-November, Aeon Co. started selling a set of two smartphones for a parent and a child. The monthly fee is relatively cheap at ¥3,980, including the price of both smartphones and basic usage charges. The child's phone is equipped with functions to track the child and limit use of the phone at night, among other features.

Thanks to such budget models, consumers who have hesitated to purchase a smartphone, thinking it would be difficult to operate, are becoming more interested.

It is also necessary to enhance customer support services for such smartphone beginners.

Internet service provider Nifty Corp. began selling budget smartphones in late November. Its customer services include staffers who visit users' homes and explain how to use the phone.

Aeon launched a smartphone in early December with a display that has enlarged icons for e-mail, telephone and other commonly used functions. It is targeted at senior citizens who are smartphone beginners.

Due to the tough competition between companies, there is now not much difference in the fee structures of individual budget smartphones. As video streaming company U-NEXT and Japan Communications Inc. also started offering flat-rate, unlimited data plans with high-speed communication, the competition over budget smartphones is increasingly a war of attrition.

As a result, some executives related to the industry have an increased a sense of urgency. "If we engage in such a price-cutting war, there will be no winners in the industry," said Naohisa Fukuda, chief operating officer and executive vice president of Japan Communications.

According to the research company MM Research Institute, the number of smartphone contracts stood at about 2.3 million as of the end of September, up about 30 per cent from the end of March. However, budget smartphones account for only 1.4 per cent of all cell phone lines.

"In addition to low prices, sellers of budget smartphones have to offer services that differentiate them from major mobile carriers, " Hideaki Yokota of MM Research Institute said. "They're now facing a crucial test for promoting budget smartphones full scale."

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