Euro operators push cheap Android-based smartphones

Mobile operator Orange is joining a growing list of European mobile operators offering cheap Android-based smartphones, in a bid to get more prepaid subscribers on data plans.

The operator will launch three Android-based smartphones this year, and the target price is €120 (US$145) without a contract, according to a spokeswoman at Orange. The goal is to offer a variety of smartphones for consumers who can't afford high-end devices like the iPhone, but want to use mobile Internet and data on their phone, she said.

The first smartphone, called Boston, has already been launched in Spain and will also be available in Austria, Slovakia and Romania. The phone is made by Gigabyte and has a 3.2-inch touchscreen, a 5-megapixel camera, GPS, Wi-Fi, HSPA (High-Speed Packet Access) and a 3.5 millimeter audio jack.

Two more devices, manufactured by ZTE and Huawei, will arrive later this year though Orange isn't ready to talk about details.

Orange isn't alone in launching low-cost Android-based devices. In June, Vodafone will start shipping the 845, according to Vodafone's U.K. Web site. Vodafone hasn't announced pricing, but it is a "low-cost" device, according a spokesman.

The 845 is based on Android 2.1 and has a 2.8-inch touchscreen, Wi-Fi and HSDPA (High-Speed Downlink Packet Access) connectivity, a 3.2-megapixel camera and GPS. It also comes preloaded with Vodafone's 360 services.

The device is manufactured by Huawei, but will come as a Vodafone-branded phone, and the initial plan is to make it available in 12 countries including the U.K., according to Vodafone.

However, the most aggressive operator when it comes to cheap smartphones based on Android has so far been T-Mobile. At the end of last year, it started the low-cost Android trend with the launch of the T-Mobile Pulse. In May, it started shipping the T-Mobile Pulse Mini, which costs £99 (US$144) with a prepaid subscription. Huawei makes both devices.

Vodafone will have to match the £99 price point with the 845, according to a research note from CCS Insight.

For operators, pushing low-cost Android devices is about increasing the use of data services among prepaid subscribers, in the process making more money and keeping subscribers from moving to another operator, according to Ben Wood, analyst at CCS Insight. Working with a big manufacturer like Huawei also makes it a fairly risk-free proposition for the operators, he said.

However, a huge challenge for the operators will be to get prepaid subscribers, who are used to texting and making calls on their phones, to also use data services, according to Wood.

That Huawei and ZTE are the ones putting the pressure on smartphone pricing shouldn't come as a surprise. The two companies have used the same tactic to successfully enter the network equipment market, according to Pete Cunningham, senior analyst at Canalys.

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