Fed Up With High-Priced Smart Phones? Then Think INQ

The so-called $100 laptop made waves when the One Laptop Per Child nonprofit decided that cheap computers for kids could help emerging economies catch up to developed countries, by providing knowledge and other opportunities for poor children. Now, a potential $50 smart phone could do the same.

Hong Kong conglomerate Hutchison Whampoa today unveiled a new subsidiary called INQ, whose raison d’etre will be to make cheap smart phones rivalling Nokia, Motorola, Apple, and all the other big-name makers. That makes good sense: As Business Week noted, the company will be able to sell more of its mobile Internet services if more people had phones with which to use them.

I like the idea of democratizing smart phones, especially since many more people, in the United States and around the world, have mobile phone service than they do their own Internet connection. Cheaper smart phones could thus make the Web more accessible to a broader demographic. Marketers, in turn, would be able to reach a wider range of consumers via mobile Internet. While SMS will only get stronger in its own right, it can also be used to promote, say, a brand’s mobile Web site that the user can finally access.

INQ also raises the question, “How much are consumers over-paying for their smart phones?” In Japan in 2003, IÂ purchased what at that moment was the latest Kryocera flip phone with all the bells and whistles (including video recording capability, unheard-of in the United States at that time, and with any color you desired) for $45. In that country, consumers often buy a new phone every three or four months. I’m not sure if this is why the phones were so cheap, or if this perpetual phone-replacement was because they were so cheap. Chicken-or-egg question aside, that market proves you can sell high-end, multi-capability handsets at a low price and somehow earn a profit, especially if you make your money on services, voice and data charges, etc. That’s probably what Hutchison is thinking.

Advanced phones everywhere else in the world are still well over $100. If INQ proves you can have a high-quality smartphone that does everything your Samsung or Blackberry can, at a much lower retail than the big-name handsets, it could force everyone else to shrink their prices too. And that’s always good news for consumers.