Pricing of these low cost smartphones will come down from $150 in 2010 to $80 in 2015, due to increased competition and the availability of lower cost chipsets, states the report, said the research firm.

Devices such as the Orange Boston and Vodafone's 945, manufactured under OEM agreements by handset vendors like Huawei, allow smartphone features like app store connectivity and an Android OS to be offered to subscribers without the high price usually associated with the smartphone, finds the research firm.

Chinese and Indian handset vendors such as Micromax are expected to launch Android-based smartphones at competitive prices for their local markets in the near future. Compression and remote browsing is enabling the mobile internet to reach low-cost handsets at price points as low as $25.

Content strategies in developing markets are becoming important to reduce churn for the operator and to tie in the customer to the handset brand for the vendor. Barriers to entry into the handset market have come down, opening the door for local players in growth markets such as India and China.

As a first tier of local players like ZTE and Huawei now seek to extend their geographical reach to the US and beyond, a second tier of Indian and Chinese players are becoming increasingly important in their local handset markets, finds the report. Such players, however, do not have the sophisticated content strategies that veteran handset manufacturers like Nokia have, added the research firm.

Anthony Cox, analyst at Juniper Research, said: “In 2010, operators like Vodafone and Orange kick-started the low-cost smartphone market with devices in the $150 range. pricing of smartphones will come down to $80 by 2015.”

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