How Chinese Vendors Turn a Profit Selling $12 Unlocked Phones

By Wesley Fenlon

For $12, you could buy a pizza, or you could buy an unlocked, off contract phone. Choices, choices.

Mobile carriers like Verizon and AT&T hand out free cellphones like candy. Even a perfectly decent smartphone like the iPhone 4 costs a fat 0 dollars--so long as you're willing to pay for a two year contract to the tune of at least $80 per month, that is. In China, a free phone is something different altogether. On his blog, inventor and hardware expert Bunnie Huang (who's previously written about Chinese manufacturing) asks "how cheap can you make a phone?" Then he answers his own question: less than 10 bucks.

Photo credit: Bunnie Huang

"Recently, I paid $12 at Mingtong Digital Mall for a complete phone, featuring quad-band GSM, Bluetooth, MP3 playback, and an OLED display plus keypad for the UI," Huang writes. The tiny phone is aesthetically rooted in the 90s--it's cast from green, translucent plastic and has fat, gel-looking buttons below its tiny screen--but it's still far more compact (and much faster) than any cellphone sold in the Nokia age.

It's an unbelievable deal. For $12, Huang got an unlocked, contract free phone in a box with a charger, cable and protective sleeve. How can it be so cheap? Huang writes that he's not sure yet, but he's piecing the answer together. For one thing, there's almost no wiring in the phone. "Everything from the display to the battery is soldered directly to the board," he writes. "The electronics consists of just two major ICs: the Mediatek MT6250DA, and a Vanchip VC5276...The MT6250 is rumored to sell in volume for under $2." The phone's plastic case is also designed to simply snap together, with no screws needed to hold it in place.

For $12, Huang got an unlocked, contract free phone in a box with a charger, cable and protective sleeve.

Huang compared the $12 phone to a $29 Arduino, noting that the phone has a 260 MHz, 32-bit CPU compared to the Arduino Uno's 16MHz, 8-bit processor. It has 8MB of RAM compared to the Arduino's 2.5 kilobytes. It has a battery and a two-color display. Obviously the two devices serve very different purposes, but the phone is an amazing piece of engineering for its price.

The blog post concludes by discussing the gongkai, or "open," ecosystem in China, comparing it to the unique and independent ecosystem of the Galapagos Islands. It's an interesting perspective on the technological progress being made in China's open source market. "Gongkai isn’t a totally lawless free-for-all. It’s a network of ideas, spread peer-to-peer, with certain rules to enforce sharing and to prevent leeching," he writes. "It’s very different from Western IP concepts, but I’m trying to have an open mind about it."

The rest of the post is worth reading if you're interested in the innovations of China's technology community.