Updating Progress on the 'Recreate iPhone of 2010 for $10 by 2020' Projection - Yes we are perfectly on track still in December 2014 so yes by 2020 you'll get a good spec smartphone for ten dollars (Revised)

Those who've seen me speak in public have probably seen this slide ever since I first showed it in 2010 from Johannesburg to Sao Paulo to San Diego to Helsinki to Hong Kong. I promised that we could take the specs of the then-topmost superphones like the iPhone, and recreate those specs by year 2020 for only ten US dollars and still sell profitably. This is that slide:

(NOTE this blog article was updated the next day with better example, see below)




And those who have seen me speak recently have almost always seen that slide as well. I used Moore's Law and projected that the final price of those specs - so a 3.5 inch touch screen smartphone with 8mp camera and flash, WiFi and GPS, on 3G connectivity - and promised those specs would only cost US $10.00 to sell including marketing and profit, by year 2020. This price is without any handset subsidy. Note that I also projected the mileposts by 18 month intervals, so we can monitor this 'theory' to see if it turns out to be true. Would be wonderful, wouldn't it, if every economically viable person on the planet could by year 2020 own the pocket marvel internet camera media video news and computing machine that was the iPhone of 2010 (or whatever superphone you preferred then be it Nokia N8 or Blackberry Bold or Samsung Galaxy etc). The specs of the topmost phone of the time. I used the iPhone specs as a good balance 'compromise' among the different choices. 

Well, that theory suggests quite a massive milestone on December 2014. Those specs should now be available on some smartphone for the first time for well under $100. The theory says we should be able to buy those specs on some smartphone for 75 dollars. Lets see if there is such a marvel somewhere.

UPDATED VERSION:

On 6 January I returned to the blog and found the comment by DarwinPhish (see below in comments) that the phone I had found was in fact an older model that was discounted. While that is still valid, to some extent, if Moore's Law holds true, we have to also find NEW phones that fit the theory, not just old stock being sold perhaps at severe discounts. So I went back to search and found this instaed (I have left the old text here if you wanted it, below). So the NEW phone I found is:

So I found (on my second try) the iBall Tiger phone from India, a local brand. Its a smartphone running Android and the iBall Tiger 4h Tiger+ has these specs: 4 inch touch screen, 3G, WiFi, 8mp camera and flash, GPS. And its price is 4,590 INR or 72 US dollars. So there, exactly on schedule we match all the specs of the iPhone 4 from 2010. So yeah, sorry about the first phone I found being an older model (and thanks DarwinPhish for telling me, obviously I don't know every India phone model and when they were released haha) but this is a new phone released in October 2014 and yes, it costs 72 US dollars in India and it matches all the specs I required from 2010. The theory holds.


(IF you want to read the original paragraph with the older Byond brand smartphone it is here)
I didn't have to look far and I am guessing this is not even the ultimate match but its close enough. In India a local brand smartphone called Byond sells the Byond 63 which has these specs: 4.5 inch touch-screen (better than I promised) plus 8mp camera and flash, WiFi and 3G, GPS, all running on Android. And the cost is 4,500 Indian Rupees. Is that 75 dollars? No, its only 71 dollars.


We are (again) ahead of my schedule and I can confirm that the theory is perfectly on track. By year 2020 we can buy some smartphone that replicates the specs of the top superphones of 2010, and that phone will be sold for ten US dollars including marketing and profit. Wow, this is good news for the planet. It will be the smartphone that finally bridges the digital divide for the planet. Isn't this a great industry to be in? (BTW if you need more info on the phones across the Digital Divide, I give you the latest 2014 stats here).

Comments

[DarwinPhish]

I believe the Byond 63 is a 2 year old device and was 2-3x the price when released.

[MH]

So far so good - but Moore's law has its limitations in this scenario.

1. it only applies to the parts of the phone that can be implemented in silicon.
2. Flash memory scaling is running out of steam - still getting price reductions due to mass production but not so much due to die-shrinks.
3. Die-shrinks are themselves increasingly costly - but that is offset by the immense volume of mobile chips that are produced.

It will be interesting to see how this prediction turns out, though - and whether the above limitations will kick in before or after 2020!

[charly]

If you ship it like a $600 phone than "empty box costs" are in the $10 range but if you ship it like a $10 in store Christmas lights than the "empty box costs" are much lower. There is also political pressure which makes $10 phones in some countries highly likely and in others highly unlikely.

ps. does the phone include a charger as that would end up the most expensive thing next to the battery?

[AndThisWillBeToo]

@Baron95
I usually agree with you but on this one I don't. I bought a toy car before Christmas and paid amount of euros equivalent to $10. The car is made in China and with the box it has weight and size about of a cheap smartphone. So yes, box can be shipped from China and sold from the shelves for $10 as far as the box is in big shipment and sold as supermarket goods.

I believe such a smartphone will be made and shipped in the future. Like the toy car in question, it will be made in some sweatshop with cheap labor and crappy quality and it will be made in vast numbers to push shipping costs down.

Therefore the $10 phone will not compete with iPhone any more than that $10 toy car competes with $400 radio control car. (Made in China and shipped to U.S.)

My worries relate to the fact that growth of mobile phone market (smart and dumbphones combined) has slowed down to 3% or so. Once all phones are smartphones, those $10 phones will represent major share of the market. Those who go by the church of market share say that Apple and Samsung need to fight their way to have a piece of that share. I say they should do everything they can to ensure they do not compete in that space (admitted, Apple has always made sure they don't).

[Tomi T Ahonen]

Hi all

Wow I didn't expect this much disagreement among my regular readers, as this is not news to you, I wrote that on this blog in I think July 2010 and have revisited the issue a couple of times already to check on the progress and the theory is utterly true today.

DarwinPhish. Thanks, I didn't know that and obviously here is where the power of 'Communities Dominate' truly comes to bear, when my local readers in the various markets can contribute. I really appreciate it!

I will go seek another more newer phone model, because if its an old model sold at out-of-date discount then while it 'proves' such phones can be made and sold, it is not necessarily sustainable if its an older model. We should be able to find a modern phone, introduced for Xmas 2014 that fulfills those specs too. I'll go search for one and report back.

M -good points and the battery is perhaps the largest obstacle as its development lags far from Moore's Law and may well be the bottleneck that sinks this theory before 2020 haha... We'll see but so far its held incredibly well.

baron95 - I hear a lot of luddite-thinking there, not meaning you are one, but that is exactly the kind of way people reacted to the microwave oven and home VCR and pocket calculator and PC and mobile phone etc. Cannot happen. But so far this theory has held more than 100%, ie we have gotten at every 18 month interval either some better specs or lower prices or earlier delivery of the exact same specs. So we are perfectly on track for 2020. But on the packaging issue - yes, packaging doesn't shrink in costs with Moore's Law (as neither does global shipping). I am sure the 2020 cheap touch-screen ('only 3G') smartphone will not be shipped in a pretty box like an iPhone was or any of the rivals back in 2010. It will probably be in a bubble-plastic container to hang on supermarket shelves near the check-out counter. So yeah, it will be packed, but the packaging will not be as elaborate, in a pretty box, as we had with our Galaxies, Nokias, Blackberries and iPhones in 2010. It would be a waste to do it so. No, the packing will be simpler. But bulk shipping - as AndThis explained with the toy example - sorry, that is not going to stop this. A phone is so small and light, its shipping costs in huge volumes (millions) will be truly modest per phone and won't criple this theory. The issues M showed before will be more the threat to the theory.

charly - good points about local regulations yes, this model of course can only apply to prices without local import taxes and levies that some countries impose. As to charger, I didn't specify the charger has to come with the phone but it did in 2010 and its a very reasonable accessory. Yes for the most part (about 90%) of new phone sales in 2020 will be replacement sales not to new customers, so theoretically almost everyone owns a charger already, and its now nicely standardized for the micro USB connector too (for almost all brands haha) but yeah, I will take the theory to hold true if the phone sold without charger in 2020 costs 10 dollars retail, but to be fair, it should include the charger... I would make a footnote about that when we get to 2020 on the blog haha... PS note the scale of charger-shipments will mean that for all our connected gadgets, the cost to produce chargers at unbelievable volumes by some specialist suppliers will be of course one factor helping keep charger costs coming down but yeah, Moore's Law isn't applicable to the current-conversion tech haha..

AndThis - thanks for taking my side on an argument with Baron95 for once haha... But yeah we agree. And the point you make later that this is the ultimate death of any significant profits for the rest of the industry (except Apple) is very valid. If we say outside of Apple the rest of the industry makes say 10% profit on average, then currently about 20 Billion dollars of profits are generated by the non-Apple smartphone makers globally on 1B+ smartphones sold globally. But by 2020 if the 10 dollar 'basic' smartphone is not a bare-bones featurephone type but has a good-sized touch screen, an 8m camera, WiFi and GPS then even cheaper smartphones will exist into the 5 dollar range. And while some will buy the superphones most phones will be sold at these kinds of levels. So if we say for argument that outside of Apple, the rest of the industry average (smart)phone price is 50 dollars globally and by then the pricewars have shrunk the average margin to 5%, then yes one phone sold generates 2.5 dollars of profits and thats when the volume is double what it is today but the total industry profits (outside of Apple) would be down to one quarter they are today at 5 Billion dollars only and likely Samsung would take the vast majority of that. Those Chinese rivals who have enough scale would then live on typically 1% margins while much of that industry would have consolidated by then.

Which is why the handset makers keep pushing for the next big thing like bendable phones and 3G displays and optical zooms and whatnot to try to make sure there exists a premium price level where next year's flagship phone can be sold at the same price levels as this year's flagship phone, rather than follow this 'suicidal' price curve to the bottom with Moore's Law haha. So yeah we agree and totally, I agree Apple is almost immune to this danger and will always sustain far higher profit margins than the rest of the handset industry - but I do think they have to adjust, the levels of obscene profits cannot be sustained in this environment (and good for Apple for continuing to prove it can be done, but this cannot last forever at the scale they sell in a global market when this is the economic reality dictated by Moore's Law)

Tomi Ahonen :-)

[Darwinphish]

Tomi,

The Intex Cloud FX, which is only a few months old, is probably the cheapest smartphone out there. It misses your specs. With no WiFi, no GPS, 2MB camera, no flash. It is closer to a 2007 smartphone than a 2010 flagship.
However, at launch is was 1,999 Rupees or about $35 (closer to $31 today), which is over 3x your target. In the next few years I could see the specs improving, but I do not see the launch price dropping very fast. Hitting $ $10 has more to do with expected sales volumes than tech.

Correct me if I am wrong, bu I don't think there is any current phone that sells for $10 regardless of specs (unless discounted to move stock). Even the least expensive Nokia feature phones are about $30.

[Tomi T Ahonen]

Hi DarwinPhish

Yeah, thanks, but I am not looking for the cheapest smartphones because one could then argue that its not 'enough' if it doesn't have WiFi or 3G etc. So that is why this theory was so relevant, for the Emerging World, if every consumer could afford an 8mp camera - meaning everyone has effectively a hand-held pocket scanner for example for any printed documents, and HD video recorder in their pocket, and GPS so the mapping/location issues and both 3G and WiFi. THAT kind of specs, what was a proper superphone in 2010.. if THOSE specs can be brought to 10 dollars (or I'll be happy if its even 'just' 20 dollars by 2020, it will still change the planet and bring genuinely the computer into every pocket).

So yeah, I've seen cheap smartphones in various markets and the cheapest I've seen have been in the 25 dollar range in Africa now this Autumn. Cheapest phones period have been in the 20 dollar range but yah, so far nothing in 10 dollars yet. About 25 dollars gets you cheapest cameraphone.

So yeah the point of this theory and monitoring it, is, that a touch-screen 3G-WiFi 8mp GPS smartphone will be essentially an ultimate pocket computer for anyone who wasn't connected to the internet yet and will bring unbelievable abilities straight out of the box even without the network and SIM card, but added with ever broader 3G coverage in the Emerging World and increasingly also WiFi hotspots, it will totally change the world. I was just in Capetown in December and saw free WiFi hotspots in the public parks so visitors to the park could use their WiFi gadgets. This is not the poorest part of the Emerging World but it is Africa and this is the kind of connectivity that will help such phones and their owners get the maximum out of their first internet experiences even if they cannot afford a 3G data plan haha..

Tomi Ahonen :-)

[charly]

So those Nokia's 108, Samsung E1200 & E1270 and Alcatel i see sold for sub $30 (the Nokia with camera) and sub $20 (Samsung & Alcatel) are somewhere subsidied?

For ultra cheap phones brands like Samsung and Nokia (Alcatel less) have an advantage because because you know you're buying something functional and at least in the West the $2 saved by going to Shenzen brand isn't worth it. That low number of competitors lead me to believe that the profit margin percentage isn't bad but there is obvious the problem that making $20 profit on a $20 phone is obvious harder than on a $600 phone.

[Umpipumpi]

Techs become cheaper but what does this mean? What are the consequences for the industry once there are more powerful low end phones? This all has already happened before. You can already buy very cheap phones capable of running apps. Phones that would have been very high end back in 2005.However that change had very little impact on the industry. The new models had more features and they enabled the customers to have more options to what they do with the phones they have. Today some people say how there can't be too many new features added to the phones. This was also said back in 2005.

What has happened between 2005 and 2015 really? If you don't consider apps as one big change, there hasn't been that many changes. You were able to use the SMS services back then and you can use them now. The internet was also accessible back then but maybe more usable today. The internet of 2020 will also be more usable with the latest devices but this has always been the case with the phones. How will this affect the industry?

[DarwinPhish]

Tomi:

I understand where you are coming from and the point you are trying to make. I am just looking at it from the opposite direction: instead of looking for the cheapest phone with 2010 (or better) specs and speculating on how long for its price to go down, I am looking at what the cheapest phones have now and how far off they are. The cheapest smartphones on the market now have some features only found on the top devices in 2007, but are still missing some key features. I suspect a $35 phones will get better/more features over time, but I doubt price floor for smartphones will drop below $30 even in 5 years.

Anyhow, probably the closest current device to a 2010 flagship is the Motorola G which, at launch, was a $200 device. It meets or exceeds your requirements and I doubt there is anything current on the market that compares to it and is significantly cheaper. If the price drops by 50% every 12-18 months, it could approach $10 by 2020.

[AndThisWillBeToo]

@Baron95
This forum.
"Same phone".
What matters in comparison?
This forum.

Megapixels, flash size, screen size (inches), connectivity (BT, 3G, 4G, Wi-Fi, GPS), hardware, hardware, hardware.
N95 was superior to original iPhone.
Everything in iPhone5 existed in Nokia phones 2 years back.
Everything.
This forum.

Play with the rules and you realize no one is attempting to sell iPhone experience for $10.

[charly]

@Umpipumpi

The only new feature added to phones since 2005 that is not a gimmick is a touch screen. And what needed to improve was also obvious in 2005. Better internet browsing, faster internet, more storage and a better camera.

[Winter]

@Boron95
In what way are the box and the shelf space part of the phone specs?

And shipping a phone is a problem? There have been cheap electronix from China on sale for far less than $10. They ship $1 tin cans around the world that are larger than an iPhone.

And seriously, you really want to claim the aluminum frame was the defining advantage of the iPhone?

[Paul]

I'm in the semiconductor business and one of the big debates at present is whether Moore's Law is over. For all sorts of technical reasons I won't go into, it is starting to look like future processes will be better (faster, lower power etc) but more expensive. Many people believe that the current main process generation (28nm) is not only cheaper than every process that came before it, like Moore's Law predicts/explains, but also cheaper than every process that will come after it. So the chips in a phone will not get cheaper any more, or at the very least will get cheaper a lot more slowly.

Flash memory scaling has largely stopped too. And DRAM. But there are potential new ways to build the memory elements that could make a big difference but they are not yet proven.

Of course the huge volumes involved can lead to both economies of scale and learning. But don't count on a halving of cost for the same function every couple of years (which is the way I prefer to think of Moore's Law). There is never again going to be 20 years in which what were multi-million dollar state-of-the-art flight simulators bought by the military come down in price by 1000s of times so our kids can buy better graphics today than the military could buy in the 1980s. Out of their allowances.

[John F.]

There are 2 elements that Tomi is missing or not considering,

First, all Moore's logic indicates that the price tag is achievable BUT.. yes the big BUT;

1- A lot of the components needed are not in infinite supply, at the speed production of all kinds of electronic goods is growing and in the many different industries that are expanding will eventually create a supply problem.
The price of those commodities due to shortages might head north, it has happened many times before, due to the huge amounts of materials being over consumed eventually we arrive to the situation that there is not enough for every industry.

2 - Supply chain and production - In todays environment, all manufacturers of those specific material are working at maximum capacity or over capacity, in some cases some materials can be found in just one or two brands because they bought the existing capacity, 3-5 years from now this will be a bigger problem to consider, factories to produce such components don't come cheap and take time to build, and the commodities needed are in many cases considerer "rare", why do you think apple buys almost all semiconductors that it needs from Samsung and Samsung happily obliges?

Moore's law will eventually find a huge wall to climb, production and demand of basic materials to produce such amounts of devices will hit a bump, phones are just one of the industries in need, soon many more will start to demand more and more
So what do we do when production of smartphones double? Again don't assume that there is double of everything else to make it happen.

Also to consider is the following that same law implies that by now all PC's and TV's should go for peanuts, well... ask LG and Samsung if they only sell 199$ TVs or if the new Lenovo thinkpad goes for 210$, and why not ? because like with the auto industry, that can sell cars below 10K $ that are more that good enough, people desire, choice, branding, user experience and aspirations are a HUGE factor, so factor people into the equation too, over a billion have disposable income, enough to keep brands and higher prices for a profitable segment no matter what.

Last thing to consider is products evolve to something so radically new that people NEVER see it coming, VCR to DVD to whatever to streaming to ..... smartphones as we know it maybe are the VCR's we do not see changing to netflix.

So yes, there will be 0.99$ phones or even Buy Corn flakes and get a Kellogg's phone free BUT the 0.99 cents amazon fire phone tells you a very different story .

[AndThisWillBeToo]

@Baron95
I said:
THIS.
FORUM.

Tomi has explained ad nauseam that only thing iPhone had that N95 did not was touch screen and it was not an,advantage as you could not text blind. In this forum every iPhone since the 1st gen up to year 2012 or so have been inferior to contemporary Nokias. IN. THIS. FORUM.

[Winter]

@John F
"Also to consider is the following that same law implies that by now all PC's and TV's should go for peanuts,"

No, it doesn't. We can get a Raspberry pie or beagle bone for peanuts. Embedded single chip computers with all the power of a 1980s PCs are cheaper than a bag of peanuts in quantity. But people have little use for computers with the power of a 1980s PC. So they are not sold.

But a $10 mobile phone with the specs of an early iPhone would still have a market.

@John F
"Moore's law will eventually find a huge wall to climb,"

In the long run, we are all dead. I understand that huge fortunes have been lost by people who made bets against Moore's law.

In short, unless those bickering about "Moore's law will end" come up with some solid evidence that that is going to happen before 2020, they are just sore losers.

[Tomi T Ahonen]

Guys

I am SO disappointed in you. This argument had merit in 2010 when I presented it first. All of your doubts you list now, had merit THEN not now. If your points were valid then today we would not find these kinds of smartphones. What is PROVEN up to December 2014 that Moore's Law HAS HELD TRUE even when all components of a smartphone are not subject to it.

This is PROVEN. The exact specs as I specified are in that iBall Tiger smrtphone running Android that was launched for sale in India in October 2014 and its price was BELOW what my theory predicted.

YOUR POINTS ARE MOOT.

The FACTS are in. This is REALITY. You are in DENIAL.

Now, some points made suggest this trend is not sustainable all the way to 2020, that is a valid point like Paul warns from inside the semiconductor industry but I do remember those warnings in the 2000s decade and in the 1990s and in the 1980s (when I started in IT) so I am not totally convinced this is the end of Moore's Law quite yet haha.. BUt at least Paul acknowledges that we've gotten this far and the path forward might not be as smooth.

Now of the iPhone experience - OF COURSE NOT. I NEVER said that Apple would sell an iPhone for 10 dollars in 2020. Guys, you have to read the post and you KNOW what I mean. Apple will give us the iPhone 11 or whatever in 2020 that includes really cool iTech like teleportation and time travel but the SPECS of ANY flagship phone of 2010 - not just iPhone - ANY flagship including Nokia, Blackberry, Samsung - those SPECS can be replicated - and by gosh, the Android OS in 2020 will be FAR FAR FAR better than what iOS was in 2010 as will the experience in the Play store compared to Apple's App Store of 2010. So those consumers whose first access to the internet is that cheap 10 dollar touch-screen 3G/WiFi/GPS smartphone with 8mp camera and flash - they WILL experience it as well and comfortably as anyone using an iPhone in 2010. Come on you guys, don't act like Luddites !!! Not on this blog!

I am disappointed in you. Usually the discussion here is smart and worth reading.

Tomi Ahonen :-)

[John F.]

@winter

Sorry, BUT " No, it doesn't. We can get a Raspberry pie or beagle bone for peanuts"

It's very common not to know Moore's law, your assessment is widespread, so I understand your mistake, but Moore's law is more about going forward doubling capacity and power.

goes like this " an axiom of microprocessor development usually holding that processing power doubles about every 18 months especially relative to cost or size"

So, in the mid 80's the newest iPhone o Samsung would worth over 3 million dollars if we would add all its capacity and computational power.

Your statement is backwards, it basically says that moore's law is to reduce power and capacity to the equivalent of a 1980 computer to make worth peanuts, and that's why your assessment is wrong and has nothing to do with Moore's law

By those standard we can say the same about making black and white 7" TVs.

[Winter]

@John F
"It's very common not to know Moore's law, your assessment is widespread, so I understand your mistake,"

Actually, there is no "Moore's law". The law Moore proposed never held. Over the decades, his law has been rewritten and what was doubling and how fast it was doubling changed time and again. Even you are now unable to give a definition that is specific enough to measure.

If we go back to the first IBM PCs and compare their capacity to process and store data at fixed purchasing power, we do see roughly a doubling every 18 months (give or take some months).

But Moore's law works two ways. Both in that we get exponentially more computing power at fixed prices and in that we can get yesterdays high end computer power for today's low end prices.

But you are right, for these low end prices we do get yesterdays SciFi features, like color TV (io BW) and videoconferencing (not possible in the days of the original IBM PC).