In theory, at least, the world’s cheapest smartphone will meet the world’s fastest-growing smartphone market in the next few weeks.

Shipping of its Freedom 251 handsets by Ringing Bells Pvt, a little-known Indian company, is set to begin. At the astonishingly low price of 251 rupees (less than $4), the prototype touts back cameras, a quad-core processor and a 4-inch screen.

In a country where Apple Inc. has been unable to make a dent, the $4 smartphone is the one stirring up the internet-hungry, app-crazy hordes while global brands Samsung Electronics Co. and Lenovo Group Ltd. sell devices for less than $100.

In a country where the World Bank puts the per capita income at $5,630, Apple commands a mere 2 percent of market share with iPhones costing upwards of $700.

Experts like Tarun Pathak, a senior analyst at Counterpoint Technology Market Research say that profiting from a $4 device is a ludicrous idea when brands can’t make money even on $50 smartphones. Companies like Micromax makes profits by taking advantage of economies of scale by selling millions of cheap devices every month in smaller cities.

Ringing Bells is planning to recoup money through advertising and marketing deals as its ’ managing director Mohit Goel says that the company will lose hundreds of rupees on each unit and it isn’t counting on a profit from device sales. The company is assembling the phones in a factory in Haridwar near Delhi after importing kits from Taiwan, Goel has said.

According to Forrester Research, only 17 percent of India’s population use smartphone but it accounts for the world’s second-largest smartphone base with 222 million users. According to a CMR report, with the market for sub-$150 smartphones forecast to grow at 44 percent rates this year and  as the base is expected to grow to 517 million by 2021, the real prize is the hundreds of millions of potential buyers in the country.

Due to scarcity, even at $4, the smartphone could still be out of reach for most. The company said over 70 million jostled to register, crashing its website when

Goel first announced Freedom 251 in February. Buyers who have been picked by lottery would soon be shipped 200,000 smartphones, Ringing Bells said last week.

Scrutiny along with the publicity has been drawn to the company selling such a cheap device. It turned out that another manufacturer with its logos covered had produced the prototype Freedom 251 when presented to the media. Inquiries by the police and tax officials were set off when thwarted buyers protested outside the company’s headquarters.

“We are concerned and keeping a close watch,” said Pankaj Mahindroo, president of the Indian Cellular Association, with members including Apple and Samsung.

Allegations that the company was misleading customers as Ringing Bells refunded deposits and delayed the launch date were denied by Goel who doesn’t have a technology background.

Satish Meena, a New Delhi-based analyst at Forrester said that by heading to China and ordering direct with factory owners for budget devices, anyone can get into the smartphone business through the A la carte production route and this business is no more limited to just household technology names.

He said that even “a cement maker can get into making smartphones overnight” as it has become such a commodity.

Despite this the price of the Freedom 251 is far below what anyone else has promised.

“A $4 smartphone is nothing but a gimmick,” said Meena.

(Adapted from Bloomberg)

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