Spice unveils cellphone below $20

By Tarmo Virki

BARCELONA (Reuters) - Indian conglomerate Spice unveiled a new cellphone model on Monday priced below $20 to target surging demand for cheap phones in emerging markets in Asia.

Spice will start selling its "People's Phone", which comes without a screen, in Asian markets from Iraq to Indonesia from March, and plans to introduce more phone models in the $10 to $20 price range in the near future, Spice's chairman Bhupendra Kumar Modi told Reuters.

All cellphone vendors are eyeing entry to the lowest end of the market, as growth in the rest of the spectrum is expected to slow this year.

So far the sub-30 euro ($43.5) market, which represents 20 percent of all phones sold globally, has been dominated by the world's largest cellphone maker Nokia. Nokia's cheapest mass market product, Nokia 1110, retails on average for 23 euros on Western European markets, data from research firm CCS Insight showed.

Spice chairman Modi said the company had been able to keep the costs down on its new model as it has not added a screen and other non-essential features.

"It is just a phone," Modi told Reuters in an interview.

"If things go well we are talking about 10 million phones in the first 12 months. That's our target," he said.

A couple of vendors tried in the 1990s to sell phones without screens but they found no mass appeal. Motorola also tried to tackle Nokia's stronghold of the market in the past few years.

"Only half of the people in the world use mobile phones at the moment. The problem is the cost of the phone," Modi said, adding a global manufacturing firm would make the first phones in China, but Spice had started to build its own factory.