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Disposable mobile phones to be released.

  1. groundzero

    28,634 Posts.
    This will HAVE to have an impact on conventional mobile phone manufacturers.

    Location: http://news.zdnet.co.uk/story/0,,t269-s2119922,00.html
    Disposable cellphones ready for 'immediate' launch
    Disposable cellphones ready for 'immediate' launch


    Throwaway cellphones are set to make their debut on US convenience store
    shelves, down the aisle from plastic razors and disposable cameras they
    seek to emulate as spur-of-the-moment consumer purchases.

    Hop-On, a small company based in Garden Grove, California, said last week
    it had won US regulatory approval to sell its first phones, clearing the
    way for a nationwide introduction of a no-frills recyclable phone for
    prepaid mobile calling.

    In an interview, chairman and chief executive Peter Michaels said
    approval of the phones will allow Hop-On shortly to sell its
    stripped-down mobile phone and 60 minutes of initial service for a $40
    (£25.5) flat fee, through an unnamed "major CDMA" carrier. CDMA is one of
    the mobile phone network formats used in the US, along with TDMA, GSM and

    "We are going to launch pretty much immediately," starting first in
    southern California and then rolling out across the United States over
    the next three months, Michaels said.

    "I don't want to sound like a crazy person, but as many phones as I can
    build I can sell," Michaels said, adding that Hop-On's goal was to sell
    millions of phones by Christmas.

    Hop-On mobile devices are plastic, two-way phones the size of a deck of
    playing cards. Users talk and listen to callers via a microphone/earpiece
    connected by a thin wire. Customers buy scratch cards in increments of
    additional talk time of 60, 90 and 120 minutes, according to company

    Hop-On, which hopes to sell the phones at major retailers, corner stores
    and gas stations, said it received a go-ahead from the US Federal
    Communications Commission for phones with a low-cost chipset from Philips
    Electronics based on Qualcomm technology.

    Michaels also hopes to win the FCC's blessing in 45 to 60 days for a
    second, less-expensive model that would be priced at $29. This is based
    on the international GSM mobile standard. It would be aimed at Europe and
    eventually the United States.

    In talks with 30 companies
    The company also said it is in talks with as many as 30 major retailers
    and other companies to distribute the phones, including convenience
    stores, gas station chains and big retail chains. Consumer brands,
    including a major beer company, are looking at licensing Hop-On phones
    and selling them under their own brand names as promotional items,
    Michaels said.

    "Our (business) model is that we are basically giving you a very
    inexpensive phone for which you can buy additional minutes of air time,"
    Michaels said.

    Hop-On is wooing partners with the potential the phones may have to drive
    new customer traffic into stores -- consumers who might pick up a phone
    for emergencies, for fun, or because they cannot otherwise afford to
    commit to pay for a mobile phone.

    Imagine busy people on the road who forget their regular mobile phone at
    home that day or families of tourists in theme parks or tech-fearing
    seniors who want the security of a phone without the on-going cost of a
    monthly bill.

    The aim is to fill the gap left by established phone makers and wireless
    network operators who fear that selling low-cost phones and services will
    further undermine the $50-$55 that the average US mobile user spends per
    month, analysts said.

    Hop-On phones could also create more vigorous competition at the low-end
    of the prepaid mobile phone market, where cost-sensitive customers pay
    upfront for minutes of use instead of signing up for an ongoing monthly
    subscription to services.

    Still, retail, mobile phone and financial analysts are mostly taking a
    show-me-the-money stance toward Hop-On.

    "The pieces of the strategy seem to make some sense, but I just wonder
    what's going to make people reach for this phone rather than a more
    conventional prepaid phone?" said Steve Baker, a retail technology
    analyst for research firm NPD.

    Stripped-down models
    Hop-On phones are stripped down and designed to be as cheap as possible.
    Phone numbers are assigned locally. Calls made within the same area code
    are charged at local rates, but calling between area codes would involve
    paying additional toll charges.

    By offering a $5 rebate to customers who want to dispose of their phones,
    Hop-On hopes to recycle used devices to new customers, saving on
    additional manufacturing costs and in effect, borrowing the strategy of
    disposable camera makers, which recycle cameras four to five times in new

    "The cheaper the better when you are talking about this market," said
    Mike Doherty, a wireless analyst with market research firm Ovum in

    Hop-On plans to cut costs by doing away with extra memory needed for
    advanced data features, focusing only on what is needed to place and
    receive voice calls. Also out are liquid crystal displays (LCDs) found on
    more expensive phones. Instead, phones offer an audio playback for any
    number dialled.

    Michaels declined to identify by name the CDMA network carrier it is
    working with, saying that an announcement would take place within two
    weeks. Verizon Wireless and Sprint PCS are the two major US carriers with
    CDMA networks.

    Hop-On, which employs just 15 people, plans to rely on contract
    manufacturers operating in China, Taiwan and Mexico to supply it with
    low-cost phones.

    The combination low-cost phone and discount minutes strategy is aimed to
    compete not so much in traditional mobile markets as with discount
    calling cards, according to Michaels.

    Different market
    "In order to be successful they need to go after a different market than
    traditional prepaid," said Gartner Dataquest analyst Paul Vittner, who
    has been tracking the emerging disposable phone market since he released
    a report entitled, "Cheeseburgers, Cellphones and Fries" two years ago.

    Vittner, who has been briefed on Hop-On's strategy, said the challenge
    will be to make disposable phones that are not so cheap they are no
    longer a real phone. The company must also negotiate with wireless
    carriers to buy wireless access in bulk at prices low enough that it can
    still turn a profit, he said.

    Remember how silly disposable cameras once seemed?

    "When they first came out, most people thought, 'Ah, why would I want a
    disposable camera? That changed rather quickly" when consumers discovered
    new uses for them, said Michaels.


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