What The Arrival Of Contract-Free £20 ($32) Smartphones Mean

T-Mobile UK has put on sale an Android smartphone for just £19.99 ($32) on pre-pay, with no contract commitment whatsoever. This price for the Pulse Mini includes 20% UK sales tax (VAT) as well as six months of free mobile Internet access, but excludes a compulsory £10 airtime top-up.

This pricing places smartphones into the mainstream. And, as consumers no longer have to pay a premium for the phone over a basic phone or a featurephone and nor do they have to choose to pay extra for a data tariff, many consumers will buy the Pulse Mini without even realising it is a smartphone.

Other smartphones remain a little more expensive for now. A number of smartphone models from Samsung, LG, HTC, SonyEricsson, and RIM are on sale in the £80-£150 range on pre-pay in the UK. Over the next few years, these prices will reduce and will place big-name-brand smartphones into the mainstream phone market pricing, too.

The result will be that we will see increasing numbers of people that fall into the category of "smart phone owners but dumb users." This is a trend we have already identified in our published Mobile Trends and Smartphone Trends reports at the start of this year: Consumers will go to a store looking for a replacement featurephone -- an LG Viewty or Samsung Monte for example -- and ask for a phone at a similar price to their existing featurephone. Increasingly, that 2011 range phone will be a smartphone, usually an Android smartphone. So, many consumers will adopt smartphones without realising it (at least they will in countries where operators do not insist on bundled data tariffs or where the market is not controlled by operators and consumers buy their phones without operator subsidy).

And, this is a more significant news item for the future of the mobile market than are yesterday's higher-profile announcements:

  • HTC's Sensation, a high-end dual-core smartphone unveiled yesterday, is an impressive device with a 4.3 inch-high detail touchscreen and 8 megapixel camera with full HD video recording. But like the other dual-core high-end phones from Motorola, LG, and Samsung, this is a category we predicted way back at the start of the year in Smartphone Trends, and it is something that HTC was clearly going to do soon, as all of its competition, bar Apple, had already announced dual-core smartphone models.
  • Nokia's Symbian Anna update, again announced yesterday, includes numerous features that should have been present in Symbian^3 from the start, such as a Qwerty portrait keyboard, revised icons to differentiate Symbian^3 from older versions of Symbian (finally), and an improved web browser.

An upcoming, slightly delayed, Forrester report will look at the impact of this trend of mass-market smartphones in more detail. For now, this astonishingly cheap, T-Mobile Pulse Android smartphone is the flag bearer for the trend of smart phones and dumb users, or in the Pulse's case: smart Androids and dumb users.