With wireless markets nearly tapped out in Western Europe and slowly getting to that point in North America, handset manufacturers will be soon focusing on cheaper handsets that can sell well in the so-called "emerging markets".  In markets such as Brazil, there are many pre-paid customers who typically bring a low ARPU, so there is also added pressure for the carriers not to subsidize high-priced handsets if their payback period would be long.

In the quest for that cheaper cellular phone, vendors are faced with margin risks.  For instance casings for phones typically cost $8-$10 with not much variance due to the handset price.  For an average $150 handset, that translates to roughly 6% of the cost of the handset.  However, applying the same logic to chaper phone (let's say a $50 phone), the same casing would constitute 16 to 20% of the price.  With margins staying relatively flat, at roughly the 10-15% range at current prices, vendors will find it hard to embark on an ultra-low price handset strategy.