Sub-£20 video phones on the way

Texas Instruments unfurled plans on Wednesday to produce a chip that will let consumers in emerging markets buy inexpensive video mobile phones by 2008.

The chip, called 'eCosto', combines the multimedia functions found in phones sold in Europe, Asia and North America into the same piece of silicon that handles the essential communications and processing functions for the phone. Texas Instruments already produces a chip called 'LoCosto' for emerging markets. It lets phone makers produce so-called single-chip mobiles, but the LoCosto phones don't include cameras or other extras.

The eCosto phones will sport, depending on the final configuration, 3-megapixel cameras and video capable of 30fps, and will support the GSM, GPRS and EDGE standards.

LoCosto phones cost around $30 (£16) and will continue to decline in price. Texas Instruments has said that sub-$20 phones will come out in the relatively near future. Phones with the eCosto chip are likely to follow a similar price decline. In most cases, the price of the phone will be blended into the service contract, so the up-front payment will be lower.

Electronics companies in the past few years have begun to design products for people in emerging nations. Products designed for these markets need to be substantially less expensive to acquire than products in the West, and have to be able to withstand hardships like dust and intermittent electricity better. Still, emerging markets represent billions of untapped consumers -- in 2005, it was estimated that India had 14 computers for every 1,000 people.

PCs and phones in these markets, as in the West, get used in many different ways. In Mali, radio stations have set up email services that can rapidly send messages between villages and news agencies.

Reaching the next wave of cellular consumers first is crucial to Texas Instruments. The company holds a dominant share in the market for mobile phone silicon. Although PC penetration in emerging markets is relatively low, the mobile phone market is taking off rapidly. Roughly 400 million of the billion-plus people in China are current mobile phone owners, and double-digit growth is expected in the next few years.

"We believe there is a large market," said Avner Goren, who manages marketing for Texas Instruments' cellular systems. "In many cases, it (a cheap mobile phone) will be the first time they connect to the network."

Integrating multimedia functionality into these low-cost chips is another example of Moore's Law, a 1965 observation by Intel co-founder Gordon Moore that the number of transistors per square inch on an integrated circuit doubles every year to two years. The LoCosto chips are made on Texas Instruments' 90-nanometer process, while eCosto chips will get made on the 65-nanometer process (the measurements refer to the average feature size of the chips). Moving to the more advanced manufacturing process improves the performance and lets Texas Instruments add functionality to the chip without increasing the cost or the power consumption.

Integrating the multimedia functionality in many ways was easier than integrating the processor with the radio/communications functions in LoCosto, he said. Historically, radio chips were embedded into analogue, not digital, circuits.

Texas Instruments has not produced eCosto chips yet. It will, however, send samples of the chip to phone makers in 2007 and phone makers will put it in handsets in 2008.

LoCosto, announced in 2004, has been picked up by approximately 15 handset makers, which collectively have come out with 30 phones based on the chip. These phones are just coming to market now.