Cheap smartphones will help Android overtake the iPhone

Sony Ericsson's Xperia X8 will cost less than US$250 before subsidies

Vendors are adding cheaper and simpler Android-based phones to their portfolios, in an effort to put smartphones in the hands of more users. The products will also help close the gap between Android and Apple's iPhone, according to analysts.

On Tuesday, Samsung Electronics launched the Galaxy 3 and Galaxy 5. On Wednesday, Sony Ericsson announced the Xperia X8, which will start shipping in the third quarter and cost less than €200 (US$250) before subsidies, according to a blog post. The Xperia X8 comes with a 3-inch display, a 3.2-megapixel camera and navigation using A-GPS (Assisted-GPS).

The new price point will help attract a new audience for Android-based smartphones, Sony Ericsson said.

Sales of Android smartphones have exceeded those of the iPhone in North America, but globally the iPhone was still ahead of Android by more than 3 million units during the first quarter, according to market research company Gartner.

However, the arrival of smartphones like the Galaxy 3, Galaxy 5 and the Xperia X8 will help drive sales volume and give Google an edge in the smartphone OS war with Apple.

"Android is undoubtedly growing in strength, and I think if you look at the momentum that Android has now ... it looks set to next year really start pushing Apple in terms of volumes, and in a two year time frame become the second largest platform behind Symbian," said Geoff Blaber, analyst at CCS Insight.

The only thing that can stop Android from becoming the second largest smartphone platform is Google, if starts to dictate conditions that the phone vendors cannot live with, said Carolina Milanesi, research vice president at Gartner. But for Google, this has always been the end game, mass market popularity, she said.

For operators, low-cost Android smartphones will help them increase use of data services among their subscribers, according to Milanesi.

Some European operators are already working with Chinese vendors, including Huawei and ZTE, on their own low-cost smartphones based on Google's OS.

However, the arrival of cheap smartphones running Android isn't good news for everyone. For Nokia, it means even more unwanted challengers. The vendor has struggled in the high-end smartphone market, but has been more successful in the low end, where it will now face more competition from Android, according to Blaber.

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