The sub-$100 phone market is rapidly fading. New data from industry research firm Counterpoint shows sales in this segment dropped 64% year over year in the second quarter, as manufacturers either raised prices or stopped shipping budget models altogether. The shift marks a turning point for an industry that long relied on affordable devices to bring millions of people online. For prepaid customers and emerging markets, the consequences are immediate: low-cost options are disappearing, and the devices that remain are becoming more expensive.
The numbers behind the collapse
Counterpoint’s global market tracker recorded the decline across multiple regions. The 64% drop is unusually sharp for a single quarter and suggests a structural change rather than a temporary dip. In previous years, budget phone sales fluctuated with the release of new models and seasonal demand, but the latest fall is tied to supply-side pressures. Manufacturers have not just delayed factory orders; they have stopped producing many entry-level phones entirely.
The prepaid phone market has become the clearest battleground. Prepaid users are more price-sensitive than contract customers, and they often pay full price for a phone up front. That makes them the natural audience for sub-$100 devices. According to Counterpoint, the segment’s shift favored Samsung and Motorola. Both companies increased their prepaid share, while smaller players could no longer undercut them on price.
Samsung and Motorola are not necessarily winning by doing anything new. They are simply big enough to absorb component cost increases and still sell at a profit. Smaller brands, many of which operate in hyper-competitive markets like India and Southeast Asia, operate on razor-thin margins. When the cost of memory, processors, displays, and logistics rises, they have no room to adjust. Some have raised prices, while others have quietly exited the segment.
Why sub-$100 phones are vanishing
The most immediate cause is the global memory shortage. RAM prices have climbed sharply, and the cost of the memory chips used in budget phones has been under pressure for several quarters. Memory suppliers have shifted production toward higher-margin chips, leaving entry-level components in short supply. Many low-cost phones use small amounts of RAM and storage, but every dollar added to the bill of materials matters when the retail price is below $100.
The shortage does not affect all phone makers equally. A large company can commit to massive orders, lock in component prices, and spread fixed costs across many devices. A smaller brand cannot. It may buy components on the open market at higher spot prices, leaving its product margins at risk. Once the price gap reaches a certain point, the device is no longer worth manufacturing. That dynamic has played out across the industry over the past few quarters.
Other factors accelerated the trend. Global inflation has pushed up logistics and labor costs. Carrier certifications and regulatory compliance costs continue to rise. And smartphone users are keeping their phones longer, which reduces replacement demand and makes it harder for budget brands to maintain volume. Together, these pressures have turned the sub-$100 tier into a difficult place to do business.
What the market looked like before
Not long ago, the sub-$100 segment was seen as the engine of global smartphone growth. Brands like Xiaomi, realme, Tecno, and Infinix built their reputations by offering respectable specifications at extraordinarily low prices. In emerging markets, these devices were the first smartphone for millions of users, replacing aging feature phones and bringing messaging, digital payments, and social media to new audiences.
Feature phone makers also played a role. Companies like Nokia, with its reverse-growing feature phone portfolio, helped keep the low end alive. But feature phones do not offer the same internet experiences as smartphones. As mobile networks moved from 3G to 4G and eventually 5G, the need for affordable smartphones became more urgent. The sub-$100 phone was the bridge for consumers who could not afford flagship devices.
For a time, it worked. Advances in chip design made it possible to produce capable smartphones for $60 or $70. Android Go, a lighter version of Android designed for low-memory devices, was introduced to make budget hardware usable. The ecosystem around these phones grew, including app developers who optimized for low-end devices and accessory makers who produced cheap cases, chargers, and screen protectors.
That ecosystem is now under threat. As fewer sub-$100 phones are sold, developers have less reason to optimize for low-end hardware. Carriers and retailers have less reason to stock them. Component suppliers have less reason to support the tiny chips and cheap displays that the segment relies on. The collapse is not just a change in product mix; it is an unraveling of the support structure that made budget phones possible.
Samsung and Motorola’s quiet windfall
Samsung’s position in the low-end market has historically been built on its A series and M series. In many markets, those devices are no longer priced below $100, but the company still sells a handful of entry-level models under names like Galaxy A03 and Galaxy A04. Motorola has similarly relied on budget Moto G and E-series devices. Both companies have deep enough relationships with suppliers and carriers to keep some affordable models alive.
The new data suggests they are consolidating power in the prepaid channel. When smaller competitors disappear, customers looking for a cheap phone have fewer choices. Samsung and Motorola benefit not only from direct sales but also from prepaid carrier partnerships that offer devices at subsidized prices. In the United States, prepaid carriers like Tracfone, Metro, Cricket, and Boost Mobile depend on affordable devices. With fewer players remaining, Samsung and Motorola can negotiate better terms with these carriers. That creates a cycle that further disadvantages small entrants.
There is also a brand-loyalty effect. Customers who previously bought a sub-$100 phone from a smaller brand may choose a Samsung or Motorola device when their next upgrade arrives. Even if the cheapest model costs a little more, the perceived reliability and after-sales support justify the extra expense. This dynamic is especially important in regions where service networks are sparse and spare parts are hard to find.
The future of budget smartphones
The disappearance of the sub-$100 market does not mean cheap phones are gone entirely. It means the floor is rising. The new entry point in many markets is now around $100 to $150. Devices at that price include better cameras, larger batteries, and more memory, but they still exclude the least affluent consumers. For many people, the smartphone is no longer becoming cheaper over time; it is becoming more expensive.
Some manufacturers are trying to soften the blow. Several brands have said they will keep older models in production for longer, rather than replacing them with costlier successors. Others are shifting to a smaller number of budget models but selling them for more. The prepaid market is moving from a wide catalog of cheap phones to a narrow selection of slightly less cheap phones.
The broader smartphone industry is also being reshaped by the component shortage. Premium phones continue to sell because buyers have more flexibility. Mid-range phones can absorb cost increases with a few extra dollars. But the low end has no cushion. A phone that costs $80 cannot easily become a phone that costs $100; that price jump changes the product category and alienates the target audience. As a result, the market is simply shrinking.
Governments and NGOs have sometimes stepped in to promote affordable connectivity, but their efforts are limited. Universal service funds and subsidized device programs exist in some countries, but they have not kept pace with the market changes. If the sub-$100 segment continues to contract, the digital divide may widen. Consumers who were poised to buy their first smartphone may find that the entry point is now out of reach.
The data from Counterpoint points to a moment of consolidation. Samsung and Motorola, with their scale and supply chain advantages, are well positioned to dominate the low-end for years. Smaller brands will not disappear entirely, but they will have to focus on niches or accept thinner margins. The days of a fully stocked, fiercely competitive sub-$100 phone market are over. What remains is a smaller, more concentrated market where only the largest players can afford to participate.
Source:The Verge News