An Indian phone-maker has started shipping what it said was the world's cheapest smartphone after months of criticism that the offer was a scam.
Ringing Bells had announced it would sell the phone for 251 rupees (S$5) five months ago but quickly ran into trouble. The unknown company, run by former dried fruit businessman Mohit Goel, 29, was overwhelmed by some 75 million orders and its online payment gateway crashed.
Various Indian agencies then launched investigations, including one by the police for cheating. The company was even accused of being a "fly-by-night operation".
But yesterday, Ringing Bells finally started shipping the first batch of 5,000 phones on a cash-on-delivery basis. The company, which was launched last year, has since refunded all online payments and selected, through a computerised draw, the 5,000 customers from millions of people who had registered for the phone.
"We have started delivery and have sent out around 2,200 phones. Out of these, 800 have been sent to Uttar Pradesh where we got the most number of registrations at 28 million," said Mr Goel, following criticism of delays in shipment and doubts about the phone's quality.
The phone, called the Freedom 251, has a 4-inch touchscreen, a quad core processor, front and back cameras, and seven applications. It is being assembled in Haridwar, near Delhi.
"If we are not able to deliver (the phones)... we will face it. But I am not going to run away," said Mr Goel. He said 65 per cent of the parts are made in India and the rest include Taiwan-made chipsets.
India is the world's fastest-growing smartphone market. There are more than 220 million estimated users in a population of 1.25 billion and the market is increasing by around 23 per cent annually.
More than 150 phone-makers, including Apple, China's Xiaomi and Gionee and India's Micromax, are looking to increase their share of a market where the average price of a smartphone is around 8,000 rupees but smartphones are also available for less than 3,000 rupees. So scepticism remains high over the viability of the 251-rupee phone.
Ringing Bells, which also launched an LED television and six other phones (starting at 699 rupees) on Thursday, has remained at a loss to explain its plans to complete millions of orders, which at the current rate of delivery would take well over 10 years. Mr Goel has placed orders for another 200,000 phones, which will be shipped out in the coming months.
Ringing Bells says the Freedom 251 smartphone costs around 1,250 rupees to 1,400 rupees to make, so the company is losing around 180 rupees to 250 rupees on each unit after cutting revenue from app-makers and distributors.
"We need the government's support," said Mr Goel, who hopes for financing from the government.
Experts said the phone would have little impact on the market. "There is a need for a smartphone (in the Indian market) at an affordable price. At the end of the day, quality needs to be good. It must have high resolution and good battery power. To maintain sustained performance over a period of time is going to be difficult," said Mr Romal Shetty, partner and head of telecom at KPMG.