If there is a 50$ smartphone with decent build quality and reasonable user experience there would be market in the developed world as a second/backup phone. I would gladly buy one for backup. But the problem is that these devices, even though may be functional, lacks in build quality and UI, which makes it a pain to use them after using iOS or Samsung devices.
Why do you assume there is no demand for $50 phone outside China ? Cheap phones are in huge demands in developing countries such as India and Indonesia where per capita income are still very low compared to developed countries such as US and Western Europe.
When a new product starts, people will typically tolerate size and price. Towards market matureness, consumers will demand variety which include different size and form factor. In particular, in the Asian and European market, consumers will demand smaller phones, for ease of carrying, and different look, for uniqueness. The cell phone market development followed the trend from Motorola DynaTAC 8000X to Motorola MicroTAC; then, comes the Nokia 8850 with style.
Consumers are price sensitive, in particular, once the smartphone becomes a commodity.
There is no doubt the market is moving towards $50.00 smartphone. Nonetheless, the high price tag smartphone will still be around.
Junko - Is the $50 price really unsubsidized? That's how I read your article and if so that's amazing. A year ago people didn't expect to see $50 smartphones for much longer.
Incidentally, the previous commentators are underestimating the demand for cheap phones, even in the U.S. There are plenty of poorer folks, cheapskates and large families who are on prepaid in the U.S. with a cheap phone. Upgrading to a smartphone at that price is a no brainer for occasional use of the net.