I'm a bit on a history trip at the moment because it's interesting to discover what has changed in a decade which might help a bit to estimate how things will develop in the future. Let's have a look at entry level phones today vs. 10 years ago.
The cheapest phones are now available for €29.- in the rummage table while what I would consider entry level phones from back then such as the Bosch 738 I had at the time cost in the order of 200 euros, had a two year contract with a basic monthly subscription fee attached and were bought after a lengthy discussion an form fill-out session in a shop. In other words, from a price point and sales experience point of view, the difference is quite significant.
From a feature point of view not much has changed compared to entry level phones 10 years ago. Still, entry level phones are very voice and SMS centric and the cheapest of them come without GPRS and basic Internet functionality. That comes for a couple of Euros extra, however. Also, most entry level phones are only GSM dual frequency capable. The main difference between then and now is size, weight and the color screen, although on entry level devices, resolution is quite poor. Nevertheless, back 10 years ago, such displays would have been stunning.
So how will entry level phones look like in 10 years from now? From a price point of view a few additional euros might be cut but then that's just about it and won't matter a lot. Also, what is there beyond the rummage table? Get a surprise phone in every 20th pack of cereal? So while in the past 10 years it was all about driving cost out of the entry level segment it seems to be this might gradually change into putting additional features in without increasing the price.
With that in mind I think it's quite reasonable to assume that (basic) Internet connectivity will go into such devices with (ultra) thin clients for fashionable services such as Instant Messaging, e-mail, Facebook and other social networking sites and in the future whatever replaces or complements it. Flash memory becomes cheaper by the day and at some point, a euro or two extra buys you enough storage capacity to keep your music library with you even with very inexpensive phones. Same goes for the camera and image storage.
What do you think?