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New $15 smartphone headed to India

DataWind and Reliance Communications are looking to team up to release the world's cheapest smartphone in India by the end of 2015.

DataWind is working with an Indian telco to produce a $15 smartphone. Pictured is its $37.99 tablet.

Brands like Xiaomi have found incredible success in selling quality smartphones for relatively low prices, but now two companies are teaming up to bring a new meaning to the term "affordable smartphone."

DataWind, a Canadian manufacturer, and Indian service provider Reliance Communications (RCom) are collaborating on a smartphone for India that will cost 999 rupees (the equivalent of $15, AU$20 or ‎£10) according to the Economic Times.

The phone won't be running Android, but will rather be Linux-based, and will likely only support 2G connectivity. The report added that the new device is expected to hit stores in India on December 28.

DataWind and RCom are aiming to sell the phone to those in India who are upgrading to their first smartphone. As of Q4 of 2014, 65 percent of handsets sold in the country were feature phones, according to research by IDC. There's a definite trend of users upgrading, as this figure down from 78 percent at the beginning of Q1 that same year.

DataWind is no stranger to developing cheap hardware. In 2011 it developed the Aakash 7-inch tablet for schools in India, which would end up being sold in the US for $37.99 (AU$55, ‎£25).

The cheapest phone currently offered by the company retails for 1,999 rupees ($30, AU$45 or £20). For comparison, Xiaomi sells its budget Redmi line from roughly $150 (AU$210, ‎£100) while Micromax, a popular brand in India, prices its smartphones between 2000 and 9,999 rupees ($30 - $150).

Suneet Singh Tulu, DataWind's CEO, told Economic Times that such a cheap device is possible thanks to the decreasing prices of processors and memory, adding that the company will soon be closing a deal with a Chinese or Taiwanese chipmaker.

"Our big focus is on network services, apps and content," he explained. "Hardware today is a customer acquisition tool. Once people start using it, we can make money through service offerings."