Freedom 251: India firm launches 'world's cheapest' smartphone

The Freedom 251 smartphone resembles Apple's iPhone 4

An Indian company has launched what is being billed as the world's cheapest smartphone.

Ringing Bells said their Freedom 251 phone would cost just 251 rupees ($3.67; £2.56), and there was huge demand in the first hours of sale.

But sceptics have raised questions about the device and the company's price strategy.

India is the world's second-largest mobile market and has one billion mobile phone subscribers.

Freedom 251 is expected to target a market already dominated by low-cost handsets.

Is India's cheap smartphone too good to be true?

The phone has 8GB storage and cameras in the front and back, and its model resembles Apple's iPhone 4, including the home button and icons.

"This is our flagship model and we think it will bring a revolution in the industry," the AFP news agency quoted a spokeswoman as saying.

The smartphone went on sale on Thursday morning but, just hours later, the company had to stop accepting orders after its website crashed due to huge demand: 600,000 hits per second, it said.

Ringing Bells said the phone would be produced locally, even though it still has no factory in India. The prototypes handed to journalists were, actually, of a Chinese-made phone with its brand name, Adcom, covered with white paint.

It has promised to deliver the first devices in four months.

The company had initially said the device would cost under 500 rupees (£5; $7.3), before revealing a much cheaper price at the launch on Wednesday.

But critics have raised questions about the smartphone, saying the price is far lower than what its components would cost, let alone costs with production, distribution and marketing.

"It looks like it is highly subsidized by the company and it is not clear how they plan to sustain this," Tarun Pathak, an analyst with Counterpoint Technology Research, told the Reuters news agency.

The Indian Cellular Association reportedly wrote to the country's telecoms minister Ravi Shankar Prasad saying it was not possible to sell a 3G phone below 2,700 rupees.

Ringing Bells was set up a few months ago and recently launched one of India's cheapest 4G smartphones at 2,999 rupees, the Press Trust of India reported.