While sales of low-cost smartphones are expected to continue growing in the next few years, Google, Amazon and other Internet service companies in China may lead price competition in the segment, according to industry sources.

Shipments of low-cost smartphones, defined as models with a selling price of less than US$150, are forecast to double every year from 2010 to 2016, increasing from 4.5 to 311 million units, according to NPD DisplaySearch.

Most of the demand (60%) is from the Asia Pacific region, where a large majority of component suppliers and manufacturing factories are located - providing both time and cost savings, said DisplaySearch.

In China, the trend for telecom carriers to continue cooperating with chipset suppliers, handset design houses and handset vendors for the launch low-priced smatphone models will continue for a while, the sources noted.

Vendors including Huawei Device, ZTE, Lenovo and Coolpad have emerged as the leading group of the smartphone suppliers in China through the offerings of low-cost models, but most of vendors has suffered losses or seen the profits of their handset business decline due to fierce price competition in the segment, the sources revealed.

Lenovo's handset business unit is still operating in red, and Huawei and Coolpad have seen their profits decline, while ZTE and TCL have seen their handset businesses swing from profitability to loss, the sources indicated.

In order to stemming losses, or improving profitability, most branded smartphone vendors in China have been trying to expand their share in the mid- and high-end segment, while pushing their sales through local retain channels or export sales.

But other China-based smartphone vendors such as Xiaomi Technology, Internet service companies including Baidu and Shada Interactive Entertainment, as well as online retail giant 360buy, are likely to continue to adopt aggressive price strategies to pushing sales of their own models, said the sources.

In the global market, the cooperation between Google and LG Electronics for the launch of Nexus 4 at prices ranging from US$299-349 is also expected to lead to the proliferation of more low-priced Android smartphone models, the sources indicated.

Amazon, which has been aggressive in the tablet segment, is expected to release its first smartphone model in 2013 with the same price tactics, which is likely to further drive down the prices of smartphones, commented the sources.