The company's Research Director, Allen Nogee, says that low-cost Android phones will be at blame for the widening of the dreaded fragmentation that has been a pox on the platform. Nogee says that most low-cost Android phones will be released with Android 2.2 or Android 2.3 aboard and despite the price, offer a good amount of features, memory and processing power. Android 4.0 requires handsets to have more a more powerful processor with larger memory which makes it very unlikely to see Ice Cream Sandwich in a low priced Android unit. And that leads to a big gap between high and low-end Android models.
In-Stat's report, Less is More: The Worldwide Emergence of Low-Cost Android Smartphones, predicts that low-cost Android models will continue using the EDGE network in coming years and have processors clocked at 600MHz or less under the hood as those cost less than $10 per unit. The report also suggests that manufacturers will use the "gray market" to buy some parts to avoid having to pay royalty or licensing fees for parts under patent. Companies expected to compete in this segment include Motorola, Huawei, Samsung, MicroMax, Spice and ZTE
source: In-Stat via BGR