Mobile Handset Analyst (PDF) is reporting that Motorola has decided not to compete in the GSMA-sponsored extension to the Emerging Market Handset: 3G for All.

Last year Motorola won the Emerging Market Handset (EMH) competition with their C113; a GSM handset which could be manufactured for less than $40 a pop. They have since shaved that down to $30 with some impressive cost-reduction techniques.

The 3G for All project is supposed to create a cheap 3G handset for use in developing markets, though the GSMA backed off setting a target price or feature-set in contrast with the original EMH competition.

While 12 network operators have signed up to judge the competition, and promised to buy some handsets from the winner, it remains to be seen if anyone manages to create a 3G handset at a reasonable price and what features such a handset will have.

Motorola couldn’t be reached for comment, but the decision is unsurprising given the tight profit margin on 3G handsets and the unknown potential sales of a really cheap one: to the peasant-farmer voice communications is a much more compelling application than downloading video clips.

The results of the 3G for All competition will be announced at 3GSM in February.®