When industry leaders talk about ‘connecting the next billion’, the emphasis is on potential customers who skip the PC in favour of first using internet on a mobile device. The focus is on countries with a large lower class and growing middle class of consumers.
According to IDC, China will be the world's biggest smartphone market in 2016 with around 20 percent of all smartphone sales. This will push the US, a typical high-end market, to second place. India will be in third place.
While Chinese products largely dominate these markets, the level of quality varies considerably. In some instances, imitation devices selling for USD 10-20, known as grey market devices, are the focus of local suppliers. Big handset makers are increasingly playing into the shortcomings of these relatively inferior products by focusing their emerging market strategies on quality, price and local customer services.
There were numerous examples at MWC. Nokia introduced two low-end Lumia smartphones and two S40 smartphones, the Nokia 105 and Nokia 301 for respectively EUR 15 and EUR 85. In a keynote speech, CEO Stephen Elop underlined the importance of affordable mobile devices for the struggling Finnish handset market. By redefining the affordability of mobile devices, the company hopes to expand in developing countries, Elop said.
Nokia is keeping in mind local standards in these markets. Consumers there expect a full internet experience, but often can't afford an expensive data subscription. To address this the Nokia 105 has the Nokia Xpress browser which compresses data to reduce usage. According to Elop, global users can save up to USD 1 million a day on data costs thanks to the compression technology.
Elop's speech was attended by the CEOs of Bharti Airtel (India) and Qtel (Qatar) and Gary Kovacs, head of Mozilla, which unveiled its Firefox OS at MWC with the Chinese manufacturer ZTE. According to Manoj Kohli, CEO of Bharti Airtel, less than half the operator's customers in India (181 million) and Africa (42 million) are using mobile data services.
The message is clear: consumers in emerging markets are increasingly less likely to settle for the limitations of a feature phone with voice as the main function. Instead they want smartphones with features similar to those on offer in developed markets. This includes internet access, locally relevant apps and support for financial transactions.
Smartphones in Western markets will continue to have higher specifications, but the emphasis will increasingly be on integration with other connected devices, such as TVs and game consoles. In Barcelona, connected cars, home and cities were also increasingly part of presentations.
It was clear at MWC that the next mobile revolution will take place in markets where consumers access the world wide web over mobile devices. For suppliers moving into these markets, success will depend on building scale in order to compensate for lower margins. A positive development for users in these markets is the growing number of cheaper data bundles and handset subsidies offered by mobile operators.
