Reaching out to the next billion connected users is a phrase that has been tossed around liberally.
Mozilla used it when they announced their $25 smartphone initiative. Nokia’s (now Microsoft’s) Stephen Elop used it when Nokia launched the revamped Nokia Asha line last year, and again when he announced the Nokia X. Last year Google used the same phrase as it launched Android 4.4 KitKat.
However, these companies’ efforts are still to leave a mark in the countries where the supposed next billion connected customers reside. Firefox’ $25 smartphones are yet to enter the market, neither Nokia’s Asha nor X line have turned out to be “hot items”, while affordable smartphones running KitKat are still few and far between.
The newly announced Android One program might just be the thing that will turn the dream into reality.
The Nexus line is not the answer
For quite a while now, Google has actually had a product line with the potential to disrupt and take over emerging markets. A $350 Nexus 5 should have been an instant hit in unsubsidized regions, where phones with similar specs often cost more than twice as much. However, Google sells the Nexus line in few markets where it’s likely to actually cause the most disruption.
Google cannot risk upsetting other Android OEMs by making Nexus products available everywhere with their disruptive pricing intact
In many emerging markets, Nexus devices are not available through the Play Store; instead, the phone is distributed directly by LG. In some Southeast Asian countries, the Nexus 5’s retail price is not far from the LG G2, on which it was based, which is close to $600. Even in India, where Nexus devices are sold through the Play Store, the Nexus 5 is being sold for more than $480. Obviously, this blunts the Nexus line’s potential to cause a stir in high growth markets.
While it might seem rather baffling for Google to curb its own product’s disruptive potential, the approach actually makes sound business sense. Since Google had to choose a single OEM partner to produce each Nexus model, Google cannot risk upsetting other Android OEMs by making Nexus products available everywhere with their disruptive pricing intact.
Mediatek is close to pulling it off
Suppose I had to pick one company whose efforts in making smartphones available to the next billion have resulted in more than just lip service, then my choice would be Mediatek.
Mediatek shows that providing integrated reference designs is a good way to reach new users at the entry level.
If you had the chance to spend some time in China, India, or Southeast Asia in the past 24 months, you might’ve noticed that most cheap phones were powered by Mediatek chips. Companies like Lenovo, ZTE, Micromax, or Karbonn, all have Mediatek-powered phones in their low-end and mid-range lineup.
Last year, Research outfit VisionMobile estimated that Mediatek powers more than 500 million mobile devices each year. According to Gartner, Samsung sold close to 300 million smartphones in 2013.
Even if we can’t confirm the accuracy of VisionMobile’s estimate, Mediatek’s achievement shows that reaching the next billion smartphone users is not a wild dream. More importantly, providing integrated hardware/software reference designs is one way to do it.
As we reported earlier this year, Mediatek is offering turnkey solutions that allow companies to leverage their hardware reference designs to bring smartphones to market quickly, without having to invest money in hardware and software development. This enables small companies to sell devices that often have better specs than models from established brands with similar features.
It’s not all rosy in the land of Mediatek devices, though
Most Mediatek powered phones are notorious for being late in getting updates, if any at all
Ever wondered why both the Moto E and Moto G are still considered revolutionary devices, even in markets where similar Mediatek phones, at similar price tags, have been available for a while?
It’s because Motorola is able to offer affordable phones with up to date firmware, smooth UI, and guaranteed timely updates, while most Mediatek-powered phones are notorious getting late updates, if any at all.
This, in part, is due to Mediatek’s own refusal to comply with GNU GPL licensing terms, which makes their source code unavailable for the public.
Furthermore, companies relying on Mediatek’s hardware reference models do not necessarily need to have a robust software engineering capability. Thus, many of them simply do not have the manpower necessary to keep their devices up to date. This problem is so severe, that I often advise people with Mediatek smartphones to simply trade in their devices regularly if they want to stay up to date in the software department.
To be fair, this problem is not limited to Mediatek devices. The issue is also apparent in many low-end and mid-range devices coming from established companies like Samsung or LG.
Android One will change everything
As Sundar Pichai explained on stage at I/O 2014, Google will offer turnkey solutions in the form of ready to use hardware reference designs with hardware from qualified vendors. As I’m sure you’re aware, Google calls this initiative Android One. As we discussed above, Mediatek’s meteoric rise is proof that offering such turnkey solutions is one surefire way to reach hundreds of millions of new smartphone owners.
What sets Android One apart from similar integrated solutions from Mediatek is the fact that Google’s reference designs will run stock Android with updates coming straight from Google, just like the Nexus or Google Play edition line.
Unlike the Nexus program, Android One is open to any OEMs interested. This will allow Google to bring Android One to as many markets as possible, without risking to alienate its Open Handset Alliance partners. According to Pichai, Google is currently working to bring the first Android One devices to India with three local brands, Micromax, Karbonn, and Spice.
One thing that some tend to forget when talking about new smartphone owners in emerging markets is the fact that these people are aspirational, just like customers in mature markets.
New smartphone owners in emerging markets are just as aspirational as users in mature markets
They want to have a device with up to date specs and software that will give them a refined user experience, allow them to enjoy the same apps their friends use, and play whatever gaming craze happens to sweep through their social circle at the time.
This is how Android One will change everything.
The program will enable even small OEMs with barebones software engineering teams to offer devices that will give these new smartphone owners the experience they crave for, and, better yet, those devices won’t go out of date six months down the line.
What about the threat of carrier bloatware in Android One devices?
At his I/O keynote, Pichai mentioned that the Android One program will allow OEMs and carriers to provide locally relevant content that the user has full control over.
Some enthusiasts squinted at the idea of giving carriers the ability to add bloat on top of a pure Android experience. This is a legitimate concern. After all, Verizon’s handling of updates on the Galaxy Nexus remains in our collective mind.
But there are many examples of how the carrier’s influence can actually be useful to consumers in emerging markets.
As Pichai cited on stage, in Kenya, Safaricom has a mobile money product called M-Pesa that lets customers send and receive funds using their mobile phones. M-Pesa now has more than 18 million customers, with more than $800 million exchanged every month through the mobile payment platform. Bloomberg’s Charles Graeber noted during his trip to Nairobi that M-Pesa has not only allowed Kenyans to reduce the risk of being robbed on the streets, but also enabled entrepreneurs to build new, innovative businesses based on the product.
Not all carrier additions are bad for the user.
Meanwhile, Indonesian mobile operator XL Axiata has an Opera Mini based internet plan that allows users to browse the web for less than 25 cents a day. In countries where the average monthly income is still less than $200, such solutions can mean a lot. Relevantly, Pichai said Google is working with local carriers to equip Android One devices with affordable connectivity packages.
Since Pichay emphasized that Android One users will have full control over carrier customizations and updates will come automatically from Google, I think there’s little reason to fret over the influence of carriers.
How will Android One devices change the landscape?
Information regarding the specs of the first Android One devices is still scant. We know that initial devices will have 4.5-inch screens, dual-SIM support, FM radio, and microSD card support, all for under $100.
However, we can use what Motorola has been doing as a proxy to get an idea of what kind of specs these devices might come with.
Even by including the cost of hardware and software development, Motorola was able to launch the Moto E for as low as $130 off-contract.
Assuming that by leveraging the Android One reference platform OEMs will be able to take most of the development costs out of the equation, it’s reasonable to expect sub $100 Android One devices to have comparable specs to the Moto E.
A bit further into the future, constantly dwindling component cost may allow OEMs to offer next-gen Android One devices with specs comparable to today’s Moto G.
Think about it for a minute. In less than 12 months, we could see Android One smartphones with HD screens and quad-core internals, maybe even LTE, for under $100. That means that even folks earning less than $200 a month would be able to enjoy features that even sophisticated consumers in mature markets consider attractive.
If this is not the very realization of democratization in mobile technology, then I don’t know what is.