Smartphone penetration in the developing world

by abisola

androids eat apples!

Image by laihiu via Flickr

Over the past few months, sales numbers for Android have shown an astounding and, frankly, unprecedented – almost logarithmic – growth. I won’t bore you with the details here as you can easily Google this information or otherwise check Horace Dediu’s website, which I highly recommend by the way if you like a visual take on statistics. Instead, I want to give a thought to the conclusions of analysts and pundits on the basis of the Android projections, especially in regards to growth potential in the developing world.

The rapid growth of Android, mostly at the expense of RIM (Blackberry OS) and Nokia (Symbian), has resulted in technology pundits and analysts making predictions about the mobile market following the same pattern as the Windows PC market. Are these predictions bold or lazy?

Respected Venture Capitalist Fred Wilson even went as far as dumping Apple stock two years ago and is now actively canvassing developers to move to Android as their primary development platform. His argument is that the new frontier for growth is the developing world and Android – with its commoditized handsets – is well positioned to capture this space. Android devices are probably the cheapest for mobile device manufacturers to produce as the OS is free and all they need do is focus on streamlining manufacturing costs.

Cheap works in the developing world. Apple’s iPhone is expensive and the cost will seem prohibitive to growth in the developing world to any technology analyst looking at the hard, cold numbers. Afterall, if the poverty levels are as high as is claimed, it stands to reason that people in these countries will flock to the cheapest handsets. This is lazy thinking, though, as having grown up in Nigeria myself, I can attest to the fact that Nigerians will borrow, beg and steal (and overextend themselves financially) to buy the latest, greatest handset. The ‘posher’ a phone is, the greater appeal it holds for Nigerians. Fact. Check it up yourself if you are in doubt.

This leads to the question of why, in spite of my assertion, the iPhone adoption rate in Nigeria is so low. Instead, it’s the Blackberry that rules the roost. Loads of my friends who – while in London – used the iPhone discarded it for a Blackberry once they got back to the developing world. This intrigued me and I set about asking quite a few of them why they abandoned the iPhone for a Blackberry. Their responses were even more interesting. There were two main reasons, apparently:

1. BBM. The level of usage of the blackberry messenger service in Nigeria is unprecedented. Literally every Blackberry owner in Nigeria uses the messenger service. Very actively too and not just occasionally. A lot of communications happens via this medium and I have myself been forced into getting a Blackberry primarily so I can keep in touch with my sisters, both of whom are Blackberry owners and for whom communicating via the messenger service is cheaper and more convenient than sending text messages or calling.

2. No credible (or affordable) data plans. The iPhone is a great device for mobile communications and this is irrefutable. I would like to find out the usage stats for iPhone users of voice and SMS vs data. I’m willing to bet that the voice and SMS usage on iPhone probably accounts for an average of about an average of 5% of the total usage. The remainder 95% is dependent on 3G or WiFi data. Mobile service providers in the developing world don’t have great or affordable rates for mobile data usage and even if they do, the nature of this part of the world makes it difficult to serve pay monthly customers and PAYG for mobile data usage is ‘suicidal’ for customers as they can very quickly run out of credits due to apps updating in the background alone.

The attraction of the Blackberry service in this region is due to the fact that their customers pay a flat monthly rate for unmetered Internet connectivity which is delivered via the Blackberry infrastructure, thereby bypassing the mobile operators almost completely. At the moment, no other smartphone can compete with this. Android, iOS, WebOS, Windows Phone, etc all have the same weakness: dependency on data plans, and this is a big stumbling block for penetration of this market.

Anyone who reckons that Android penetration in the developing world is only a matter of course as a result of the affordability misses a trick or two if they don’t take the lack of data connectivity into account.

 

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