Breaking the Affordability Barrier: How to Connect the ‘Next Billions’

by Jeff Wiener on February 28, 2013

While smartphones are becoming increasingly affordable for us here in the West, the cost of even the lowest-end handset remains a barrier to smartphone expansion in the world’s emerging mobile markets. In an engaging keynote address about connecting the ‘next billions’ in emerging markets at this week’s Mobile World Congress trade show in Barcelona, Manoj Kohli, CEO of carrier Bharti Airtel – which operates in India and Africa—gave a hard target for the mobile world to hit:. If you want to break the affordability barrier, the price of smartphones needs to drop to $30.

Of course while the price needs to drop for smartphones to be adopted, everything else associated with mobile infrastructure needs to rise, and that’s where companies run into problems. Unlike traditional cell and feature phones, modern smartphones aren’t made specifically with data consumption constraints in mind, a problem that plagues even the most powerful 4G LTE networks, meaning there’s little chance these phones (at least in their current form) will ever be affordable, let alone work, in emerging markets.

What companies need, of course, is a mobile strategy for emerging markets, but such a complete and total rethink of smartphone design– one that would seriously incorporate data and cost constraints– takes time, energy, resources, and funds, and selling the phone at $30 means there’s little these companies will get in return.

As we’ve said here before, the world is full of untapped smartphone markets, and with companies looking to make inroads into places like Africa and Asia, completely new development and marketing strategies will be required. What’s interesting, however, is just how far away companies are from hitting Kohli’s $30 target.

Arguing against this $30 ceiling, Nokia CEO Stephen Elop noted that others factors play into the total cost of a phone, including network connection and electricity, concluding that a phone that was more expensive yet was proficient at managing data consumption and had a low upkeep cost would be of more value to the average consumer in than a low purchase price.

To that end, as TechCrunch writer Natasha Lomas explains, Nokia’s own “strategy for emerging markets has been to beef up its feature phones, in its Asha line and other Series 40 handsets – such as the Nokia 301 which launched yesterday. That device retails for around $85, while Nokia’s cheapest Windows Phone smartphone retails for around $185.” All still well beyond the affordability barrier.

Of course many remain optimistic that low cost smartphones are just over the horizon. At last year’s Mobile World Congress, Google CEO Eric Schmidt dubbed 2013 as the year that the cost of smartphones would drop to that of feature phones, with his price target more than double that of Kohli’s at $70.

But that said, whether $50 or $70 smartphones are truly affordable or whether $30 is the price that finally breaks the barrier, as companies continue to see the possibilities in emerging markets they’ll continue find ways of producing devices that are affordable and that better manage data network resources, the latter being something that could actually benefit us all.

{ 2 trackbacks }

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