The Smartphone Market

The emerging markets are rapidly shifting towards smartphones leaving behind feature phones, with more than half of the mobile phones being sold today being smartphones. This is not a small number at more than 500 million annually. The growth is being primarily driven by the low cost emerging markets such as India, China, Brazil, Nigeria and other countries. The citizens there cannot generally afford high cost smartphones such as the iPhone or Samsung Galaxy. They need smartphones which cost between $100-200. Earlier this segment was being mainly served by the low cost low quality Android vendors. Most of these were Chinese and Indians, who used to put their brand on the white box smartphones made in China and Japan using cheap cost components.

However this market has become quite huge; and for major technology companies the fight is not for the hardware dollars but for the software and service ones. Each major tech company such as Google (GOOG) wants to put out its OS to as many customers as possible. Microsoft (MSFT) did not play this game earlier, but given its rapid decline in the computing OS market the company too has changed its strategy. The company bought Nokia (NOK) and is now selling cheap smartphones, under the Nokia X brand for less than $200. It is also using Android to sell phones cheaply. Windows OS is not very popular with customers at the present moment, despite the best-selling Lumia 520 which was the only successful Lumia till date.

Blackberry (BBRY) which is fighting to survive has come out with Z3 in Indonesia in partnership with Foxconn. BBRY’s pricey BB10 smartphones are not selling at all and they have been dumping inventory of its Z10 and Q10 at heavily discounted prices (80% cut in the last one year). The company is also trying to push its Blackberry OS but it will have a tough time, due to the massive strengths of Google and Microsoft.

Motorola’s Moto E launched at a cut-throat price of $120 in the Indian market is an excellent phone for this price point. Moto G has also done well and this new smartphone will help build Android’s 80% plus marketshare in the Indian smartphone market. Samsung had phones at all price points, but never of this high quality. Lenovo is making life tough for Samsung, especially after buying Motorola which gives it a great brand name.