Smartphones competition to intensify in 2013 for emerging markets

Mobile World Congress has traditionally been the launch pad of the handset manufacturer's hottest and most innovative handsets. These handsets feature the latest network compatibility such as dual mode LTE for a range of markets and smarter technology such as NFC. More recently emerging markets have deployed 3G technology and due to lower income levels these markets need to offer significantly lower priced handsets.

Industry giants such as Nokia have traditionally been strong in emerging markets where a durability and long battery life have taken precedence over more innovative features present in handsets for developed markets demands are changing rapidly. Nokia is facing competition from Chinese vendors such as Huawei and ZTE who are now capable in offering sub USD100 handsets.

Emerging markets are witnessing growth in the smartphone sector and manufacturers need to seize this opportunity. Enabling users in these markets to experience the mobile platforms that smartphones offer in the short term will enable swifter take up of higher end smartphones when more advanced networks are deployed in these markets. Developed markets are witnessing smartphone penetration levels above 50% however growth of premium handsets is hindered by coverage of 4G networks and long contract durations.

  • Nokia in emerging markets: At the very low end of the handset market Nokia today announced at MWC2013 the Nokia 105 and Nokia 301. Although these are simple feature phones, they satisfy the most basic needs for emerging market countries; ultra long battery life and very low cost. The 105 is expected to be priced at around USD15 and also offers a splash proof, dust proof and colour screen. The 301 has a few more advanced features and is also capable of streaming videos and enables the use of popular apps such as Facebook, Twitter and WhatsApp. It also includes more practical functionality such as dual SIM and a lite version of Mail for Exchange. These two handsets alone should allow Nokia to defend its position at the very low end in emerging markets.

The smartphone market is becoming increasingly more popular and market prices have decreased significantly. Features of smartphones of launched just a year or two ago are now standard on low cost smartphones targeted for emerging markets. Nokia's Asha range is designed to offer a smartphone experience at very low cost targeting developing markets such as India and China.

  • Nokia mid tier: Over the past couple of years, Nokia's partnership with Microsoft to develop a Windows phone designed to target the higher end of the smartphone market has not had the success it initially expected. This strategy enabled it to be part of the Microsoft ecosystem and leverage its software advantage. At MWC2013 today Nokia announce the Lumia 520. The smartphone is expected to target the middle tier of the smartphone market offering a low cost upgrade to the Windows 8 platform. Although the handset is set to launch in the UK in Q2 2013, at a price of USD184, it could see entrance into emerging markets by the end of the year.
  • The Lumia 520 is a step back from the premium end of the market where is has faced strong competition from Apple which has a well established ecosystem, loyal following and of course a small range of premium devices. Further competition has come from Samsung which has opted for the widely accepted Android system which although has not been able to replicate the same ecosystem as Apple, it has been able to offer a very wide range of premium handsets at competitive prices.
  • Huawei's low cost offering: Huawei is a relatively new entrant to the smartphone market and this year at MWC it launched the Ascend P2, one of the fastest smartphones on the market with a 1.5GHz quad core processor. Although this phone will target the premium end of the smartphone market particularly in China it has more recently offered a range of lower cost handsets for emerging markets such as the Y200 and the G300. More recent launches for the emerging markets are Y210 which retails at USD92 in India and features the Android 2.3 Gingerbread operating system, support of dual SIM cards, a 3.5 inch screen and a 1GHz Qualcomm Cortex A5 processor. Microsoft's entry into the handset market which was initiated with an agreement with Nokia has now spread its focus to the African smartphone market and earlier this month announced a new strategy for the African mobile market termed "4Afrika." The 4Afrika initiative saw it partner with Huawei to launch a Windows 8 phone, the Huawei 4Afrika, which is a tailored version of the Huawei Ascend W1. The handset will be available in Angola, Egypt, Ivory Coast, Kenya, Morocco, Nigeria, and South Africa. Its price point is expected to be relatively expensive for most emerging markets at USD150 however these markets are increasingly demanding more advanced handsets.
  • VMK handsets for Africa: VMK, the relatively new smartphone manufacturer founded in 2009, is specifically targeting the African market. Its handset is designed in the Republic of the Congo but assembled in China and currently retails for USD170. It currently only offers the Elikia smartphone which features the Android 2.3 OS, a 650MHz processor and a 9 hour in use battery life. VMK has also developed its own App Store as Google does not accept credit facilities originating from the Congo. VMK is the first handset originating from Africa which could benefit from local support however the major manufacturers seem to have this price point covered and with little information published about volumes and sales, VMK offers a promising yet uncertain future. It is likely that the manufacturer will seek partnership opportunities to optimise distribution in the near future.     

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