The “emerging market” handset trap

Today at Mobile World Congress, Vodafone announced “the world’s cheapest phone”. At $15 it certainly scores low on the price tag – which is good – but it also scores low on functionality – not so good. Not only is this a problem for any end user who might need (or want) to use it for things beyond voice calling and SMS, but it’s also perpetuating a long-standing problem in the social mobile world dating back over five years.

With the ICT4D community putting an increasing focus on “smarter phones” – ones which feature downloadable applications and allow for cloud-based solutions, for example – where do phones like today’s Vodafone 150 fit in? Aimed specifically at emerging markets, these are the kinds of phones Vodafone are hoping will end up in the hands of the very patients or farmers the ICT4D world is itself working hard to reach.

Low-cost phones have certainly achieved one thing – low cost – and in price terms they’ve done exactly what they said on the tin. Over the past five years or so, prices have indeed steadily dropped, as we can see if we pick an early “emerging market handset” winner from 2005 (the Motorola C113), a ZTE phone widely available in East Africa in 2008, and today’s Vodafone 150.

The prices may have changed, but functionality has largely stagnated. You couldn’t browse the web on the Motorola in 2005, nor the ZTE in 2008, and today you’d have the same problem on the Vodafone 150. You can’t download applications onto any of them, either. They all have monochrome screens and look pretty-much-the-same despite having a five year gap between them. Very little has changed other than price, it would seem. Voice and SMS remain king at the bottom of the pyramid, or so it would seem.

The real trick is to reduce the price of these phones whilst at the same time increasing (or at very least maintaining) functionality, a combination which no manufacturer has yet managed to crack. Nokia’s announcement last week of their cheapest 3G-enabled phone for the Indian market shows prices are shifting downward for data enabled phones, but at $90 it’s still some way off what most would consider affordable for the remaining 1.5 billion people in the world without a phone.

From today’s announcement, a sub-$40 smart phone – which really would change the game – looks to be as far off as ever.

[Related post: “The Digital Divider“]

44 thoughts on “The “emerging market” handset trap

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  9. hash says:

    I don’t think it’s a trap at all. We need both, and it’s clear that the manufacturers are working at driving down costs on both simple and data-enabled phones. While we might all hope to see phones with greater functionality more widely available right now, we can’t ignore the fact that the cheap/simple phones still sell the best and that $15 is still a huge chunk of a lot of people’s income.

    I’m glad to see that you’re being objective about your argument though, even if I don’t agree. It would be easy for you to claim that SMS-only phones are all that are needed, seeing as you run FrontlineSMS. :)

    Maybe I’m reading your argument wrong though… Are you saying that the ICT4D community is building too many apps/services for data-enabled phones, and therein lies the problem? If so, I could agree with that. Build for what people *have* not what you wish they had.

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  26. jke says:

    Well I am also having mixed feelings about this. To me this seems rather odd because cheap phones are already available everywhere.

    These phones would only make sense with a really low power consumption. Granted, most of them aren’t power hungry and will have an adequate standby time, but if I had the choice between buying a crippled Vodafone 150 and …let’s say a used Nokia 1208, 6021 or even 6230, I’d certainly save money for the better phone. An analogy I’d like to use here is: “People in Africa drive Mercedes, BMW and Toyota. Not Tata or Dacia.”

    Besides, try to find someone who will unlock these Vodafone 150 mobiles. I think they are so special, no one really wants to unlock them. Had a colleague who bought two of these Vodafone cheapos for his fam in Zambia and came back with them, telling me that no one could unlock them.

    Interestingly, used iPhones are currently very overprized on the second hand market. Soo… taking the iPhone as the top of the pyramid, it should ring a bell somewhere at Vodafone’s marketing dept. that ppl (in Europe and Africa) really want better phones. After all, those who have the money for better phones will also be the ones with higher monthly telephone bills and generate decent revenue for the operator. Long tail & the herdsman in the bush who walks 5km to recharge his phone – what kind of revenue do they generate for Vodafone? Will SIM-Toolkits run on these phones?

    I’d love to see a $34,99 smart phone with a decent browser, 3G and multiple user profiles.

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  28. Linda (@meowtree) says:

    I don’t think it has to be either or. People with the means will continually upgrade. People without will keep what they have and/or get hand-offs from those who upgrade. So maybe it’s just a question of knowing well who you are designing for (with?), what they have, what they need, and what they aspire to. Feet in the now, but eyes on the horizon.

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  31. Possicon says:

    @emer How about: “Design what people would like to have” lolz … and wait till they have it before using you app!

    Your response will be influenced from which side of the coin you are looking at it. How about old mama who can neither read nor write but uses phone, don’t you think that simple phone will be best for her? Considering the price and power consumption! Now come to the other people who reside in the urban areas with low income… they definitely don’t need this phone (SMS/voice only phone). They like to have good things but dont have much to buy them. For now in Lagos, China phones dominates the market. Nokia phones that goes for N60,000, you can buy the chinese (clone) version generally called “Chinko” for N6,000 with all functionality (Data, Voice and multimedia) they’d like to buy an iphone if they can get it cheaper.
    So knowing really who you target should be the main influence on what is being develop/produced.

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