Technology | Media | Telecommunications

Thursday, February 23, 2012

Android Smartphone Upside in Developing Markets

The Google Android operating system (OS) has taken the smartphone world by storm. In just two years, Android has become the preferred smartphone OS worldwide.

In the U.S. market, Android reached number one in smartphone OS sales because wireless operators that did not carry the Apple iPhone -- for whatever reasosn -- chose Android as their smartphone solution.

Yet, the Android handsets that are selling well in the U.S. and Europe are not the exact same low-cost Android handsets selling elsewhere in the world.

According to the latest market study by NPD In-Stat, they now forecast that low-cost Android handsets will reach a penetration rate of 80 percent of total smartphones in Africa, India, and China by 2015.

In the developed world a mobile phone isn't merely a communication device, it's a tool for much-needed socioeconomic advancement.

The low-cost Android smartphone segment is comprised primarily of smartphones released with Android 2.2 or 2.3 -- since these versions are a good blend of features with modest memory and processor usage.

The low-end low-cost smartphones generally stick with EDGE and processors running at 600MHz or lower, because a single-core EDGE chip sells for well under $10.

For our purposes, low-cost means smartphones that are $150 or less. Smaller phone manufacturers will sometimes purchase from the gray market where component manufacturers typically don't pay licensing fees, royalties, or taxes for the products they produce.

Early competitors in this market include Huawei, MicroMax, Motorola, Samsung, Spice, and ZTE.

"All-in-all, the way that Android has spread worldwide, low-cost Android will also spread worldwide. But, where most Android phones are being sold in developed regions of the world, low-cost Android will flourish in emerging areas; however, it will face heavy competition in some regions,” says Allen Nogee, Research Director at NPD In-Stat.

Samsung has bada, and Nokia is developing Meltemi. In addition, Microsoft has stated that it wants to sell Windows Phone in these developing regions as well and could aggressively lower prices to gain market share. While Google profits in these regions from advertising revenue, Nokia and Samsung benefit the old-fashioned way, by selling hardware.

Highlights from the latest market research include:
  • Unit shipments for low-cost Android smartphones will approach 340 million worldwide in 2015.
  • The low-cost Android handset segment will cause some fragmentation in the Android platform.
  • The Ice Cream Sandwich (Android 4.0) step-up in memory and processor demands makes this release less attractive for low-cost Android devices.