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Johannesburg - Lower cost devices are the key for smartphone manufacturers if they hope to tap the expect boom in developing markets, Nokia has said.
While many smartphone manufacturers, including Nokia, have launched smartphones in the $1 000 price range, territories like Africa and Latin America present unique challenges to adoption of mobile technologies.
"Every month, people are replacing a feature phone for a smartphone. And that's where the Asha comes in: Asha is so important in driving that affordable smartphone," Patrick Henchie, Nokia head of Product for South and East Africa told News24.
The company recently launched its new Lumia 1520 in South Africa which costs R499 on a 24 month Vodacom contract.
However, the Asha range has been refreshed with the 500, 502 and 503 smartphones. The recommended retail prices for these start at R899 and top out at R1199.
Opportunity
While the screen size of an Asha device at around 7cm is microscopic compared to the huge Lumia at 15.2cm, the smaller phone sports functionality that may better suit predominantly prepaid consumers in developing markets.
"Developing markets are the growth curve for everybody. If you look at smartphone penetration, or just mobile phone penetration, we're growing smartphones exponentially," said Henchie.
According to research firm Gartner, sales numbers show that developing markets and cheaper smartphones are outpacing premium devices.
"Mature markets face limited growth potential as the markets are saturated with smartphone sales, leaving little room for growth with declining feature phone market and a longer replacement cycle," said Anshul Gupta, principal research analyst at Gartner.
For Nokia, Africa and other developing markets represent an opportunity to consolidate its brand proposition.
"That is the strategy: We will continue to convert people from feature phones to smartphones and that's why Asha, as well as Lumia, plays such an important part in our portfolio," Henchie said.
Globally, Nokia is the second place mobile phone manufacturer, grabbing a market share of 13.9% or 250 million units in 2013.
Data cost
That is some distance behind Samsung at 24.6%, but does not take into account the number of legacy Nokia devices, particularly in developing countries.
Henchie said that aspiration played a big role in driving smartphone adoption.
"It always comes down to aspiration; it really does. Lumia is the top of the tech business, whereas Asha is the more affordable smartphone.
"I'm not saying that the Asha customer is not aspirational: I'm just saying that they potentially have slightly different needs to what the Lumia customer does have," he argued.
Check out this YouTube video of Henchie presenting the Nokia Asha range in Johannesburg:
In Africa particularly, the cost of data is an inhibitor to smartphone growth and the fact that the Asha features an Xpress Browser which reduces the data footprint of a web browsing by as much as 90%, similar to the Opera browser, makes it attractive to budget conscious customers.
Dual SIM in the Asha 502 allows people to use one SIM for calls and one for cheap data rates, as an example, but operators in SA have generally been leery about dual SIM technology because of the fear that it may drive customers away.
"There are operators who are busy ranging dual SIM devices. There is the X202, which is a Nokia dual SIM device which is currently ranged with one of the operators," said Henchie, indicating that dual SIM phones are very much in the minority in SA.
Market share
Analyst Arthur Goldstuck said entry level devices like the Lumia 520 and Asha 201 would give Nokia the edge to grow it's footprint in developing markets.
"Entry level smartphones like the Lumia 520 and the Asha 201... set the agenda for consumers who start on those devices and eventually migrate up the value chain to the more high-end devices," he told News24.
Given that Nokia's global market share declined from 19.1% in 2012, Goldstuck warned that the company would have to convert customers to its Lumia brand as a matter of urgency.
"The hope for Nokia is that the brand survives long enough for a long enough proportion of the market to migrate up that value chain to embrace their flagship devices."
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While many smartphone manufacturers, including Nokia, have launched smartphones in the $1 000 price range, territories like Africa and Latin America present unique challenges to adoption of mobile technologies.
"Every month, people are replacing a feature phone for a smartphone. And that's where the Asha comes in: Asha is so important in driving that affordable smartphone," Patrick Henchie, Nokia head of Product for South and East Africa told News24.
The company recently launched its new Lumia 1520 in South Africa which costs R499 on a 24 month Vodacom contract.
However, the Asha range has been refreshed with the 500, 502 and 503 smartphones. The recommended retail prices for these start at R899 and top out at R1199.
Opportunity
While the screen size of an Asha device at around 7cm is microscopic compared to the huge Lumia at 15.2cm, the smaller phone sports functionality that may better suit predominantly prepaid consumers in developing markets.
"Developing markets are the growth curve for everybody. If you look at smartphone penetration, or just mobile phone penetration, we're growing smartphones exponentially," said Henchie.
According to research firm Gartner, sales numbers show that developing markets and cheaper smartphones are outpacing premium devices.
"Mature markets face limited growth potential as the markets are saturated with smartphone sales, leaving little room for growth with declining feature phone market and a longer replacement cycle," said Anshul Gupta, principal research analyst at Gartner.
For Nokia, Africa and other developing markets represent an opportunity to consolidate its brand proposition.
"That is the strategy: We will continue to convert people from feature phones to smartphones and that's why Asha, as well as Lumia, plays such an important part in our portfolio," Henchie said.
Globally, Nokia is the second place mobile phone manufacturer, grabbing a market share of 13.9% or 250 million units in 2013.
Data cost
That is some distance behind Samsung at 24.6%, but does not take into account the number of legacy Nokia devices, particularly in developing countries.
Henchie said that aspiration played a big role in driving smartphone adoption.
"It always comes down to aspiration; it really does. Lumia is the top of the tech business, whereas Asha is the more affordable smartphone.
"I'm not saying that the Asha customer is not aspirational: I'm just saying that they potentially have slightly different needs to what the Lumia customer does have," he argued.
Check out this YouTube video of Henchie presenting the Nokia Asha range in Johannesburg:
In Africa particularly, the cost of data is an inhibitor to smartphone growth and the fact that the Asha features an Xpress Browser which reduces the data footprint of a web browsing by as much as 90%, similar to the Opera browser, makes it attractive to budget conscious customers.
Dual SIM in the Asha 502 allows people to use one SIM for calls and one for cheap data rates, as an example, but operators in SA have generally been leery about dual SIM technology because of the fear that it may drive customers away.
"There are operators who are busy ranging dual SIM devices. There is the X202, which is a Nokia dual SIM device which is currently ranged with one of the operators," said Henchie, indicating that dual SIM phones are very much in the minority in SA.
Market share
Analyst Arthur Goldstuck said entry level devices like the Lumia 520 and Asha 201 would give Nokia the edge to grow it's footprint in developing markets.
"Entry level smartphones like the Lumia 520 and the Asha 201... set the agenda for consumers who start on those devices and eventually migrate up the value chain to the more high-end devices," he told News24.
Given that Nokia's global market share declined from 19.1% in 2012, Goldstuck warned that the company would have to convert customers to its Lumia brand as a matter of urgency.
"The hope for Nokia is that the brand survives long enough for a long enough proportion of the market to migrate up that value chain to embrace their flagship devices."
- Follow Duncan on Twitter
