Hands0n
17th August 2011, 08:31 PM
An interesting article popped into the news today.
Earlier this year, the Chinese firm Huawei unveiled IDEOS through Kenya’s telecom titan, Safaricom. So far, this $80 smartphone has found its way into the hands of 350,000+ Kenyans, an impressive sales number in a country where 40% of the population lives on less than two dollars a day.
Read the full article here: http://singularityhub.com/2011/08/16/80-android-phone-sells-like-hotcakes-in-kenya-the-world-next/
I would say that only the Chinese could do this, and I don't think that I am too far wrong in that either. They have a completely different outlook and philosophy to doing business. There is no short term'ism there, witness their seemingly endless pouring of cold hard cash into what has been a loss-making business until this year, by that I mean Three UK (and others). No Western venture capitalist would have supported Three for this long. Look how quickly the banks bailed out of Racal Vodafone at the beginning of Cellular Telephony. It was probably less than 12 months and they wanted their investment back! The Chinese investors would still be feeding that particular golden goose.
And so as Huawei target the African market with their Android handset they are entrenching themselves into the African psyche and will be assured of a business market for the indefinite future. Clever or inscrutable? Call it what you like, but it certainly astute business practise.
Why will this succeed?
For several reasons, not the least being the economy. Africans are not rolling around in cash, theirs is a meagre economy generally. And so there is a strong need to converge as much as possible into a single spend. So a smartphone addresses the need for communications (voice, text, Internet [messaging, social media, on-line services]) and, to a degree, personal computing where there is an app to do almost everything.
Then there is the lack of a wired infrastructure, the curse that is the West's. A mobile networked device makes perfect sense in Africa and other under-developed nations. In these it is a simpler matter to erect cell towers across the nation than to try and cable the country.
Price; getting in below the $100 is going to be trivial for a company like Huawei. If they can enter Kenya at $80 and sell 350,000 of the things then they also have plenty of scope to reduce pricing as the device becomes a commodity item. We can buy Huawei Androids from T-Mobile here for £29, so with sufficient market liquidity in Africa we can envisage a similar dollar price for the locals there, in due course.
"In the beginning of the 21st century, the mobile telephone was the reserve of an elite few and the gadget’s sole purpose was to make phone calls and send text messages. Today, all this has changed and the mobile phone is no longer a luxury but a necessity. By morphing and adopting into various aspects of our lives, the mobile phone has gone beyond its original purpose of phone calls and text messages and it now serves as a bank, a computer a radio and a television set among other things. In a nutshell, it has penetrated every aspect of our lives".
Dr. Bitange Ndemo, Kenya’s Minister of Information and Communication
What about the others?
Apple, Samsung, HTC, Nokia and the others cannot compete in that market, not at that price. And certainly not at the price a commoditised Android handset in that country is going to reach. But I suspect that the likes of ZTE could make a sensible entry.
OS Wars?
Not a chance. Android has Kenya and will take Africa as a whole. We can anticipate seeing similar penetration in all of the other third-world nations as they leverage mobile technology to empower the masses variously. And pretty much any [legacy] smartphone or featurephone OS is doomed.
This is an exciting development to witness. A true technological dawn in a nation that desperately needs to get connected with itself and the world at large. And the Chinese are going to profit all the way forward while the West can only look on and wonder what the next 90 days will bring.
Earlier this year, the Chinese firm Huawei unveiled IDEOS through Kenya’s telecom titan, Safaricom. So far, this $80 smartphone has found its way into the hands of 350,000+ Kenyans, an impressive sales number in a country where 40% of the population lives on less than two dollars a day.
Read the full article here: http://singularityhub.com/2011/08/16/80-android-phone-sells-like-hotcakes-in-kenya-the-world-next/
I would say that only the Chinese could do this, and I don't think that I am too far wrong in that either. They have a completely different outlook and philosophy to doing business. There is no short term'ism there, witness their seemingly endless pouring of cold hard cash into what has been a loss-making business until this year, by that I mean Three UK (and others). No Western venture capitalist would have supported Three for this long. Look how quickly the banks bailed out of Racal Vodafone at the beginning of Cellular Telephony. It was probably less than 12 months and they wanted their investment back! The Chinese investors would still be feeding that particular golden goose.
And so as Huawei target the African market with their Android handset they are entrenching themselves into the African psyche and will be assured of a business market for the indefinite future. Clever or inscrutable? Call it what you like, but it certainly astute business practise.
Why will this succeed?
For several reasons, not the least being the economy. Africans are not rolling around in cash, theirs is a meagre economy generally. And so there is a strong need to converge as much as possible into a single spend. So a smartphone addresses the need for communications (voice, text, Internet [messaging, social media, on-line services]) and, to a degree, personal computing where there is an app to do almost everything.
Then there is the lack of a wired infrastructure, the curse that is the West's. A mobile networked device makes perfect sense in Africa and other under-developed nations. In these it is a simpler matter to erect cell towers across the nation than to try and cable the country.
Price; getting in below the $100 is going to be trivial for a company like Huawei. If they can enter Kenya at $80 and sell 350,000 of the things then they also have plenty of scope to reduce pricing as the device becomes a commodity item. We can buy Huawei Androids from T-Mobile here for £29, so with sufficient market liquidity in Africa we can envisage a similar dollar price for the locals there, in due course.
"In the beginning of the 21st century, the mobile telephone was the reserve of an elite few and the gadget’s sole purpose was to make phone calls and send text messages. Today, all this has changed and the mobile phone is no longer a luxury but a necessity. By morphing and adopting into various aspects of our lives, the mobile phone has gone beyond its original purpose of phone calls and text messages and it now serves as a bank, a computer a radio and a television set among other things. In a nutshell, it has penetrated every aspect of our lives".
Dr. Bitange Ndemo, Kenya’s Minister of Information and Communication
What about the others?
Apple, Samsung, HTC, Nokia and the others cannot compete in that market, not at that price. And certainly not at the price a commoditised Android handset in that country is going to reach. But I suspect that the likes of ZTE could make a sensible entry.
OS Wars?
Not a chance. Android has Kenya and will take Africa as a whole. We can anticipate seeing similar penetration in all of the other third-world nations as they leverage mobile technology to empower the masses variously. And pretty much any [legacy] smartphone or featurephone OS is doomed.
This is an exciting development to witness. A true technological dawn in a nation that desperately needs to get connected with itself and the world at large. And the Chinese are going to profit all the way forward while the West can only look on and wonder what the next 90 days will bring.