Dumb phones, smartphones and the connected billions

Five and a half years ago, of the 3.4 billion mobile subscriptions worldwide, roughly 2 billion originated from emerging markets. By the end of 2012, there were over 5.2 billion mobile phone subscriptions in the developing world alone. In just one decade, emerging market mobile subscriptions increased tenfold, moving from relative scarcity to near ubiquity.

The rate of mobile phone adoption over the past 10 years is unrivalled in the history of mankind. Today, thanks largely to an influx of discount Android handsets priced as low as US$ 23, smartphones have begun their own rapid ascendancy in emerging markets. These affordable devices, powered by Google’s Android operating system, will serve as the catalyst for bringing the next 5 billion people online.

Of the over 5 billion mobile phones in use in emerging markets, well over half are fairly basic. While they may allow access to the Internet, they don’t let users browse easily or download apps. Many companies – including my own, Jana – have designed their web platforms to work seamlessly on “basic feature” phone browsers. Facebook’s own feature phone app, Facebook for Every Phone, recently reached 100 million monthly users.

Yet, as the price of some Android-powered smartphones drops below US$ 25, emerging market consumers have moved away from these so-called “dumb phones” and are purchasing smartphones at an outstanding rate. In the second quarter of 2013, global smartphone sales exceeded feature phone sales for the first time.

According to data from the China Internet Network Information Center, China is now home to over 460 million smartphone users, almost 150 million more than the entire population of the United States. Nearly 300 million of these users have an Android-powered smartphone. This trend is not unique to China. Of the 435 million smartphones sold worldwide in the second quarter of 2013, 79% were Androids. As consumers in other budding smartphone markets – such as India, Indonesia and Nigeria – buy their first smartphones, Android stands to gain hundreds of millions of new users. For much of the developing world, an Android-powered device will be the first point of access to the Web.

What is it about Android that has led to such a rapid uptake of the mobile operating system? The key to its success lies in Google’s decision to make its OS free and open for all developers and smartphone manufacturers. While other companies limit the use of their operating systems to their own mobile phones, any handset manufacturer can build and sell an Android smartphone. This has led to a vast range of Android-powered devices, from sub-US$ 50 tablets and smartphones, to top of the line models.

In China, handset manufacturers are building smartphones that are priced as low as US$ 23. As the next billion emerging market consumers look to buy their first smartphone, they will not be purchasing a US$ 700 iPhone. These consumers will be choosing from a breadth of inexpensive smartphones, the vast majority of which will be running the Android OS.

This global boom in smartphone users has created an outstanding opportunity for brands. As emerging market consumers come online for the first time, companies around the world will have unprecedented access to billions of emerging market consumers. At Jana, we spent the last few years building a platform that can instantly reward 3.48 billion emerging market consumers in over 100 countries with prepaid mobile airtime. It allows brands to offer mobile rewards to users for the action of their choice, enabling anything from cross-platform social marketing campaigns to targeted global research.

Other companies in fields such as social media, mobile tech and e-commerce have seen significant growth among mobile users in the developing world. Much of Facebook’s astounding user growth over the past few years is directly attributed to the rise of mobile Web in emerging markets. As affordably priced Android smartphones bring Internet access closer to ubiquity, how will your company be poised to engage the next billion global consumers coming online?

Author: Nathan Eagle is the Chief Executive Officer of Jana, a World Economic Forum Technology Pioneer company. He took part in the session Innovating into the Future at the Annual Meeting of the New Champions in Dalian, China.

Image: Costumers browse through mobile phones sold in a shopping mall in Beijing REUTERS/Kim Kyung-Hoon.