Why the Surge of Low-Cost Smartphones is a Boon for BBM


76801711Feature phones are going away. People around the world are trading in their old models for shiny new smartphones, which are getting less and less expensive. The transition was especially evident at Mobile World Congress earlier this year, with many manufacturers racing to sell to the low- and mid-range markets.

Feature Phone vs. Smartphone: What’s the Difference?

It used to be easier to tell the difference between feature phones and smartphones. Feature phones used to be basic handsets with voice and SMS capability, and possibly a rudimentary way to connect to the Internet. To generalize, they had proprietary operating systems and couldn’t run apps.

Smartphones did have an operating system and an API, and they could run apps — most notably email and web browsers. (Again, I’m generalizing. There are exceptions: some feature phones had browsers and other bells and whistles.) Smartphones also had more computing power and better Internet connectivity (WiFi), global positing system (GPS) units, near-field communication (NFC) chips, media players, digital cameras, motion sensors, can openers, toenail clippers, etc. (Just kidding about those last two.)

However, as the technology continually evolves, the already-blurry lines are getting even less distinct. Yesterday’s smartphone has become today’s feature phone. But the important takeaway is that the old, basic handsets with only voice and SMS are becoming a thing of the past.

The Numbers

According to International Data Corporation (IDC), the worldwide smartphone market grew by 25.3% year-over-year in Q2 2014 and set a new record of 301.3 million shipments. It’s the first time shipments have gone above 300 million in a quarter. In India, the year-on-year growth was 186% in Q1 2014. The numbers aren’t in yet for Q3, but sales are predicted to be even higher.

The number of people using smartphones is also predicted to grow to 1.75 billion by the end of this year — an increase of more than 22% over the 2013 total of 1.43 billion.

A recent article in The Economist quoted some impressive stats.“In 2012,” says Mr. Jeronimo, “42% of phones priced at less than $80 had a processor faster than 1 gigahertz; by last year, 87% did. The proportion of cheap phones with screens more than 4 inches across went up from less than 8% to 38%. Two years ago, the median price of a smartphone was $325. Last year it was $250. This year it may be $200.”

The Technology

No rocket science or big surprises in the technology corner: The technology is getting smaller, faster, and cheaper. Chipsets from Qualcomm (US), MediaTek (Taiwan), and Spreadtrum (China) are providing ever-increasing quality and ever-decreasing prices.

The Players and Phones: What’s Out There

BlackBerry launched our Z3 smartphone in Jakarta in May. We designed it specifically for the Indonesian market, partnering with Foxconn on manufacturing. It’s a great phone with tons of productivity features and reliable communications, plus it’s stylish and more affordable than our other models. It’s been very popular so far. In addition to Indonesia, it’s now available in Malaysia, India, Singapore, the Philippines, South Africa, and Nigeria.

The Z3 is our first full-featured device under $200, and we think this mid-range market is an exciting place to be. There’s lot of competition here, but where it’s really heating up is further down the spectrum.

Earlier this year, Mozilla announced its plans to offer a $25 smartphone that runs on the Firefox OS — and it has gotten close with the Intex Cloud FX, the latest smartphone to run on the open-source OS, a collaboration with India’s Intex Technologies. The Cloud FX is set to hit the Indian market at 1,999 rupees, or about $33.

Before Lenovo acquired Motorola this year, Motorola launched its Moto E, G, and X in India, and has done well with them. Lenovo is no stranger to the space, with its Vibe X2 and Vibe Z2 aimed at maintaining its worldwide market dominance.

Huawei and ZTE have long been leaders in China, but that country’s new “kid on the block” — Xiaomi — is nipping at their heels with its “hey, that’s just like an iPhone but only costs half as much” phones going toe-to-toe with Apple’s products, not only in China, but in India and other markets as well.

And don’t forget about Nokia, Alcatel, LG, Micromax, and Karbonn. They’re all players in the fast-paced smartphone market, too.

The Markets

The biggest growth is happening in emerging markets. India, as I mentioned above, is poised for tremendous growth. Other top markets are Indonesia, China, Latin America, Africa, and the Middle East. While many of these regions don’t have widespread or reliable mobile networks, it’s getting better all the time as demand increases and as projects like Internet.org — a collaboration of several tech industry giants — work to build the infrastructure and bring these communities online.

Why All This is Good for BBM
Consumers throughout the world are moving to smartphones, and they’re also moving to mobile messaging. With BBM’s cross-platform strategy — our apps for iPhone, Android, and Windows Phone — and our strength in key developing markets, we’re poised to take advantage of this global trend.

We’re growing our user base at a steady clip through original equipment manufacturer (OEM) relationships, and opening up BBM to non-BlackBerry platforms. Another 6 million users joined in Q2 alone, bringing the total to 91 million.

BlackBerry and BBM are strong brands in many of the markets where analysts are predicting double- and triple-digit growth in smartphone adoption: Indonesia, the Middle East, South Africa, and Nigeria. The network effect helps us quite a bit here. As so many people in these markets already use BBM (I’ve even seen people advertising their BBM PINs on bumper stickers in Indonesia), it’s that much more attractive for new smartphone owners.

In addition, new payment offerings like BBM Money and TransferTo, which are solid on BBM due to BlackBerry’s history of security expertise, make BBM even more appealing. In many developing markets, the majority of the population does not have access to banks and credit cards, so must still make payments in cash. Mobile financial services are a big draw.

Handsets are the most visible sign of this trend, but the numbers, technology, and markets are all contributing to the transition from feature phones as well. And BBM is ready to welcome the next billion people to the mobile economic ecosystem.

About Matthew Talbot

I am the Senior Vice President - Emerging Solutions at BlackBerry. I have extensive International Management, Sales and Marketing background in Mobility and Cloud technologies, Financial Services, Telecommunications, and Content in both a “Start-Up” and Public company environment. This includes stints as a senior executive at SAP, Sybase, Mobile 365 and others.

Join the conversation

Show comments Hide comments
+ -
blog comments powered by Disqus