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‘New category’ of mobile internet emerges in Asia

Reuters/ AFR | July 24, 2013
Telcos, handset makers and content providers are buckling up for a bumpier ride as growth shifts to emerging markets, primarily in Asia.

China, the world's biggest mobile market - where only about a fifth of its 1 billion users are on 3G - has emerged as a fierce battleground for smartphones. Each niche has a different local challenger: Xiaomi, for example, offers phones which could be mistaken for iPhones at first glance, but which sell at less than half the price of an iPhone 5.

This presents problems for the bigger players.

"Our objective is to achieve a leadership position in the market," Lenovo Group CFO Wong Wai Ming told Reuters recently, "and therefore only being involved in a certain price range will not enable us to achieve that."

Even more cut-throat is India, the world's second largest mobile market, where the price of a low-end Android phone has halved in the past year to about $US50, says Sameer Singh, Hyderabad-based analyst at BitChemy Ventures. By next year, he reckons prices will drop another $US20, undercutting feature phones from Nokia and Samsung.

As the price points fall, more users will adopt smarter devices. Between now and 2017, eMarketer estimates China and India will account for more than 28 per cent of new smartphone subscribers. India's share of the world's smartphone subscribers will triple.

This is already challenging existing players. Samsung, for one, is being squeezed at both ends of the market. While rivals at the lower end say it has cut prices on some models on a quarterly basis, others are challenging it at the high end with cheaper handsets with more or less the same specifications.

Indian handset maker Micromax, for example, this month released its Canvas 4 phone with features comparable to Samsung's Galaxy S3 and Note 2, but at up to half the price. "It's very hard for a company like Samsung to compete with these guys," noted Singh.

It's not just the prices of phones that are dropping. Tablet prices are actually falling at a faster rate creating across the region what Singh calls "a whole new category of internet user."

Demand for tablets in the Philippines, for example, grew fourfold in the past year, according to consultancy GfK; prices across Southeast Asia during that period fell by a quarter.

Talmon Marco, CEO of internet phone and messaging service Viber, says the shift from a standard phone to even the most basic device running operating systems like Android is like "moving from a great bicycle to an old leaking 1970s car. That car can still take you from New York to Chicago in a couple of days. The bicycle never will."

Whatever the quality of hardware or connection, a smartphone or tablet shares the same DNA - user interface, apps and access to an online store - which stimulates higher usage, Marco says.


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