Rise of the cheap smartphone

Companies

Thalia Holmes

Once, having a smartphone had snob value. Now you can get one for as little as R500, and the choices are increasing.

Six or seven years ago, owning a smartphone was something to brag about. Owners of the iPhone 3 or the Samsung Galaxy could stroke the screens of their chunky, gleaming devices with pride. These phones were an about-turn from the battle for sleekest, thinnest and smallest that had gripped the feature phone market for the better part of a decade.
 
Smartphones represented a new-found intelligence, a new level of internet-driven activity through downloadable applications – apps – and big, clear screens that made doing things like watching movies and YouTube clips a pleasure rather than a chore. Owning a smartphone also meant you could afford to fork out R8 000 or R10 000 for a device. In short, it had snob value.



But those days are fast changing. You can now pay as little as R500 to earn the title of smartphone owner. Major brands are undercutting each other with more and more affordable and "basic" smartphones – partly in response to a growing demand, and partly because of the somewhat saturated environment that already surrounds high-end smartphone devices.

And it's not only the traditional tech companies that are clambering to fill this space. Mobile telecommunications companies have also joined the fray, with the latest South African product being offered by MTN.
The MTN Steppa, an Android "smartphone for everyone", is retailing at just R499, making it one of the cheapest on the market.


And MTN isn't the only one. The Steppa comes in response to the Vodafone Smart Mini, a budget Android phone with a recommended retail price of R799, which went on sale at the end of last year.
"We're keen to make sure that we are providing affordable connectivity options to all income groups and not just those that can afford high- end devices," said Richard Boorman, Vodacom's executive head of media relations.


Vodacom South Africa plans to launch more low-cost alternatives before June. Some of them could be newer iterations of Vodacom's cheapest available phones: the French-based Alcatel OneTouch Pixi and the New Zealand-based ZTE V795, available for R599 – both use Android as their operating system. These low-cost smartphones are not actually manufactured by Vodacom, but are being made available to the South African public through its channels.


"We … work with Vodafone to introduce low-cost smartphones and also partner with manufacturers to drive the costs of smartphones down," said Boorman.


The sacrifice
But in slashing the price by 50% or 70%, something's got to give. Just what are consumers sacrificing in order to enjoy that greatly reduced price tag?


Tech analyst Arthur Goldstuck said the biggest difference between low- and high-end smartphones is the size and quality of the screen. "The cheap phones are 3.5-inch displays, compared with the more expensive five-inch displays," he said. Mobile phone companies are leveraging the use of existing templates to produce smartphones more cheaply than they did before, he said.


Tech writer Tristan Hall points out other significant differences. "It's not just a smaller screen size; they also have much lower-powered processors and poorer cameras, if any," he said. "Battery life is also much shorter, with limited internal storage."
So who would be keen to make the switch?


"I would go for the MTN Steppa," says waiter George Shabangu (32). "It's much better. Anyone can afford it." Shabangu currently owns a pre-paid Blackberry, but he would be happy to make the swap, because "this one is cheaper".


Small-business owner Sebastian Brogan (30) agrees: "I enjoy having a smartphone – it gives me instant connection to family near and far.


"As for all the other perks of an expensive phone, I see no real benefit. The idea that they make people more productive is utter tosh. The next one I buy will be a cheap smartphone."
But Johannesburg-based mother Tara Steyn says she is unwilling to make the change. "It's not worth the hassle and frustration."
And Andrew Burgoyne, a 28-year-old PhD student at the University of Cape Town, who moved from a high-end smartphone to a cheap model, describes his current device as "absolute kak".

But according to Goldstuck, most of the criticism of cheap smartphones comes from people who are used to handling high-end devices.
"People who use cheap smartphones will [usually] be upgrading from a feature phone, not downgrading from a Samsung Galaxy," says Goldstuck. "So the criticism is often ill-informed."


Cheap smartphones versus advanced feature phones
And there's clearly a growing demand for the devices, as competition in the space increases.
Nokia, the Finland-based telecommunications company that once dominated the smartphone market, is clawing back at market share with its own offerings of low-cost models. According to mashable.com, nearly 40% of all smartphone users owned a Nokia in 2010. Those statistics have changed significantly, with Nokia now claiming less than 3% of the global smartphone market by the end of 2013.


But the company is fighting hard to carve out a space in the low-end spectrum of the market, with feature phones that compete with similar smartphone offerings.
"It is more important to look at the features and value offered at a price, rather than just the moniker of 'smartphone or not'," says Leo McKay, head of communications for Nokia in Southeast Africa.
"People are moving towards touchscreen devices, but devices with a full qwerty keyboard, like the Nokia Asha 210, are still prevalent in the South African landscape. Customers look at features and value with apps such as WhatsApp, a range of games, a data-efficient web browser, quality features and battery life ... [These] are important. The most affordable of Nokia's Lumia line of Windows phones, the Nokia Lumia 520, is the most successful device in its price category both locally and globally – in a very competitive category."


As feature phones become more sophisticated and smartphone ranges include simpler models, some argue that the line between feature phone and smartphone is blurring. According to Hall, this is especially true of Nokia's Asha range when compared with the Vodafone Smart Mini or MTN Steppa.
"Feature phones offer some functionality beyond phone calls and SMS though lack all the apps and power of smartphones," Hall says. "They also offer FM radio and some browser capability. In the case of the Nokia Asha phones, they offer some apps, including WhatsApp. These cover the needs for many users."


The biggest differentiator is that smartphones allow for the ongoing development of new applications. "The freely available developer codes allow for a large number of apps to be created on those platforms," Hall says.


The low cost of adaptability and a truly universal platform for app development is what has seen Android become the most popular operating system for smartphones.
According to Strategy Analytics, Android-run phones claimed nearly 79% of smartphone market share in 2013. In comparison, Apple iOS phones claimed 15.5% of the pie and Microsoft-run phones took only 3.6%.

Nokia phones traditionally used Microsoft as their operating system, but are now making use of alternate platforms for some of their models, despite Microsoft's plans to buy out the Finnish mobile company in the next few months.


Leaked images of an Android-powered Nokia smartphone, due to launch this year, surfaced in December. To some, it signalled the ultimate admission of defeat by Nokia, but for others it illustrated the same lesson that the smartphone market is teaching: adaptability could be the biggest key to "smarts".


'Aspirational' smartphones hog the market
The global sale of smartphones is on a bull run.
According to the International Data Corporation last year, for the first time, one billion smartphones were shipped in a single year. Smartphones accounted for 55% of all mobile phone shipments in 2013, up from 41.7% of all shipments in 2012.


"Among the top trends driving smartphone growth are large-screen and low-cost devices," says Ryan Reith, programme director of the company's quarterly mobile phone tracker.
"Of the two, I have to say that low cost is the key difference maker. Cheap devices are not the attractive segment that normally grabs headlines, but our data shows this is the portion of the market that is driving volume."


Local tech research company World Wide Worx recently estimated there are more than 15.5-million active smartphone users in South Africa, translating into more than 30% of the population. Given the country's median monthly salary of R3 000, this is a telling figure.
The company's managing director, Arthur Goldstuck, says the massive figure was attributable to two main factors.


"Firstly, smartphones are no longer expensive phones. The entry-level cost of smartphones has been dropping rapidly over the past two years, and is now the same price as most feature phones. Secondly, smartphones are aspirational for many people." – Thalia Holmes