• Smart thinking

    With Africa’s mobile phone operators slugging it out to provide ever-cheaper mobile devices, the US$50 smartphone is now a reality.

    Smart thinking

    They called it ‘iDay’. On 29 June 2007 – which seems a lifetime ago now – the world saw the launch of the first iPhone. And the world went nuts. Or, at least, tech-obsessed sections of the developed world did.

    Queues started forming several days in advance outside Apple’s 164 stores in the US. When sales opened, many of those stores ran out of stock. At least 500 000 (some say a million) first-generation iPhones were sold on that first weekend. Depending on the model, it cost either US$499 or US$599.

    The age of the smartphone had begun, and for a long time after iDay, the device was a serious status symbol. Unlike ‘normal’ mobile phones (or ‘feature phones’, as sales staff prefer to call them), smartphones had touch screens and the ability to run third-party applications. Suddenly you had seamless internet access and apps (yes, apps!) in your pocket – all for only US$500.

    It’s taken just eight years to knock a zero off that price tag. And now, as the US$50 looks set to sweep across the world – and across Africa especially – the smartphone has gone from a status symbol for businesspeople and tech geeks to being a ubiquitous tool for economic empowerment.

    In early 2014, MTN South Africa announced the launch of its Steppa smartphone. With a 3.5 inch touchscreen, Android operating system, 2 MP camera and a retail price of ZAR499, it was Africa’s first US$50 smartphone.

    At the time, the company’s chief of customer sales, Farhad Khan said: ‘It is the most affordable smartphone in South Africa, breaking the affordability barrier of smartphones to deliver internet access and a high-performance mobile phone handset to South Africans at an affordable price.’ He added that MTN’s challenge was to bring an affordable device to market, while at the same time ensuring it was not complicated. ‘MTN Steppa throws weight behind efforts to bridge the digital divide and help those who can’t afford high-end smartphones to enjoy the capabilities and opportunities presented by the devices,’ he said.

    As a phone, the Steppa was, well, okay. The screen was smaller than the average smartphone, the battery life was shorter and the performance was no great shakes. But it worked. And it was cheap – and that was a very big deal indeed.

    In an article on BDLive, World Wide Worx founder Arthur Goldstuck summed up the general feeling among reviewers: ‘The phone is significant not because it is a great smartphone but because of the two things it represents: it is a low-cost smartphone aimed at a market that still predominantly uses feature phones and basic phones; and it uses a “reference design” for low-cost, high-specification devices that can be used as a free template of sorts by any brand in the world.’

    It also represented an important milestone in the race to the bottom of the market. MTN’s Steppa came in response to Vodafone’s Smart Mini, a ZAR799 Android phone that went on sale in August 2013.

    ‘We are 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 Vodacom spokesperson Richard Boorman at the time. Even then, the company was already marketing the low-cost, French-made Alcatel OneTouch Pixi and New Zealand-made ZTE V795 to the South African market for just ZAR599.

    Vodacom, in turn, responded to MTN’s Steppa with the launch in August 2014 of its own-branded Smart Kicka device. It ran the latest Android 4.4 KitKat operating system, boasting 4 GB of memory, a 3.5 inch screen and a 2 MP camera. But the spec that really mattered was the price: just ZAR549.

    The Smart Kicka also came with five free 50 MB Power Bundles, providing consumers with immediate connection. ‘By including Power Bundles, we’re making it easy for first-time internet users to experience the web – whether it’s downloading music or catching up with friends on Facebook,’ says Vodacom’s consumer business unit chief officer, Phil Patel.

    ‘At the moment, only 27% of people living in South Africa’s emerging markets have access to smart devices,’ says Patel. ‘We aim to double that number in the next year. The Smart Kicka is not only affordable – coming in at around the US$50 level – but also offers the best from a technology perspective. Put simply, it gives users the best possible internet experience without breaking the bank.’

    Meanwhile, in Kenya, integrated communications provider Safaricom had already announced the launch of their own Yolo smartphone in early 2013. The device came bundled with 500 MB of free data and was powered by Intel Inside. It also had an entry price of just KSH10 999 (about US$120).

    ‘We’re redefining what cost-conscious Kenyans can expect from a smartphone,’ said Peter Arina, general manager of Safaricom’s consumer business unit. ‘The Intel-based Yolo smartphone strikes a unique balance between price and performance. We consider it to be a real breakthrough. It’s great news that Kenya will be the launch country in Africa for smartphones with Intel Inside, and we expect a great reception from our customers.’

    The smartphone has gone from a status symbol for businesspeople and tech geeks to being a ubiquitous tool for economic empowerment

    The continent’s cheap smartphone revolution has resulted in a number of unexpected consequences. For one, global companies are realising that the most effective route into Africa is with established African partners. Intel openly admitted that the biggest contributing factor to its decision to use Kenya as the Yolo’s launch pad in the Africa and Middle East region was the partnership opportunity with Safaricom.

    The Yolo is sold exclusively in Safaricom stores in Kenya – overcoming the distribution and marketing challenges most entry-level vendors ordinarily face. In a statement, Intel said: ‘We are pleased to have established a strong relationship with Safaricom in Kenya … where smartphone usage is increasing and mobile penetration is high. There is also high utility of mobile phones for multiple reasons, such as mobile banking, internet usage, radio, etc.’

    Another side effect of the US$50 smartphone boom is the notion of voice-and-data packages, which give consumers time-based access to the service provider’s network. In March 2014, Vodacom launched its Power Bundle: 10 minutes of airtime for ZAR2, an hour of airtime for ZAR4 and 50 MB of data for ZAR3. The company now sells about 40 million bundles per month in South Africa – accounting for around half of all prepaid usage.

    ‘Our strategy is to provide customers, particularly those on tight budgets, with exactly what they need, when they need it, and at a price they can afford,’ says Patel. ‘Much has been said about bringing down prices for those consuming large amounts of voice and data, but this bundle strategy is the key to driving internet penetration for all South Africans. The success of Power Bundles as well as our other bite-size voice services, like Power Hour, has meant that quite literally millions of people are now able to access services that used to be out of reach.’

    This has allowed Vodacom to lower the average effective price per megabyte of data by 30% over the past year – resulting in a 70% increase in data traffic on its network.

    More than 52% of Vodacom’s 32.5 million South African customers now use data, and that’s all the incentive the company needs to invest in developing its network. In 2014, the service provider invested more than ZAR9 billion in its South African network, with a special focus on providing 3G coverage in emerging markets. ‘Our strategy is very simple,’ says Patel. ‘We aim to have 3G coverage wherever we have voice coverage.’

    ‘At the moment, only 27% of people living in South Africa’s emerging markets have access to smart devices’

    Last July, Tech4Africa founder Gareth Knight predicted a ‘massive boom in Africa’ when the US$50 smartphone hits. He said the continent has over 750 million SIM cards alone (compared to just 220 million desktops) – with device manufacturers and telecommunication providers in Nigeria, Rwanda, Ghana and other African countries already making the most of the rise in mobile subscriber rates.

    Knight was right about the ‘boom’. Before the year was out, the US$50 smartphone rush was echoing across Africa. In November 2014, Vodacom announced that it sold 250 000 units of the ZAR549 Smart Kicka in the first six weeks following its launch.

    That same month, MTN announced the launch of an even cheaper (and better) Steppa 2 – along with an MTN Steppa Tablet. The selling price: ZAR999.

    Good news, Africa. Barely a decade since the US$500 smartphone hit the international market, the US$50 smartphone has landed on our shores. And it’s brought its friend – the US$100 tablet – along for the ride.

    By Will Sinclair
    Image: Gareth van Nelson/HSMimages