The next billion people to connect to the internet in developing countries will do so largely via smartphones, prompting a battle that could favour low-price Chinese manufacturers like Huawei and ZTE over market leaders Samsung and Apple.
Fixed-line telephone networks are often weak in emerging markets and building new ones is expensive, and so smartphones are becoming a vital way to connect populations to the web and bolster economic growth.
Consumers in markets from Nigeria to Indonesia are hungry for features now standard in the United States and Europe that allow them to tweet or watch video on the go.
The challenge for smartphone makers is offering those features at a price local populations can afford.
Manoj Kohli, chief executive of Indian operator Bharti AirtelBSE 0.86 %, said emerging market consumers were ready to leapfrog basic phone models and go straight for smartphones, but that prices could not come down fast enough.
“People in the developing world are going straight to the mobile Internet,” he said in a keynote session at the Mobile World Congress in Barcelona.
Lenovo, known for its PC business, has quietly become the fifth-biggest smartphone maker in the world by almost exclusively focusing on a single market: its home country China.
It is now expanding into Indonesia, India and Russia in a bid to appeal to the rising middle classes there.
And Huawei and ZTE have built share by bringing features pioneered by Apple and Samsung such as touch screens, fast processors and better cameras to the market at prices around $100.
The opportunities in emerging markets appear huge. Just 4 per cent of Africans had smartphones in 2012, according to research group Informa. The figure was slightly higher at 11 per cent in the developing countries in the Asia Pacific region. In comparison, North America had the highest take up of web-connected phones, at 47 per cent.
Between 2012 and 2017, telecoms consultancy Ovum expects that there will be 1.6 billion new mobile connections across the world, with 61 per cent of these coming from Asia-Pacific. Africa will be the fastest-growing region, with mobile connections growing at a compound annual rate of 6.5 per cent.
Lenovo’s Chief Executive Yang Yuanqing said strong price competition among Chinese players had resulted in a smartphone boom in the country of 1.3 billion. Of all the phones sold in 2012, he said 70 per cent were smartphones, and he’s looking to repeat the trick elsewhere in Asia and Russia.