The cellular divide?
Rumors are flying about the much anticipated “gPhone” by Google, especially in light of the recent release of Apple’s iPhone. Will the gPhone replicate the glitz and glamour of the iPhone or focus on function over form? Bets seem to be on the latter, predicting that Google will opt for a low-cost, mass market approach which is likely to generate greater advertising income, the bread and butter of their business.
The most recent buzz raises two points: Google-powered phones will likely utilize an “open” operating system which allows programmers to develop additional phone features, and will require Google to strike deals with handset makers and network operators to develop and service Google-powered phones. The former is not likely to make the latter an easy task given the closed nature of the telecoms market, though progress must be underway as an announcement is expected within a few weeks.
If Google has identified a demand for low-cost mobile phones in the US (probably more accurate to say “lower cost than the iPhone” because this doesn’t necessarily imply that the cost will be low relative to other product offerings), this makes me wonder how device makers and network operators are approaching emerging markets.
Ericsson, for one, is taking a “more of the same” approach. By maximizing the immediate benefits of economies of scale and deploying the same network and product lines as in other markets, Ericsson is also minimizing future costs by avoiding a two stream approach. Their reasoning: should they implement low-cost, lower capacity devices and networks in developing countries, the country is likely to outgrow the shortcut solution in just a few years. On the network side this seems like a sound approach, but I’m still skeptical that there isn’t sufficient and sustainable demand for low-cost, streamlined cell phones in emerging markets.
CGAP is currently conducting research with MSR India to understand how illiterate people interface with cell phones and whether customizations would improve customer adoption. Perhaps the research will reveal that the cost of customization outweighs the benefits, proving Ericsson’s point that both people and markets are adapting themselves more quickly than we can keep up with.
