It can be easy to forget that about half of the world’s population, about 3 billion people, are still offline. Feature phones offer a lot of connectivity options with internet access, social media OTT services, and apps through the KaiOS ecosystem.
If we look at the break down of what is happening in the mobile phone ecosystem Android has 75% of the mobile web traffic, Apple’s iOS has 22%. Other mobile OS combined accounted for a mere 2.3%!
With such low penetration, it’s easy to dismiss the feature phone. But there is a bigger opportunity in this market than you might think. Globally feature sales are down 13% Year over Year, but the advanced feature phone segment that comes with 4G is on the rise, up 13% annually. This is the market that’s set to be the channel for the next billion internet users.
Nokia is smart to target this category as it is setting the tone for a communication landscape in the future. It is also the most realistic avenue to challenge the duopoly of Android and iOS.
Apple is not in this space at all while Samsung only controls a small share of the market. Google itself is not involved directly but has invested $22 million in KaiOS, the operating system that is powering what you might call a feature phones renaissance. Indian mobile operator Reliance Jio also holds 16% stake in the company after it invested $7 million. Cathay Innovation invested $50 million in a Series B round back in May.
Between its initial release in 2017 and late 2018, KaiOS has grown from powering zero to 100 million feature phones, CEO, Sebastien Codeville told Quartz. In India, it overtook iOS as the second most popular mobile operating system.
After its early India gains KaiOS has shifted its focus to aggressively targeting African markets where it hopes to rapidly win over market share through a partnership with the Tecno phone brand which is owned by Chinese phone maker Transsion.
Notably, KaiOS does not want to be seen as a rival to Android or iOS smartphone platforms as it sees its offering in a different category. “We will not work in large ecosystem…We are not in a position to compete with a complete smartphone operating system,” Codeville said.
Nokia 2019 IFA launch
Nokia showed of a range of handsets, the Nokia 6.2 and 7.2 are mid-range smartphones looking to compete in a crowded space.
The real stand out devices is the 3310 with 4G that will cost only $20 and a flip phone. It’s 2.8 inch display will have hipsters yearning but what makes it so interesting is that it comes with Google’s Assistant built in.
Voice is ideal for low functionality devices like feature phones. The lack of a high-resolution screen and robust mobile apps means that Google Assistant can provide access to information, services, and applications that wouldn’t otherwise be available to these users. Voice access may even make feature phones more desirable by slightly narrowing the feature gap with smartphones.
Google CEO Sundar Pichai outlined the next billion user strategy in a 2015 blog post saying, “We’d like to help get these next billion Indians online—so they can access the entire web, and all of its information and opportunity.” At the time, Google thought that “cheaper smartphones” was the likely solution to providing wider internet access. The better solution has turned out to be making “cheap” feature phones smarter by simply adding Google Assistant.
Nokia’s focus on feature phones at IFA 2019 might be more telling of the companies vision and long term strategy. The Nokia 6.2 is a beautiful phone and the Zeiss camera lens is a great feature, but with the midrange market being so crowded it makes much more sense to focus on enabling useful connectivity affordable for everyone.