Providing affordable handsets with web access key focus of manufacturers

Towards the end of 2011, the main focus of a Nokia offsite in Udaipur was on connecting the next billion. It was for the first time that the Finnish mobile giant was showcasing the Asha, a feature phone that was smarter and more connected than anything that had come before it. It has since become a success story globally - Nokia claims it is the largest selling handset in at least 25 countries.

In India, more people are now accessing the Internet through mobiles rather than PCs, thanks to smartphones becoming cheaper, and handsets such as the Asha and Samsung's Java-based Rex lowering the barriers for web access. The Asha exploits a weakness in the Android line-up, which was essentially created for phones with high-end specs. On a cheaper phone it is a bit like tying an elephant in a cowshed. The old S40-based Asha phones and the new series know they have been made for low-spec phones but try and make the best use of what they have. The smart feature phones are also much easier to use for people who are not that tech-savvy.

But with the lure of the Android being so strong, you need a compelling product to sway people's buying decisions. From its experience with the first set of Asha devices, Nokia thinks it can give a "competitive experience" with its new full-touch phone starting with the new Asha 501, which costs around Rs 5,000.   

Apart from the handset cost, there is also the charge of using it. Can someone able to afford only a Rs 5,000 phone foot a monthly data bill of, say, Rs 500 which the always-connected Android would cost? Maybe not. Thus, the Asha phones come with browsers that compress data usage to as much as a tenth. They also offer operator billing to ensure that the lack of a credit card does not act as a hurdle in the purchase of apps. Sari Harju, Director, Mobile Phones, Nokia India, says the company's strategy of giving one-touch access to the store has started working. Recently, when the Nokia Store announced that it had crossed two billion downloads in India, it was quick to emphasise that half of these had come after the launch of the first Asha phones a year ago. You can run a lot of apps on the Asha 501, with a decent overall experience.

Is this, however, good enough to make entry-level users spend yet again on in-app purchases? Such buys are mostly impulsive and if customers are required to fill in card details the transaction is invariably not going to be completed. With card penetration still very low in India, mobile vendors are pushing for operator billing to ensure this revenue stream does not dry up. It is true many users, especially in the entry segment, still don't bother to access the store. Nokia is baiting them by pre-loading some high-engagement apps that promote the store as a destination for more such products. The strategy seems to be working - over 50 per cent of downloads from the store these days are to S40 phones.

And now with Microsoft buying Nokia, it remains to be seen whether the Asha will continue to be in focus. For Microsoft it would make more sense to reduce the price of Lumia phones, maybe to $100 levels. It is also logical as last quarter, for the first time ever, more smartphones were sold globally than feature phones. But feature phones will continue to have a market for another five years. Those users would be better off with a smarter device like the Asha.

There is no doubt that feature phones are becoming smarter to counter the growing popularity of cheaper Android devices. Android, meanwhile, is trying to eliminate the other big barrier for adoption of smartphones - language. Samsung, undoubtedly the top Android vendor, has set the stage by launching Indian language support for a host of middle and top-end Galaxy devices. Vineet Taneja, Country Head, Samsung Mobile and IT, sums up the move: "The flexibility of interacting with a device in your native language can encourage consumers to explore and adopt."