The Walmartization of smartphones has begun
Cheap smartphones have been proliferating in the developing world for the last year or so – in China, there's been a veritable explosion of the devices, at varying levels of quality – but now seems to be the season for the affordable handset revolution to step up a level. They're even coming to the US.
Today, Walmart announced that it will sell the iPhone 5 off-contract for a plan that costs just $45 a month with unlimited data, text, and voice, and another that gives you unlimited international calls for more than 1,000 destinations in a bunch of countries for just $60. The devices over the counter will be a little pricier – $649 for the 16GB iPhone 5 – but the savings on the contract effectively put $950 a year into the consumer's pocket. That keeps the iPhone as a premium device, but it opens it up to far more consumers and makes it more competitive against Google's Nexus 4, which is available off-contract through T-Mobile's prepaid plans, which run for as cheap as $30 a month – and that's with a device that costs $299 in the US.
The announcement came the day after Bloomberg reported a rumor that Apple will soon sell a cheaper version of the iPhone, costing between $99 and $149, in emerging markets. Apple VP of worldwide marketing Phil Schiller quickly told the Shanghai Evening News that cheap smartphones aren't Apple's future, but he didn't categorically deny that one would happen in the near future.
Meanwhile, RIM's BlackBerry 10 – the Hail Mary device on which the Canadian company's fortunes rest – will come at multiple price points. At the Consumer Electronics Show in Las Vegas, chief marketing officer Frank Boulben said, "We intend over time as we transition the portfolio to have a full range of devices."
To an extent, mobile companies – even Apple – have to offer cheaper smartphones or face becoming marginal players. China's Xiaomi, for instance, has shown that it's possible to build a beautiful, high-spec, and high-performance phone that appeals to a large and ardent following while keeping the price low. Its phones cost $470 cheaper per device than the iPhone in China, despite offering a similar end-to-end experience in which the software and the hardware are designed to work seamlessly together, with media services offered on top.
In China, a raft of other quality smartphones are on offer for cheap, too, some of them made by Internet companies, including search giant Baidu, anti-virus software company Qihoo (which is also in the search game now, and makes most of its money from online games), and ecommerce giant Alibaba which is said to be working on a new version of a phone that will cost just over $100 and feature its own OS, Aliyun (although Google would dispute just how original the OS is).
Chinese computer maker Lenovo is also selling cheap smartphones in numerous markets, including Russia, Indonesia, India, the Philippines, and Vietnam. At CES, Intel CEO Paul Otellini showed off a bunch of cut-price smartphones that use Intel chips and are targeted at emerging markets. In Kenya, $80 Android phones have been out for more than a year.
Smartphones are the new computers, and for many consumers in the developing world – which, remember, is where most of the world's population is – they are the only computers they have ever known. That creates a whole new opportunity for developers to reach a part of the world that is only just waking up to a reality of always-on and always-there Internet.
Earlier today, Ben Horowitz of the VC firm Andreessen Horowitz told the New York Times Bits Blog that cheap smartphones, because they enable developers to reach a global customer base for fast growth, are part of the reason software is "eating the world." Now that more people can afford them, the devouring will take place at a unprecedented pace.
After all, this is the era of the Walmart iPhone.
[Image courtesy The IBM Curiosity Shop]