Apple and Facebook are closing in on the low-end smartphone market

By Richard Nieva , written on April 5, 2013

From The News Desk

Early adopters deserve kudos for getting things kickstarted in the technology world. Thank you, people who bought the first VCRs in the 1970s, the first CD players in the 1980s, the first DVD players for $1,000 in the mid- to late-90s, and the first flat screen TVs for $10,000 in the early 00s. And thank you in advance, folks who will buy the first Google Glasses for $1,500. We salute you for your contribution to technological progress.

But the sign for a maturing market is not about who’s first. It’s about having the ability to serve – and collect money from – an entire population.

Apple and Facebook have traditionally only shown glancing mobile attention to emerging markets, but recent signs indicate that they are beginning in earnest to hone in on serving markets that often go overlooked by big American companies. This will no doubt upset the ecosystem of smaller companies that have already made their business serving those markets. As such, those companies, like Nokia, should feel even more added pressure -- in not just a speculative way, but with a sense of urgency.

In the last few days, Apple's fabled low-end iPhone has started to look like a reality. And earlier this week, the Wall Street Journal published a report that said Apple is working on a lower-end iPhone. The Journal claims it will use casing made of less expensive materials, and come in various colors, similar to when Apple released the first, cheaper iPod Minis in different colors.

Facebook is also explicitly going after emerging markets with Facebook Home, a new interface running on Android software that uses Facebook elements prominently on a phone’s home screen. At yesterday’s announcement, CEO Mark Zuckerberg pointed out that only a third of the world is on the Internet. And when they do finally come online, they will be introduced to it via smartphone. Android has long been the smartphone of choice in emerging markets, mainly because of more attractive price points. My colleague Hamish McKenzie pointed out today Facebook’s play for getting into the Southeast Asian and Indian markets.

As the market gets shaken up, it will affect the companies that have cut their teeth serving emerging markets. They will no doubt make attractive acquisition targets. Take, for example, BiNu, a company that built a cloud-based platform that delivers popular media and social apps like Twitter, Facebook, and messaging to feature phones and low-end smartphones. The company is backed by Eric Schmidt and 500 Startups and raised a $4.3 million Series A late last year.

But even as Facebook and Apple get more serious about emerging markets, biNu CEO Gour Lentell still thinks his company has something they can't offer: infrastructure expertise. "A Facebook phone in Ethiopia would consume far too much bandwidth," he says, adding that most of the developing world still runs on 3G Internet. "The focus of our technology is to work within the existing technology."

Facebook already acquired biNu competitor Snaptu, a similar company that also allowed access to popular Web properties on any Internet-capable phone. So acquiring biNu would be a valuable asset to a company looking to intimately get to know the emerging market environment.

Nokia has already been hurt by the falling prices of iPhones and the range of cheap Android-based handets, as well as their brands growing around the world. As bigger companies like Facebook and Apple rethink their strategies toward emerging markets (the low-end iPhone is said to be coming out in the second half of 2013) the emerging market specialists have an even more imminent problem on their hands.

Because sooner or later, smartphones will be globally ubiquitous. The big tech companies will make sure of that. And eventually they’ll attempt the widespread adoption process again for some other device. Maybe funny looking glasses.

[Source image courtesy topgold]