Let’s not forget the feature phones - TechCentral

Let’s not forget the feature phones

Mophethe-Moletsane-180Applications have revolutionised the use of smartphones to such a degree that “dialling” has now fallen off the list of the top five most-used functions.

Apps are undoubtedly big business, and the race is on between the most popular mobile platforms. Google recently surpassed Apple in the number of apps it has on offer with more than 1,4m versus its rival’s 1,2m. Growth expectations for downloads are moreover enormous — forecasts of 269bn by 2017 are doing the rounds.

These statistics easily explain why an average smartphone user spends approximately 90 minutes on their phone every day — a staggering total of 23 days a year, according to mobilestatistics.com. There are no prizes for guessing the most popular downloads: social, gaming and news lead the field, with gaming commanding a 40% share across all major app stores.

In South Africa, banks have played a key role in raising awareness of the value of apps. One would have expected other, less security-constrained sectors to have led the migration of services to mobile, but they are only gradually starting to enter this space. As a result, the app revenue channel, which should form part of a broader e-commerce strategy, remains unexplored across a number of industries.

The expectation is that the increase in smartphone penetration, currently pegged at 39,8%, coupled with the decline in data costs, will result in more traction. These factors, along with a few others, are commonly given in explanation for South Africa’s and Africa’s deviation from global mobile trends.

But the reality is that there’s a lot of value in mobile services, and the opportunity cost of waiting for the realisation of some of these factors (for example penetration rates) equates to billions of rand and a mounting threat of industry disruption by global players.

Facebook’s Internet.org initiative could be a sign that the tech giants are starting to eye low-income, under-penetrated mass markets.
There is also no clear benefit to waiting. Take PC penetration rates by way of illustration: it is rather unsettling that less than 10% of South Africa’s population has a PC. A number of factors have contributed to this, among them heavy operating systems that require more powerful specifications, which in turn curtailed the decline in PC prices.

A similar scenario could easily play out with smartphones. Android’s code base increased from 4,1m lines in 2009 to 15,2m in 2012 for the “Jelly Bean” version.

It is therefore worth our while to investigate new ways of enabling mobile services for the 60% of mobile users who are less likely to carry a high-end device in the near future.

The Sim Application Toolkit (commonly referred to as STK) is one option that could be revisited and marketed as a means to provide mobile services on Sim modules, independently of the handset or network. The functionality has its limitations but has been used globally to enable services like mobile banking, proving that it can be secure. Telecommunications operators are currently using STK to provide services such as airtime balances, news, please call services, etc.

Not everyone has a smartphone

Not everyone has a smartphone

An STK-based app model supported by an integration platform similar to eBay’s X.Commerce concept could encourage businesses to leverage the capability. The Sim menus are text-based and could be supplemented by MMS to provide an improved end-to-end experience. Exposing the most commonly used services could attract large numbers of audiences and create a medium for advertising and other revenue streams.

India’s Gupshup and Uganda’s UReport are good examples of how other markets are connecting a large percentage of the population using text based platforms.

The large feature phone user base presents a potential market for a different form of social networking.

Voice should also be a key consideration for a different form of social networking. A model similar to the 1990s’ chatrooms could be adopted for voice social networking. People were comfortable with selecting a person to chat with based only on their username. “asl” (age, sex & location) was the universal ice breaker that would lead into hours and hours of conversations. An STK menu to select available “chatter” through a “social” price plan may just change the direction of the declining voice revenues. Operators could even use airtime to include audio adverts during or before connecting to chats.

The supporting systems are a challenge most final year computer science students would gladly accept.

  • Mophethe Moletsane is media and entertainment leader at Accenture in South Africa

8 Comments

  1. Have you seen the figures on smartphone take up in the SA market? That 60% will be reduced to a scant 20% in 2 or 3 years, which in turn will be knocked out by the second hand pass down so this market segment will be gone in 3 or 4 years. The smartphone trend has sharpened dramatically the beginning of this year, just reference any network or Pep Store smartphone sales.

  2. Andrew Fraser on

    The article seems to based on a flawed premise, i.e. that feature phones will continue to make up the majority of the market. In fact, smartphones sales are accelerating to such an extent, that in the next 18 months to two years the share of smartphones is likely to far exceed that of feature phones.

    Just because there are people using donkey carts, it is no reason to invest time and effort to improve the usability of these carts.

  3. I share your sentiments, STK has been around for a long time and has never realised its true potential. With the South African market still hovering around the 60-80% feature phone line it is primed for these type of applications, however only for the next 4-5 years.

    As eluded to, STK comes with significant challenges, particularly in distribution of these applications as they reside on space constraint SIMs. Running an application of this nature on the SIM could pose a threat to the SIM lifespan something operators would not take well to.

    With that I still believe a social STK application has value in the current SA and emerging African markets, and if launched within the year could be financially feasible.

  4. Periša Ražnatović on

    Even though smartphones are growing fast, they will not kick out the feature phone altogether until their smartphone battery life does not equal that of a feature phone. For many people, the value of voice and sms is enough if it can be used for a period of time without an access to a power grid.

  5. Don’t disagree with the perspective but would like to see some stats on that as the ones that are coming out are showing massive smartphone growth in that market i.e. Pep Store smartphone sales as a percentage of phones sold

  6. Tsholofelo Moeca on

    The Third world poses an interesting business case for feature phones, and the opportunity cost for the “waiting game” is key. Mxit didn’t wait.

  7. Recently purchased a feature phone for R300 that has 3-4 days of battery life. Not going to be duped anymore by Samsung and Apple to fork out R10K+ for pretty much the same sh*t over and over again.

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