Emerging markets are fast becoming a major focus in the tech markets, Google included. During Google IO, Senior Vice President of Android, Chrome, and Apps Sundar Pichai spoke about Google’s goals in emerging markets. Pichai mentioned his home country of India, and was met with applause from the audience. While future plans of software and devices are the main ideas focused on during Google IO, there is always something that brings a touch of humanity to the company. This year, it was emerging markets.
Earlier in April we published an article that talked about how there is a shift in the smartphone market. That shift is towards emerging markets and the affects it has on OEMs. At that time, sales reports showed that smartphone sales in emerging markets made a jump from 27.4 percent to 39.3 percent in less than two years. The reason for this shift is essentially market saturation. Smartphone sales in countries like the US have either plateaued or declined. Samsung for example experienced an operating margin loss of about 2 percent during the fourth quarter of 2013. Then Samsung released the Samsung Galaxy S5, which was priced at about $200 at launch for US consumers on a two-year contract. Though a full priced smartphone can easily run customers anywhere from $600 to $800-that’s just the hardware.
In emerging markets spending money on tech gadgets isn’t as easy as it may be for some here in the US. Consumers in the US buy a Samsung Galaxy S5 with a postpaid contract for about $200. Then, to keep the service running, there is a cost per month around $70+. That pricing in addition to the two years consumers are locked in, means a price of $1,880 or more for a smartphone and it’s services. Those numbers don’t translate very easily into emerging markets, where the average annual income is about $1000/year. While this is an issue for both OEMs and Google alike, there are attempts to fix this. OEMS themselves have been trying to up their game when it comes to low end devices. While that is a huge help for some people in the already developed markets, these smartphones are just not priced low enough to make a huge impact. This is where Google has decided to lend a hand to OEMs while helping develop emerging markets and bring the internet (the last frontier, the true land of opportunity) to the people who may need it the most.
Google announced a program called Android One-which is not to be confused with Android Silver-during Google IO. Android One is a program that will have Google working with OEMs to design and manufacture high quality devices at beyond low end price points. In fact, Pichai noted that these devices will cost likely under $100 for customers. However, bringing great devices to emerging markets will not be enough. That is why Pichai said, “We are working with carriers to provide affordable connectivity packages for these devices.” There is currently no name for this program from Google bringing connectivity to emerging markets, but it’s a huge step in the right direction. Especially since bringing them affordable devices wouldn’t bring them connectivity and the same opportunities to grow like other countries have.
Details surrounding the methods of which google plans to take to bring services to emerging markets are still all but clear, which opens the doors for opinions and concerns to thrive and take footing-one of which is subsidized data. To see this work properly, Google will need to be making as much money on ads in emerging markets as they shell out. Since subsidized services means Google would make consumers in emerging markets only worry about purchasing devices (at $100 or less) and that’s it. Google could-theoretically-make their money back simply with advertising and all of the new eyes that would be seeing them. Though there is a concern that arises when talking about subsidized services for emerging markets. The US has study after study showing the addictive nature when it comes to internet or mobile devices. Emerging markets could be very similar if not the exact same in this aspect. The one thing that will definitely not change is business. Business will always be business, and what if the corporations involved begin asking more of these consumers? Only time will tell exactly what will happen after Google has made their move. Still, the idea alone is a very noble idea from Google. Just knowing that this is something they’re working on, that Pichai has not forgotten where he comes from, is enough to bring that touch of humanity to a technology based company.