India a hotbed for next-generation smartphones on the cheap

Google, Microsoft and Mozilla have all partnered with local vendors

Sundar Pichai onstage at Google I/O 2014

Sundar Pichai onstage at Google I/O 2014

India has become the battleground for a new generation of low-cost smartphones, with Google, Microsoft and Mozilla all hoping to lure new users onto their platforms and services.

A recent report from telecommunications equipment vendor Ericsson highlighted why India is such an interesting market. The country added 28 million mobile subscribers during the first quarter, the largest increase of any country. However, that increase came on top of a low base. Just 6 percent of Indians are expected to own a mobile phone in the first half of the year, according to Strategy Analytics.

This opportunity hasn't gone unnoticed by companies that have begun to look elsewhere for growth as sales in Western markets have slowed.

"When I go back home to India ... it is exciting to see the impact phones have on peoples lives, but it's disappointing that less than 10 percent of the population have access to smartphones. We want to change that," said Google's Sundar Pichai, senior vice president of Android, Chrome and Apps, during the I/O conference keynote last week.

He hopes to accomplish this with the new Android One initiative, designed to help vendors build high-quality smartphones priced under US$100 thanks to prepackaged reference platforms. The phones will first become available in India from Micromax, Karbonn Mobiles and Spice this fall, according to Pichai.

The Google executive said he had been using an upcoming One phone from Micromax that has a 4.5-inch screen, two SIMs, an SD card slot and an FM radio.

While the first Android One products will be available in India, smartphones based on the initiative will eventually be available worldwide, Pichai said. In general, the growing attention vendors are paying to cheap smartphones will benefit consumers around the world who are on a budget or don't think they need a high-end device. As the difference among features offered by low-cost and expensive smartphones shrinks, the former segment is likely to grow.

All One phones will use the stock version of Android, which runs on Google's Nexus and Play Edition devices and comes with services such as Maps, Gmail and the Play store. When OEMs (original equipment manufacturers) and operators want to add localized apps they have to use the Play store, which lets users install and uninstall them as they see fit.

That Google wants more control over Android isn't a surprise. The greater the number of vendors it can convince to use its services, the more money Android will generate for the company. An estimated 20 percent to 25 percent of Android device shipments do not feature Google services, according to market research company CCS Insight.

Reference platforms or designs lower the bar for developing smartphones by providing the components and resources that manufacturers need to quickly and cheaply put out devices. So even companies that lack the huge research and development departments found at Apple or Samsung can still offer competitive products. The reference designs are one of the main reasons smartphones have become much cheaper in the last couple of years.

Google's OS competitors aren't going to let the company have this market to itself, though. Mozilla Foundation and chip maker Spreadtrum have developed a reference platform of their own, and partnered with Indian vendors Intex and Spice to launch ultra-low-cost Firefox OS smartphones in the next few months, they said earlier this month. Spreadtrum said the phones could cost just $25.

The reference design Mozilla and Spreadtrum have developed lets Intex and Spice build phones with a 3.5-inch screen, Wi-Fi, Bluetooth, an FM radio and a camera.

Firefox OS is built around applications written in HTML5, and Mozilla has been pitching it as more open and better suited to low-end smartphones than Android or iOS. Products based on the OS have been on sale for about a year, mainly in Europe and Latin America, without much success.

Microsoft is also hoping to improve Windows Phone's fortunes via its own partnerships with Micromax and Karbonn.

In April, Microsoft announced Windows Phone would be available for free when used on smartphones and tablets with screens smaller than nine inches, making it easier to develop low-cost devices. The inaugural products for this push in India will be the Canvas Win W092 and the Canvas Win W121 from Micromax. They will start shipping in July and cost $110 and $160, respectively. Both models have 8GB of integrated storage, 1GB of RAM, two SIMs and are powered by a quad-core Snapdragon 200 processor from Qualcomm.

The Canvas Win W121 also has a 5-inch HD screen, an 8-megapixel rear camera and a 2-megapixel front-facing camera. Buyers of the cheaper Canvas Win W092 will have to make do with 800 by 480 pixels on a 4-inch screen, a 5-megapixel rear camera and a 0.3-megapixel front-facing camera, according to Microsoft.

Microsoft is continuing to push Nokia's Android-based X family, as well. Last week, the company launched the X2, which will start shipping in July.

Nokia's X family was launched in February. It combines Android code with an interface that looks a lot like Windows Phone and Microsoft services such as, Skype and OneDrive.

To make a dent in Android's dominance, Microsoft has to partner with more phone makers and Mozilla needs to prove that $25 smartphones offer a good user experience, said Anshul Gupta, principal research analyst at Gartner. Currently, Android has more than 80 percent of the Indian smartphone market.

"It will be very difficult to take market share from Android," Gupta said.

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