Google's Potentially Winning Move-Investing in Feature Phone OS
When you are carrying out online stock trading, you'd realize that the technology sector opens up many opportunities irrespective of the way the market is progressing. This time, feature phones appear to be the next big thing.
Feature Phones a Growth Opportunity? You Got to Be Kidding!
Feature phones are still alive, at least in developing countries such as India having emerging markets. And with the country overtaking the United States as the second largest market for smartphones after China, Google ($GOOG, $GOOGL) wants to capitalize on this despite enjoying the highest market share for smartphone operating systems (OS) with its Android. That's why it has made an investment worth $22 million in feature phone OS provider, KaiOS. This OS has become India's second most popular mobile OS, toppling iOS.
Feature Phones Seeing Huge Demand in India
KaiOS is a startup based in San Diego and powers Nokia's ($NOK) feature phones along with India's increasingly popular feature phone Jio Phone, released by wireless carrier Reliance. Reliance Jio is the first carrier to provide 4G services in India at prices that totally dumbfounded rival carriers such as Airtel and Idea. Its feature phones are attractively priced too, making them extremely popular among the poorer sections of the vast Indian urban and rural population. KaiOS has also revealed that Google's apps would now be integrated into the Nokia feature phones powered by KaiOS.
Feature phones may seem to be inferior options but their popularity is only increasing, even more than smartphones. Research by Counterpoint, quoted by Motley Fool in this Nasdaq article, states that there were 1.55 billion smartphones shipped globally. That, however, was a growth of just 2%. Feature phones deliveries, though, grew 5%, touching 450 million.
Feature Phone Market Witnesses Annual Growth
This is the first time in many years that the feature phone market has witnessed annual growth. According to analyst Neil Shah, new 4G models are fueling this demand, having replaced the older 2G ones. Nokia's 3310 and 8110 models led the charge, and they are licensed by HMD Global which shipped 70 million devices last year, apart from these models. More than 40 million KaiOS devices have shipped globally.
High-end feature phones might cost as much as entry level smartphones, but Reliance Jio offers them with really cheap data plans in India. That's a key factor why people buy feature phones and use the ones they already have, rather than making the smartphone upgrade.
Last year, KaiOS wasn't even considered a standalone OS. But it still has managed to capture 15.1% of the Indian market. KaiOS has now filled the gap that existed between smartphones and feature phones by adding more features and apps to make the feature phones more like smartphones than basic phones. Among these features are newer apps, NFC payments and 4G network support.
KaiOS Could Lead Customers to Android
The sudden growth of KaiOS has made Google sit up and take attention. KaiOS is making a big impact in India, where the smartphone market is also seeing exponential growth. Google's investment in KaiOS ensures that its apps such as Search, YouTube, Maps, Assistant, etc are featured in devices powered by KaiOS. As users get to like these apps on their KaiOS feature phones, they'd eventually gravitate towards Android smartphones, or at least that appears to be Google's logic according to Motley Fool analysts. Google is making a firm investment for the future and capitalizing on a potential gold mine.
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