Feature Phones are Still Relevant: Shipments Grow (YoY) for the Fourth Consecutive Quarter

According to Counterpoint’s Market Monitor service, feature phone shipments grew for the fourth consecutive quarter. This is in contrast with the smartphone market, which is experiencing negative growth rates. Feature phones contributed to 23% of the total handset shipments in Q3 2018 and remains a sizable market.

After the slowdown of shipments from Jio in India, much of this growth came from Middle East & Africa (MEA), which has emerged as the largest feature phone market globally. Shipments in MEA grew at a rate of 32%.

Exhibit 1: Feature Phone market share by Region – Q3 2018

Feature Phone Market Share by Region Q3 2018There are several reasons for the popularity of feature phone segment:

Battery Life: In some of the emerging countries like Africa and India, infrastructure facilities like electricity are still not accessible to a sizable population. According to world bank data of 2014, around 600 million people lacked electricity in Africa alone. There is an increasing usage of mobile payments in Africa, but for remote areas with no electricity, population is dependent on charging stations (shops giving facilities to charge phone for a payment). Battery life becomes an increasingly important factor for choice of mobile phone, and feature phones have much better battery life than smartphones. Feature phones are also being used as a secondary device for calling by many users on account of their high battery life.

Sizable User Base: While there has been a trend to migrate to smartphones, still for the not so tech savvy users using a phone for the first time or the older population requiring ease of use, poor quality of entry level smart phones, low purchasing power of users in the emerging markets and robust built of feature phone are some of the reasons which still makes it a popular choice among users. Also, with 4G feature phones in the market, most popular applications like WhatsApp, Facebook and you tube are available on these basic devices, which is enough for a segment of users, who are not willing to upgrade to the smartphone.

Exhibit 2: Smartphone vs Feature Phone YoY Growth –  Q3 2017 to Q3 2018

Smartphone vs Featurephone YoY Growth Q3 2017 - Q3 2018

Return of Nokia HMD and growth of iTel: The return of Nokia HMD has also fueled the demand for feature phones in the market. 3310 has been a smash hit. Nostalgia combined with good built quality has helped become the second largest feature phone player globally in Q3 2018. iTel also with its localized products have become popular in African market which has helped it become the largest feature phone brand globally.

Exhibit 3: Feature Phone Shipment Market Share (%) Q3 2017 vs Q3 2018

Considering the under-penetrated emerging markets, Feature phones will remain relevant for at least next five years. New low-income users, who would experience mobile for the first time will likely do it through a feature phone first.

Like smartphones, feature phones are also upgrading from 2G to 3G and now 4G phones. Applications and facilities which were only a part of smartphones are trickling down to feature phones as well. It will continue to do so as more operators and OEMs try to monetize from the sizable feature phone base.

KaiOS : Bridging The Digital Divide

Mobile devices have consumed the world. They’re the most successful consumer durable product of all time. Smartphones now get all the attention. In the current evolved state the two major smartphone platforms, iOS and Android) have revolutionized mobile devices by making them smarter through an abundance of  applications and services that satisfy almost any use-case. In the smartphone sector iOS and Android are a duopoly, with Android essentially the only option for anything non-Apple, albeit there are many ‘flavors’ of Android – especially in China.

Beyond smartphones, there are still around half a billion feature phones sold every year. These continue to serve the needs of the roughly two billion feature phones users globally. This is still a huge market catering to a diverse user base many of whom continue to buy and use feature phones in preference to smartphones. The reasons for adherence to feature phones are as diverse as the user base, but include

  • Preference for simplicity
  • Lighter, robust form-factors
  • Longer battery life
  • Lower cost

Some feature phone users also suffer from digital, economic or literacy divides and face barriers to adopt relatively expensive smartphones and data plans. Especially as low-cost smartphones tend to offer poor performance and poor quality.

This is a huge opportunity for the mobile industry, to help bridge the digital divide and enable these users to more fully participate in the digital economy, but on their terms.

A gap exists in terms of offering a solution that can form an ecosystem with different players contributing to bridge this divide.

This is where KaiOS Technologies comes into play with its web (HTML5) based – lightweight operating system with a user interface that can be optimized  for non-touch or feature phone form-factors.

KaiOS is already powering tens of millions of users. It has done this by striking the right partnerships with OEMs and operators across key markets.

KaiOS Key Ecosystem Partnerships so far


Download the complimentary report on KaiOS platform positioning, growth, opportunities, challenges and forecast can be downloaded at our research portal here:


JioPhone: Accelerating India to Cross The 4G Chasm

The most disruptive 4G operator in India Jio, part of Reliance Industries, announced a category of 4G Feature Phone “JioPhone” which is essentially basic feature phone on steroids today on July 21 at the company’s Annual General Meeting (AGM). A brief analysis on this important development

  1. This is as disruptive as the first 100M subscribers Jio raced to in just six months and will help Jio to potentially attract another 100M from rival’s total base of more than 400M 2G subscribers.

  1. Reliance Jio has well thought through the overall value proposition of this offering to accelerate the next wave of 4G subscribers on its network and in process potentially connecting next half a billion users to internet over the next few years who cant afford or doesn’t want to upgrade to a smartphone form-factor.
  2. The so called JioPhone will come in a candybar form-factor with an alpha-numeric keypad maintaining the same usability, however, features a 2.4″ QVGA color display, larger battery, expandable memory, voice commands to control specific “smartphone-centric” functions, pre-loaded Jio ecosystem and other apps while also sporting NFC to enable Jio’s mobile wallet “JioMoney” ambitions
  3. Further, JioPhone subscriber can subscribe to the highly affordable a INR 153 (US$2) pack per month for access to unlimited calling and data, very much inline with average ARPU for Indian mobile phone user.
  4. Furthermore, the users with an additional accessory can stream the live TV content app “JioTV” to their old or new TVs consuming content on a bigger screen for just INR309 (US$4) /monthBrilliant move to enhance the “internet consumption” use-case and make JioPhone a virtual Set-Top-Box (STB).
  5. Putting icing on the cake, the JioPhone will cost Rs 0 (US$0) though with a catch where user will have to pay INR 1500 (US$23) refundable deposit which can be released after 36 months, very smart as it ensures a “lock-in” to the Jio network and ecosystem.

This is a truly disruptive offering with Jio aiming to make almost 5 million units available every week as we believe this will be in very high demand. Having said that, Reliance Jio will have to be careful on few fronts – product quality of this device, Quality of Service (QoS) blanket coverage right to tier-3-4 towns where most of the demand will come from as well as from component supply especially for the low-configuration memory in this device.

We have deep dived into how much this opportunity is from potential TAM demand side as well as supply side constraint perspective and how Jio can drive this into a sustainable and disruptive business model in our exclusive report (see here).

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