News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Monday, 18 May 2009

Nokia's cheapest emerging markets phone vs. El Vergatario

Emerging markets winner? The Nokia 2720 Fold - picture from Cellular News

Just when I'd finally recovered from the side-splitting hilarity of discussing the (allegedly) saucily-named low-cost cellphone recently launched in Venezuela, along came another emerging markets handsets story to remind me of the fun.

The (nudge, wink) Vergatario will cost the man and woman on the streets of Caracas a mere USD15. It's recently been reported in the press that this represents only 25% of the cost of manufacturing and distributing the device. According to the country's state news agency, there is "a long-term project to export phones from Venezuela to the rest of Latin America". It will be interesting to see whether the Chavez Government would be interested in subsidising cheap phones for the masses beyond the borders of their Bolivarian Republic. Last year, I had the opportunity to visit the HQ of Venezuela's renationalised national incumbent wireline operator, CANTV. I learned a little about the company's (and the Government's) desire to use ICT/telecoms as a driver of Bolivarian socialism - but not enough to speculate with any degree of confidence about whether this could include underwriting the cost of handsets in markets where CANTV's mobile unit, Movilnet, would not have the opportunity to recoup the subsidies during the subscription lifecycle of the customer. I suppose it's theoretically possible that an arrangement could be worked out with friendly operators elsewhere in Latin America, or even elsewhere in the world.

Let's assume for a moment that something of that sort does not turn out to be feasible. With which handsets would a non-subsidised El Vergatario be competing on the global low cost devices market?

One suite of such handsets has been launched recently by Nokia, according to a Cellular News item I received today. The Finnish device maker says the new phones are aimed at emerging markets and come preloaded with a range of Nokia's mobile internet services. The Nokia 2730 classic, Nokia 2720 fold and Nokia 7020 each come Internet-ready, and work with Nokia's range of emerging markets services.

The article quotes Nokia's Alex Lambeek, who says "we've seen mobile technologies catalyze the growth of the informal sector across the world, empowering local entrepreneurs and having an immediate and lasting impact on people's lives. Services like Nokia Life Tools and Ovi Mail, combined with the mobile phones we're launching today, bring powerful solutions that can be the gateway to knowledge, entertainment and people, without the need for a PC."

According to extensive Nokia consumer research, states the article, nearly 50% of consumers in emerging markets would indeed rather connect to the Internet over a mobile phone than a PC.

An interesting component of Nokia's service bundle is Ovi Mail, "which has the potential to be the first digital identity for many people in emerging markets" Unlike most other email services, the Cellular News article reminds us, "an Ovi Mail account can be created and used directly on a Nokia device without ever having to use a PC." The article indicates that since the launch of the beta service in December 2008, around 90% of Ovi Mail accounts have been created on a Nokia phone rather than a PC.

How do these devices stack up price-wise against the Venezuelan phone?

The most affordable of the set of three is the Nokia 2720 Fold, a compact clamshell handset expected to begin shipping in Q3 2009 for an estimated retail price of EUR 55 (USD74) before subsidies and taxes. By my maths, El Vergatario comes in at around USD60 when not subsidised by the Venezuelan state, so it does look competitively priced vs. a comparable device from Nokia. The Venezuelan handset, however, is a CDMA standard device. Presumably a GSM version would need to be on offer if the Chavez Government really does mean to export the phone.


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