Internet.org and why it makes sense now

In the previous post Data uptake in India, I discussed about the current and future state of mobile data consumption in India and the organic ways to achieve the same. This article talks about OTT services and internet.org in particular.


SaaS apps such as Ola will continue to contribute towards organic growth for data among people who can't afford it. But these organic methods will still take a lot of time to start showing results and will depend upon many factors such as the number of successful SaaS apps and the scale which they can achieve. If SaaS apps concentrate at urban areas alone then that won't help much in data uptake since rural areas dominate large parts of India and bringing these rural people online is the real challenge from a long term perspective.

Therefore for short term growth of data among the poor people certain number of inorganic ways can be used.

To be very clear, Organic data growth to me is the one where a user subscribes to a plain/pure data pack and pays from his own pocket. Inorganic data growth is where data is subsidized by a particular organisation/company or when a user pays for a "modified" data pack designed specifically for a particular purpose.

The best way to drive inorganic growth would be to subsidize the cost of internet for poor people who can't afford it. When it comes to subsidies,  the first name to come in our mind is the government. Indeed the US is planning the same with its lifeline initiative. The lifeline initiative in US began with the aim of subsidizing talk time/air time and SMS for Americans who can't afford. Now there are reports of the FCC mulling to include data also as a part of the lifeline initiative.

Even governments of emerging countries can start to subsidize internet for people who can't afford it but as far as I have seen in most emerging countries the governments have been slow in implementation. When implementing such programmes, corruption in emerging countries leads to very little benefit reaching the end user.

Apart from government help, telecom operators and internet companies who derive revenues from ads are actively trying to drive up inorganic growth through initiatives like internet.org etc. But all these initiatives violate Net Neutrality as I have discussed in my previous article Net Neutrality in developing countries.

Even internet.org violated Net Neutrality but ever since Facebook converted internet.org into a programme which any developer can tap into it made internet.org one of the best things on earth.

Although the definition of Net Neutrality might mean different for different people. I for one feel Net Neutrality is all about maintaining fair competition and not giving any one internet entity unfair advantage over another or trying to pull down an entire industry since it affects the operators in some way.

So going by that definition internet.org as of now doesn't violate Net Neutrality. Initially Facebook used to violate Net Neutrality since it only selected a group of companies, most of which didn't compete with each other but after changing internet.org to a platform which every developer can leverage, at least in my eyes it no longer violates Net Neutrality. Only restriction which Facebook imposes for developers signing up with internet.org is that their apps shouldn't consist of any data hogging content and that in my opinion make perfect sense. I mean it would be disastrous if a netflix like startup end up being a part of internet.org. A netflix like startup if included in internet.org would clog the networks and degrade the performance in general for everyone.

I truly feel that after opening up to everyone internet.org, its currently the best way to subsidize internet without actually violating Net Neutrality. Internet.org as of now has only Facebook backing it up along with telecom operators but I feel other internet companies such as Google, Microsoft etc should also join forces to create a bigger subsidized internet where everyone gets a fair chance and no one if put to a disadvantaged.

Subsidized internet -

I have a detailed a complex mathematical model below which is difficult to understand but please do give it a try.

X - Companies interested in subsidising internet
Y - Companies whose revenue market share > 0.5%
Z - Companies whose revenue market share < 0.5%

If the internet is subsidized by a particular company/companies, it should be susidized for all or for none. That's the only way one can ensure fair competition. Lets say X companies are interested in being part of the subsidized internet. Now out of the X companies lets say Y companies have a revenue market share(RMS) of above 0.5%, then these Y companies should pay or can afford to subsidize the internet access from their own pockets. Lets say Z companies that are part or want to be part of the subsidized internet don't have a revenue market share above 0.5%. These companies can't afford to subsidize internet from their own pockets so subsidy for these Z companies should be paid by the Y.

The subsidy for these Z companies that have RMS>0.5 can be A. This A needs to be paid by the Y companies which have RMS>0.5%. This A amount to be paid will again vary. For example companies like Facebook, Google etc that have very high RMS will obviously pay a bigger amount of A whereas companies with a lower RMS will pay a lower amount of A depending on factors such as RMS/profit/market capitalization etc.

Unsubsidized Internet -

If certain companies aren't interested in being part of the subsidized internet then they can be part of the unsubsidized internet. Access to such companies can then only be gained be people who have normal data packs. These companies then don't have to pay any amount to telecom operators for subsidy for others nor for themselves.

FAQ -

Q1. How does this create a level playing field ?

A1.In case the developer/company is a new entrant then the app/website of the developer/company will be one which has 0% RMS. A 0% RMS means the developer/company gets to be a part of the Y group(companies whose RMS<0.5%). Being a part of Y group means data subsidy for the developer/company is paid by the X group(companies whose RMS>0.5). So even though the company/developer might not have the financial muscle in the beginning they can still subsidize access to them. Thereby no one company is at a loss. Access to every app/website will be subsidized irrespective of the financial muscle possessed by the company/developer. Its just that at one point, the subsidy will be paid by someone else and as the company grows it will have to pay the subsidy for itself and for others too.

Once a company crosses 0.5% RMS,  then it will have to pay its subsidy itself and will also have to start paying a part of A amount(th subsidy paid for Y companies).

Q2.Won't the big companies be in a loss by subsididzing smaller ones ?

A2. Not really, I mean the potential benefits(read profits) for big companies by zero rating far outweigh the subsidy cost they may have to pay for smaller companies. Once zero-rating is allowed, companies such as Facebook and Google through aggressive marketing can make millions of new users. These new users will then in the long term provide millions of profit, a part of which will have to be given for small companies subsidy.

Q3.Will the subsidy model have to continue forvever ?

A3.Not really,once internet penetration reaches a certain level and economic conditions improve, the subsidy model can be slowly but surely rolled back.

Conclusion -
Such a model can be a win-win. Consumers who weren't able to come online because of economic constraints can come online. All developers get a fair chance in being accessible to the end user. Its very difficult to increase internet penetration without zero rating and without adopting a wholesale model like this, small developers will be at a disadvantage.

Note - Figures mentioned in the article are just for understanding purposes and should not be taken realistically.

Mobile Data uptake in India

If you have just recently loaded this article on your browser and are not connected to Wifi, then chances are 9 out of 10 that you're using a mobile data connection in case you're reading this on a mobile device.

Mobile data is now an important part of our lives and one can't imagine a world without it.

In this article I will be discussing the uptake of mobile data in India and what can be done to further boost it.

1. Internet penetration in India -

A mobile data connection has at its very core an internet connection. To understand the article, it is first necessary to understand the penetration of internet in India. According to Wikipedia, internet penetration in India is around 20% and India ranks 144 which is below average to say the least. To put this in perspective it means that 4 out of every 5 persons in India are not connected to internet in any manner.

It also means that many people miss out on the multitude of benefits provided by the internet.

2. Wired broadband won't suit India for data uptake in the short term -

Wired Broadband in India as of now is more expensive than wireless broadband. A user has to spend a minimum of $9-$10 every month in order to have the most basic wired broadband connection. In contrast wireless broadband plans start as low as $3 and go all the way upto $25 depending on the speed and data allocated.

3. What's stopping India from uptake of data -

3.a Devices aren't the real issue -

Many people feel that the reason for low internet penetration in India is because of devices. I feel devices aren't the real issue. I agree that as of now smartphone penetration in India is very low and according to wikipedia it stands at just 17%. Smartphones will be the most widely used computing platform in India and as time passes by penetration is bound to increase. Smartphone prices are dropping drastically in all emerging countries and within 2-3 years its not difficult to imagine a decently specced smartphone having the same price of a Nokia feature phone today.

From the images above its clear that both Samsung Galaxy S2 and Redmi 2 have more or less the same specs. The Galaxy S2 at its time of launch 4 years back in 2011 costed $800 unlocked whereas Redmi 2 costs $100. Of course probably the display of S2 is better claibrated, processor of S2 might be a little more powerful and camera of S2 might be better. But more or less the specs are similar and so is the overall performance. What's more fascinating is the price drop from $800 to $100. This is a staggering 87.5% drop in price in just a matter of 4 years which equates to a 20% price drop every year. Unless and until drastic changes are made to Android such that it becomes a resource hogger, specs of smartphones like S2 and Redmi 2 along with proper optimisation should provide a decent user experience for a first time smartphone buyer.


The reason why I made the comparison above is to show the rapid rate of decline in smartphone prices. At this rate its not hard to imagine a smartphone like Redmi 2 costing less than $40 in 3-4 years. Couple the $30-40 price tag with the generally improving standards of living and its not hard to imagine every user being able to afford a smartphone by the next 2-3 years. To be honest, there are already manufacturers churning out $40-50 smartphones in India but these smartphones come with below reasonable specs that lead to a bad user experience in terms of performance. But within 2-3 years there will be smartphones costing just $30-40 which provide a proper Android experience in terms of performance.

Having a device to access the internet wouldn't really be a problem in India or any other emerging country in a few years.

3.b Tarrifs and difficulty in comprehension are the main issue -

3.b.1 Issue of tariffs -

Unlinke device costs which are in a rapid decline as I highlighted above, data costs are going the opposite. Data costs in India have been rapidly increasing over the years and will continue to increase thanks to the change in dynamics of Indian telecom market. For the sake of comparison I am going to compare the 2G data rates of Airtel (India's largest mobile operator) between 2010 and 2015

Look at this article from 2010 on Telecom Talk (India's Fierce Wireless). An extract from the article reads

"Bharti Airtel, India’s largest GSM mobile service operator announced the launch of Pan-India applicable
2GB GPRS pack at Rs.98 per month"

During 2010, 98 Rs. ($1.63)  could fetch a user around 2GB of 2G data or Edge.

Have a look at Airtel's 2015 data rates -

A 2GB data pack now costs around 200 Rs. ($3.33). This is a 100% price hike over a period of 5 years.

For the foreseeable future data prices in India are going to keep increasing for the following reasons -

1.Spectrum becomes more expensive -

Spectrum is the life and blood of a telecom operator. Without spectrum telecom companies simply cannot operate. Earlier in India spectrum was given out at a fixed fee. Following the mega 2G spectrum scam, the government decided to auction spectrum and all forms of natural resources for commercial use. Most operators in India that had acquired spectrum at the rate of peanuts in 1995 have the same spectrum expiring now and need to renew it. However unlike 1995 where operators paid a fixed price for spectrum, they are forced to bid for the same now. This has led operators to spend billions in "renewing" spectrum. Apart form spending billions for that, telecom operators have also spent money on acquiring new spectrum for services such as 3G and 4G. All these billions spent on spectrum will be recovered from the end user in the form of higher data tariffs.

2. Expansion of 3G and 4G -

Operators in India are regularly increasing their spend on capex to expand their 3G and 4G coverage over India. This increased capex again hits back to the user in the form of increased data tariffs.

3. Razor thin margings -

Unlike some telecom markets such as Mexico, operators in India have razor thin margins which when coupled with the huge debt Indian operators currently have make tariff hikes inevitable.



4. Impact of OTT -

OTT players such as Whatsapp after the launch of Whatsapp voice calling would further reduce the revenue of operators obtained from voice calls.

All the four points I mentioned above demonstrate that in the coming years mobile data tariffs in India would only go up. Maybe temporarily tariffs might fall because of the entry of a new competitor but overall it will increase in future.

It is these high data prices that will act as the real barrier in uptake of data services in India.

3.b.2 Issue of comprehension -

For most people reading this article, using a smartphone is something natural and not much of an issue. However the same is not true for emerging countries.

Literacy in India has grown to 74.04% (2011 figure) from 12% at the end of British rule in 1947. Although this was a greater than sixfold improvement, the level is well below the world average literacy rate of 84%, and of all nations, India currently has the largest illiterate population. Despite government programmes, India's literacy rate increased only "sluggishly," and a 1990 study estimated that it would take until 2060 for India to achieve universal literacy at then-current rate of progress. The 2011 census, however, indicated a 2001–2011 decadal literacy growth of 9.2%, which is slower than the growth seen during the previous decade.

One must note that literacy is the ability of a human to read and write a particular launguage. Almost 25% of Indians or one in every four people can't even read or write a particular language. If a human can't even read or write a particular language thoroughly then using a smartphone becomes all the more difficult. This illiteracy then makes using the internet even more difficult since a lot of web content is text in some language and if a user isn't able to comprehend the text, how will he or she interact with it ?.

To have a better idea of what I mean I HIGHLY rceommend reading this article on Tech Crunch ->(http://techcrunch.com/2014/11/29/peering-into-the-minds-of-the-4-3-billion-unconnected/).

 This article explains in a beautiful manner the challenges faced by the offline population to come online.

4. So how does one improve data uptake in India -

100% data uptake in India isn't possible. As I mentioned there are legacy problems such as literacy to deal with before aiming for 100% data upatke. However at the same time 20% is too low and can be substantially increased. There is a significant amount of Indian population that are literate enough to use the internet however don't use it because of mostly one reason and that's the tariff of mobile data.

In today's age, mobile data is mostly seen as a luxury in India and rightly so because mostly people use mobile data for entertainment related purposes. Most operators in India show data as a form of entertainment in their marketing materials. For example Vodafone's ad as to how one can share selfies faster on Vodafone or Airtel's ad as to how Youtube videos stream faster on Airtel. However these kind of stuff will only appease people who have enough disposable income to afford them and not every Indian has this.

India's per capita income (nominal) was $1570 in 2013, ranked at 120th out of 164 countries by the World Bank.

Also the number of middle class people in India who can actually afford data is low. Using World Bank's definition of middle income families to be those with per capita income between $10 to $50 per day, the National Council of Applied Economic Research of India completed a survey and concluded there were 153 million people who belonged to middle income group. This is just 15-25% of India.

Other facts about India

1.Only 46.9% of the 246.6 million households have lavatories

2.At least 30% of the total population of India goes to sleep with an empty stomach.

In a country where one in every two households don't have access to toilets and where one in every three people go to sleep without food, having access to mobile data certainly isn't the top priority.

So when will people access data ?

Real uptake of data in India will only start when data acts as something which can help the person improve his/her living. It will only happen when the $3-$4 spent on a data pack every month will help the person earn $10 more in return

Ola as an example -

Ola is basically the Uber of India. The ride sharing app which has been expanding like fire all over India. Now just like Uber even Ola drivers need to use the Ola app in order to find new customers and for proper billing. For the Ola app to work, it needs a data connection and this is where data succeeds. In case of the ola driver, data acts as a source of income rather than a source of entertainment. It's is at this point where the rather price sensitive Indian subscribes to a data pack because it helps him improve his financial strength.

In a general scenario a cab driver in India would generally be roaming on the streets looking for a probable customer and pick him up. In such a scenario, the cab driver really doesn't need a data connection since all he is doing is manually hunting for customers but in case of Ola, the cab driver needs to connect with Ola to know what customer he needs to pick up and this connection is made by the data pack.

An Ola cab driver I spoke with, told me that in his past he used to work with a travel company and used to drive a cab. He used to own a smartphone when he was with the travel company but never used data since the travel company would simply call him up and tell him about the potential customer but in case of Ola a data connection was mandatory in order for him to know his customers.

Another instance where Ola helped create a data user was when I recommended how cheap Ola was to a friend of mine. That friend who had never used a data pack, started subscribing to a data pack just so he could make use of the Ola and travel at cheaper rates.

More SaaS apps like Ola will drive up internet penetration in India.

Many women in India work as domestic servants in homes performing activities such as cleaning utensils, toilets, wiping the floor, cooking food etc. Now if a particular app can match these domestic servants with households that require such a service then this will in turn drive up data uptake.

For example the domestice servant in my neighbour's house refuses to work on Saturdays and Sundays. Now if there was an app which could show domestice servants ready to work in real time, it could be highly beneficial. For example a women working as a clerk in a hospital from Monday to Friday could use her free time on Saturday and Sunday to work as a domestic servant and earn more money while at the same time my neighbour could get someone to work on Saturdays and Sundays. In both the scenario my neighbour and the women ready to work would need a data pack in order to find each other.

Conclusion

While data can gradually penetrate India over a period of time, the short term growth is most likely to come from SaaS services such as Ola which help a person financially. Although the post is centered around India, the same can be said for other emerging countries such as Pakistan and Bangladesh.

Update -
For Part 3 of the article series, please click here.

Net Neutrality in emerging countries

Net Neutrality is current a hotly debated topic all around the world, especially in USA. One can find all the coverage regarding Net Neutrality in US from top rated websites, so for a change I decided to cover Net Neutrality in emerging countries.

To start off, it is important to remember here that the socio-economic scenario of emerging countires is vastly different from that of developed nations. It is also important to note that the concept of Net Neutrality is not well known amongst citizens/netizens of Emerging countries. In fact certain countries like India have no laws regarding Net Neutrality. In this post I will detail who is breaking Net Neutrality in emerging countries and the consequences it can have.

1. Who is breaking Net Neutrality ?

When it comes to emerging countries, the biggest opponents of Net Neutrality are internet based companies and telecom operators. Internet based companies such as Facebook or Google have or are in the process of breaking Net Neutrality in emerging countries.

2. How are they breaking it ?

2.a Facebook -

Facebook has already broken Net Neutrality in emerging countries through its internet.org initiative. At first internet.org was supposed to be a programme where Facebook along with other members (Nokia, Qualcomm etc) of internet.org would partner with telecom operators around the world and make access to Facebook, Wikipedia, a search engine and some other websites free of cost. That did not seem anti-competitive in nature and indeed when internet.org first rolled out in Zambia the only websites accessible were

AccuWeather
Airtel
eZeLibrary
Facebook
Facts for Life
Google Search
Go Zambia Jobs
Kokoliko
MAMA (Mobile Alliance for Maternal Action)
Messenger
Wikipedia
WRAPP (Women’s Rights App)
Zambia uReport.

The real problem with internet.org came when the platform launched in India. When internet.org launched in India, a lot of commercial websites were made part of the initiative. These websites were clearly not required by a first time internet user. When internet.org was launched in India the following websites were a part of it:

Aaj Tak
AccuWeather
amarujala.com
AP Speaks
Babajob
BabyCenter & MAMA
BBC News
Bing Search
Cleartrip
Daily Bhaskar
Dictionary.com
ESPN Cricinfo
Facebook
Facts for Life
Girl Effect
HungamaPlay
IBNLive
iLearn
India Today
Internet Basics
Jagran
Jagran Josh
Maalai Malar
Maharashtra Times
Malaria No More
manoramanews.com
Messenger
NDTV
Newshunt
OLX
Reliance Astrology
Reuters Market Lite
Socialblood
Times of India
TimesJobs
Translator
Wikipedia
wikiHow

One must note how Facebook has cunningly removed Google as the search engine and replaced it with Bing. This has been done despite the fact that Google provides much better search results than Bing for local Indian content.

One must also note how for every sector except jobs only one website is representing the sector. I will list a few examples.

In case of search for example only Bing is present although Google is a much viable alternative but is not supported.

When its comes to streaming music only hungama.com is present although saavn.com and gaana.com are comparable alternatives which are not supported.

In case of booking travel tickets only cleartrip.com is present although makemytrip.com and irctc are comparable alternatives which are not supported.

Most websites of internet.org are chosen in such a way such that no two websites compete in the same space. The lone exception here are babajobs.com and timesjobs.com.

The present structure of internet.org is such that it promotes monopoly in a particular segment and is a clear violation of Net Neutrality.

2.b Google -

Google is yet to break Net Neutrality in a proper manner but has plans to do the same. Most people might remember Google's ambitious Android One programme. The programme was nothing else but a method by which Google wanted to make sure that Android handsets shipping in emerging countries had their vision of Android and their apps pre-installed. The method would also effectively allow Google to make sure that competing services don't ship on Android devices as one of the conditions for Android One devices was a bloat-free version of Android. Now a bloat free version meant that Google+ which Indians hardly use should be pre-installed whereas something like Facebook which Indians use a lot would classify as bloat. Anyhow with that said Google's Android One project did not pick steam. Google isn't ready to give up hence they decided to subsidize data usage for certain websites for Android One users. This is somewhat similar to internet.org except where internet.org is accessible to everyone, Google's version of internet.org would only be accessible to its Android One users. Android Authority has an excellent write up detailing Google's upcoming system which one can check out from here. Clearly this again is a violation of Net Neutrality.

2c. Telecom operators

By helping Facebook and Google telecom operators are already a part of the crime. But they want to be Net Neutrality violator themselves. Operators have long violated Net Neutrality but hardly anyone has taken notice. In a bid to add data customers as quickly as possible most Indian telecom operators have specialized data packs for Whatsapp or Facebook alone, leaving competing services such as Hike or Google + in the cold. Think of it somewhat similar to T-Mobile's music streaming programme which would only work with Spotify and other streaming services aren't supported. Another example would be to imagine Sprint launchimg a dedicated Netflix pack at 20$ leaving out Hulu Plus and others.

3. Consequences -

3.a. Impact on competition -

To start with, violation of Net Neutrality is obviously harmful for the competition. The biggest losers in this case tend to be the small websites that don't have the financial muscle to be a part of something like internet org.

Take my blog for example. I am a tech loving guy who likes blogging. I have opened up a blog on blogger and write tech articles. As of now my blog is very small and the chances of my blog being a part of internet.org are very slim. If internet.org was to ever include a source for tech related information it would probably be some top rated tech website like Zdnet or Cnet. If Zdnet becomes a part of internet.org, access to Zdnet will be free of cost whereas to access my blog a person might have to pay normal data rates.

Since emerging countries are really cost sensitive, people would prefer visiting Zdnet and increasingly ignore a small unknown blog like mine.

What could happen to my blog under internet.org would vey well be applicable to almost all other small websites. For example a blog providing travel related info could be over shadowed by a travel website, a startup e-commerce website could be over shadowed by something like amazon.com.

3.b Limit the meaning of Internet

Apart from having a negative impact on competition, Net Neutrality can possibly limit the meaning of Internet for millions of people.

Internet penetration in most emerging countries except for a few like China is very low. The reason for the low internet penetration is not devices. The growth of smartphone shipments in most emerging countries is meteoric. For example some like India and Africa are witnessing smartphone shipment growth rate of 100% and above on a Y-o-Y basis. Clearly citizens of emerging countries are transitioning from feature phones to smartphones at a rapid rate and this transition would only accelerate giving the rapidly reducing cost of smartphones.

The real obstacle for internet penetration in emerging countries are the prohibitive data rates. I would agree that in countries like India data plans are really cheap. A person could get 1GB of data for just 3-4$,but the issue here is unlike a 50$ smartphone which would be a one time investment , a 3-4$ data plan is a recurring investment that occurs every month. Over a period of 3 years a person might end up spending 100$ or so on data plans which would be twice the cost of his/her smartphone. The lack of enough disposable income makes a recurring investment like a  data plan seem like a luxury whereas through continuous savings every month people are able to gather enough money to make a one time investment like a smartphone.

To cut the long story short the condition of emerging markets is such that people are able to make small one time investments (smartphones) but any form of recurring investment (data plans) becomes a luxury and hence many people avoid it.

Internet.org targets people like these who own a smartphone but don't have a data plan. Most people using internet.org use internet for the very first time and don't have any clue of how vast the internet is. The users of internet.org are confined to the selected websites and think that the 20-30 websites of internet.org is what the internet is made up of. Everytime a user tries to jump across the walled garden of internet.org, they are stopped from doing so because of the data charges applicable for non-internet.org websites.

If this continues over a period of time, the user would make internet.org his or her definition internet and would never try to explore outside the walled gardens of internet.org. This in turn would restrict the meaning of internet for the user.

4. Awareness levels

To start with, literacy levels themselves are very low amongst citizens of developing countries. Even amongst the literates, people who have received formal education is very low. To further make matters worse, a very small section of the educated population actually know what Net Neutrality means and its wide ranging implications. If I were to take a guess I would say that less than 5% of the population in emerging countries know about Net Neutrality.

What is the Government doing

For the most part governments are not at all bothered about Net Neutrality. Most emerging countries have no rules regarding Net Neutrality. According to my research only three countries namely Netherlands, Brazil and Chile have legal rules on Net Neutrality. The lack of legal rules and of awareness regarding Net Neutrality in emerging countries gives an easy opportunity to telecom operators and other internet companies like Facebook or Google to commercially exploit the citizens of emerging countries with almost zero resistance.

Conclusion

Net Neutrality is a very important topic and one that must not be taken lightly. Many developed nations are already in the process of implementing strong Net Neutrality rules or at least have strong awareness amongst the general public. The real worry about Net Neutrality should be in emerging countries where the lack of laws and awarness amongst people coupled with lazy and corrupt governments provide a perfect base for the formation of a closed internet whose various aspects can be controlled by certain multi-billion $ companies if quick action is not taken.

Part 2 : Data uptake in India

Android Auto/TV/Wear and why their policies are messed up

When someone says the word "open source" in the tech arena, Android is probably the first name to come to our minds and subsequently Linux and other open software. Android for a long time has used its open nature as a big advantage against iOS. Any Android vs iOS comparison will definitely bring up the topics of customization and choice. Android because of its open nature has been more flexible (more choice and more customization) than iOS.

The same open nature of Android started becoming a problem for Google. I will list down the problems -

1. Rival Services inhibiting growth of Google services -

A perfect example of this would be Google Wallet, i.e Google's own mobile payment solution, despite launching long back in May 2011, has yet to catch up in a significant manner. A main reason for this has been ISIS (Soft Card) . Soft Card was the wallet service formed by and representing a consortium of American mobile operators namely T-Mobile, Verizon and AT&T. Given the open nature of Android, manufacturers and carriers could pre-install any apps they would want along side a standard set of Google apps. Soft Card was the reason why Google Wallet wasn't able to perform tap to pay function for a long time as carriers wanted to promote Soft Card and thereby blocked Google wallet. As of today, Google had to purchase Soft Card and convince operators to allow Tap to Pay functionality for Google Wallet. Apple on the other hand doesn't face this problem at all. The company's iPhone comes pre-installed only with apps which Apple deems fit.

2. Manufacturers inhibiting growth of Google services -

Although squarely pointing at Samsung would be wrong in this case but still Samsung's Galaxy range of devices have the most competing apps compared to other Android devices and Samsung is still the most dominant manufacturer of Android smartphones despite market share being eroded by Chinese rivals and Apple. Samsung has for the most part always tried to compete with Google when it came to services on their Galaxy range of devices. With the Samsung Galaxy S6, Samsung had agreed to pre-install apps from Microsoft. Samsung also struck a deal with Nokia to pre-install Nokia's HERE maps. Aside from this Samsung has also had its own App Store and other competing services. It is important to note here that other manufacturers also compete with Google in terms of services but no one competes as fiercely as Samsung does. Once again the only reason manufacturers are able to pre-install their own apps is because Google allows them to do so.

3. Rival software companies -

The best example of this would be Cyanogen and I have written extensively about it in this article.

4. Fragmentation -

The open nature of Android meant that manufacturers could customize Android as much as they wanted to. This led to a scenario where most manufacturers would customize Android's UI to such an extent that it would often take weeks and sometimes months for the latest version of Android to hit the devices of respective manufacturers. Add to this,  the customization carriers do before rolling out updates and often times receiving Android updates within time would be a distant dream for most Android users. Apart from this many mid-range and low-end Android handsets never receive Android updates beyond the version the devices were shipped with. All this leads to a scenario where various versions of Android held significant market share as shown below.

5. Low app quality and inconsistent user experience

5.a Low app quality -

This is actually a direct consequence of fragmentation. As I noted above the open nature of Android meant various Android versions ended up having significant market share. This in turn led to a situation where developers weren't able to make full use of the APIs of the newest version of Android and rather had to make use of a common set of APIs which would work across all versions of Android. This of course reduced the functionality of apps. The open nature of Android also meant that a varying number of devices were made from screen sizes as small as 3 inches to 7 inches. Most app wouldn't scale appropriately across all devices. Often times apps scale very badly on devices 7 inches and above (tablets).

5.b Inconsistent user experience -

The best example of this would be to assume someone who is upgrading from a device running Android Gingerbread to a device running Lollipop such as Samsung Galaxy S6. The change in UI would be dramatic and it would definitely take some time for the user to get used to it. On the other hand imagine an iPhone 4S user upgrading to iPhone 6 and the change in UI wouldn't be as dramatic.

It must be noted that only points 1, 2, 3 i.e.

1. Rival Services inhibiting growth of Google services
2. Manufacturers inhibiting growth of Google services
3. Rival software companies

lead to a direct loss for Google in terms of monetization from Android and the loss from points 1 and 2 happen only because Google allows installation of third party services. Point 3 is a special case where the company plans on using AOSP.

 Points 4 and 5 i.e.

4. Fragmentation
5. Low app quality and inconsistent user experience

do not exactly lead to a direct loss for Google in terms of monetization from Android.

In order to combat the above five problems arising from the open nature of Android, Google launched initiatives such as Android One. Android One for the most part has failed to catch up in India and its success in countries like Indonesia remains to be seen. Along with Android One, Google's also rumored to have Android Silver in the pipeline but it failed to materialize.

Also with the launch of Android Auto/Wear/TV, Google restricted manufacturers from making any meaningful changes to the UI whereas allowed them to load their own apps. The reason for restricting UI changes was because Google did not want to deal the same problem of fragmentation with Android Wear as it did with Android. By restricting UI changes, Google could push out software updates to Android Wear devices on its own and make sure every device is running the latest version of Android.

But in my opinion. Google should allow customization to UI and block pre-installation of third party apps as well as its apps.

Why allowing customization to UI is important:

I will give two solid examples for this -

1. Dual SIM smartphones

Indian smartphone vendors for a long time have been churning out Dual SIM smartphones. Given the deep understanding of the needs of local community. Indian vendors soon realized the importance of Dual SIM smartphones. I know Dual SIM smartphones don't make sense to a lot of people living in the West but it matters a lot to Indians. As I have emphasized in the past smartphones in India aren't sold on a contract basis,  rather users pay full price of a smartphone upfront and subscribe to carrier services separately.

Indians are very price conscious and the ability of having dual SIM slots on a smartphone helps them save money. India's telecom market is one of the most crowded in the world. Certain states have more than 8 operators (No not MVNOs, real Mobile operators). As expected competition is very high and operators keep launching special offers for people who purchase a new SIM card/connection. Having Dual SIM smartphone helps the user keep one SIM for day to day communication and uses the other SIM to avail the offers of various carriers.

Now this benefit of Dual SIM smartphone wouldn't have been realized by the team creating Android somewhere in Mountain View. Rather it is the local manufacturer which was able to understand the need and since Android's UI was free to customize, the vendor customized the UI to support Dual SIM slots. If the UI wasn't free to customize, the local manufacturer/vendor wouldn't have been able to customize Android to add the functionality of Dual SIM slots and would have to rather wait for the team at Mountain View to implement this change.

This was exactly the case with Windows Phone. Since Microsoft doesn't allow customization to the UI, Nokia wasn't able to add support for Dual SIM card in its best selling Windows Phone Nokia Lumia 520. I know so many people who skipped the Nokia Lumia 520 in favour of an Android device just because it did not have Dual SIM support and the only reason dual SIM support wasn't present was because Microsoft did not incorporate it. It was only with Windows Phone 8.1 that Microsoft incorporated Dual SIM support for Windows Phone devices. Had Windows Phone's UI been customizable Nokia would have definitely added support for Dual SIM slots and won customers from Android at a time when it had a chance.

2. Samsung Galaxy Note -

Samsung made a big bet with the Samsung Galaxy Note. The Korean giant was arguably one of the first few Android manufacturers to enter the phablet market. In order to make the Galaxy Note really exciting/different from the past 5 inch devices from companies like Dell, Samsung introduced the S-Pen, basically a stylus. But in order for Samsung to make the S-Pen truly useful a lot of changes had to be made to Android's UI to make full use of the S-Pen to enable features such as hover to show pics in albums, cut parts of the screen's content and save them, handwriting etc. All this was possible only because Android's UI was open to customization. The success of Galaxy Note and subsequent success of Galaxy Note 2 made phablets popular among consumers and soon large screen devices (5-6 inches) became highly popular all over the world. As far as I know the current version of Android and past version of Android had no special additions to make use of a stylus. It was Samsung's own additions that made it truly useful.

The above are just 2 examples where customization of Android had helped Google's Android succeed. There are several instance where customization to Android's UI has helped Android grow.

Similarly in my opinion manufacturers should be allowed to tweak the UI of Android Wear/Auto/TV so that they can create special offering that caters to the needs of the local community or be able to bring out revolutionary new products.

As for the problem of fragmentation, I agree its a serious issue but despite being so highly fragmented Android still commands around 80% of the smartphone market. Apart from this I have a small feeling in my heart that over time the fragmentation issue will sort out itself on its own. Just 2-3 years ago there used to be a time when buying a smartphone costing less than $300-400 meant receiving no future updates for the most part and probably the smartphone would come with GingerBread. That has changed now. I am typing this entire article on a $150 smartphone (Micromax Yu Yureka) which has already been updated to Lollipop as I write this. Apart from that if not regularly updating, a lot of manufacturers now ship their low end and mid range devices with the latest version of Android pre-installed. Over time I believe the problem of fragmentation in Android would be solved with or without the help of Google.

Apart from allowing customization to Android's UI, I also believe that Google should stop third parties from pre-installing their apps on Android Wear/TV/Auto. As I have already explained in points 1,2 and 3, a lot of monetization loss for Google simply occurs from the fact that Google allows installation of third party apps. While preventing manufacturers from installing third party apps, Google should also not pre-install its own apps. This would in turn create a more neutral platform and protect Google from possible EU investigations and fines. By now most Google apps have created a name for themselves to become the go-to app for users to perform the particular function. For example lets say an Android Watch comes completely empty with no apps pre-installed apart from certain utility apps. Lets say a user wants to install maps on his/her Android Wear Watch then 9/10, the user would opt for Google Maps and Gmail for email. On the other hand pre-installing apps is not going to make the less popular apps of Google more popular. Google has been pre-installing Google + for a long time now yet it no way rivals Facebook. If you want more proof that pre-installing apps isn't important then consider iPhone. Google Maps isn't pre-installed yet comes on the top of apps list. As far as I seen quality of apps matter more than pre-installing them.

On a side note its also worth mentioning that the lack of customization of UI in Android Wear/Auto/TV will provoke manufacturers even more to adopt the AOSP version rather than Google's version.

The future of MicroSD cards

SD cards have long served as one the cheapest and best ways for Android, Windows Phone as well as feature phone users to expand the storage of their devices.



Lately however it seems SD cards in the future would slowly be eradicated from the top end smartphones and would end up becoming a feature limited to low end handsets.

The reasons for believing the same are as follows.

1. SD cards disappearing from high end smartphones -

There are five major reasons for this to happen -

1.a Higher ASP (Average selling price) -

Its a general practice for smartphone manufacturers around the globe to place different price points of a smartphone model on the basis of its internal memory. The general norm is to increase the price by $100 for every higher stage of memory capacity.

Apple exploited this with the launch of the iPhone 6. iPhones as many people reading this post would know have never supported SD cards. The case with iPhone 6 was no different. Below the unlocked prices of iPhone 6 are mentioned -

1.16GB model - $650
2.64GB model - $750
3.128GB model - $850

Apple has removed the 32GB option and rather started its base model with 16GB. For most people 16GB is very low to suffice their needs. A few high end games would easily fill up the measly 16GB of storage in no time. Hence most users would opt for the pricier 64GB model or the 128GB model. This in turn leads to a higher ASP for Apple. Let me explain how -

Imagine 100 consumers enter a market planning to pick an iPhone 6. Now since iPhone 6 does not support memory cards, 70 consumers would opt for the 64GB model. 20 consumers would opt for the 16GB model and 10 consumers would opt for the 128GB model.

In such a scenario the ASP would work out to be -

[(70x750)+(20x650)+(10x850)]/100=$740

Now for a brief moment imagine iPhones all of a sudden allowed memory cards. In such a scenario, 50 people would opt for the 16GB model and buy a memory card. 40 people would buy the 64GB model and 10 people would opt for the 128GB model.

In such a scenario the ASP would work out to be

[(50x650)+(40x750)+(10x850)]=$710

Notice that the ASP has dropped by $30 which when employed over a scale of millions of shipments achieved by Apple could end up in hundreds of millions of profit for a particular quarter.

Android manufacturers such as Samusng are also using the same tactic. With the launch of Galaxy S6, Samsung for the first time dropped support for SD cards although this would help in improving profitability, the major reason why Samsung dropped SD card support was because of the shift to unibody design and new materials.

On the contrary, there are manufacturers like HTC which rely on SD cards to actually reduce costs. For example, with the launch of HTC One M9, HTC just released a single model of M9 with 32GB internal memory and users who needed more storage could buy a SD card and expand it accordingly.

The problem with HTC is that sales have fallen for their flagship smartphones and by creating a single model, HTC is able to mitigate the risk of unsold stock. For example if the 64GB model ends up being more popular, the 128GB model will sell less and vice versa. In case of HTC, the company mass manufactures the 32GB model on a wide scale so that there is effectively only one SKU for a particular model and accordingly lesser risk of unsold stock.

However both Samsung and Apple dominate the high end smartphone market by a huge margin and the fact that they don't support SD cards could very well make this the trend for high end smartphones. Samsung and Apple don't support SD cards in iPhone 6 and Samsung Galaxy S6 and both phones have sold very well for the respective companies. This again goes on to show that the lack of SD cards isn't something that can drastically affect the sales of smartphones.

The fact that Apple and Samsung are able to achieve good sales of models that don't support SD cards coupled with the benefit of higher ASPs could entice almost all Android manufacturers to drop support for SD cards. In fact even LG and HTC at the launch of LG G2 and HTC One M7 did not support SD cards.


1.b. Impact on performance -

SD cards themselves come in varying qualities often denoted by a class number, which ranges from 4 to 10. The higher the number the better the I/O, Read/Write speeds of the SD card. But often times there is a huge difference between the price of a class 4 SD card and a class 10 SD card offering the same storage. For example a 32 GB class 4 SD card costs $15.48 whereas the same for class 10 costs $28.34

Now the major reason why people choose SD cards instead of higher storage models is to save money. Its thereby no wonder that the same people while choosing SD cards also opt for the lower class (lower price) models which ultimately deliver low performance.

As Tech radar wrote in its article on MicroSD cards -

"According to a study carried out by Hyojun Kim at the Georgia Institute of technology, using a microSD card in your phone can cause it to become sluggish, with even basic tasks like web browsing suffering as a result. Overall performance can often drop by between 100% and 300% and in one case the study found that there was an incredible 2000% decrease in performance.

Even at the lower end that's a massive loss in performance and is an unacceptable trade off for some extra storage, particularly on higher end handsets where you're paying hundreds of pounds extra for a boost in specs.
The reason for the performance loss is simple, microSD cards themselves aren't fast enough. They can't keep up with the power and speed packed into modern smartphones. Though some are better at this than others and the brand and class of card you choose will have a big impact. "

Smartphones are highly interconnected machines. A slow down in any one part can drag down the entire experience and disappoint the end user. When a user spends $600+ on a smartphone he expects the best of performance and if that's not achieved, the user gets a very bad image of the brand.

By eradicating SD cards and using high quality NAND (internal memory) the manufacturer can eliminate false belief of their product being a low quality product.

1.c. Move to cloud -

Most market where high end smartphones are sold are increasingly favouring the cloud to store and access their data. People in developed markets prefer streaming music from Spotify rather than downloading it, the same users prefer streaming videos over Netflix or Youtube rather than downloading them. People prefer syncing their videos and photos with iCloud and Google Drive rather than storing them on their smartphone forever.

This leaves the internal storage of a smartphone with only one function which is to store apps. Most apps on Android can't be loaded on SD cards without special permissions (root) and if essential apps are loaded on SD cards of low quality, the user experience will only degrade even further.

The sales of high end smartphones occur mostly in developed countries where most people have access to high speed broadband often touching the Gbps mark such as Google Fiber, even in case of wireless networks developed countries have some of the most advanced wireless networks such as 4G capable of carrier aggregation. Within some years these countries will be some of the first to adopt 5G and if 5G helps carriers to use spectrum even more efficiently, it will help carriers allocate even more data per consumer consequently promoting cloud even more.

One must note that if people start storing all their content on the cloud then the case for a higher internal memory would also dissolve and accordingly the Higher ASP point I mentioned would no longer be applicable. But ultimately both the Higher ASP factor and the move to cloud kill the need for SD cards.

1.d Easier file access -

This isn't as big a reason for the removal of SD cards but the removal of SD cards from smartphones will leave the smartphone with just one storage which is the internal storage and this is where all the data will be stored. This will reduce a great amount of confusion as to where the data has been stored since there will be one and only one space where the data is stored. Google provides an app developer the choice to store an app's data either on the SD card or the internal storage. Some developers choose internal storage while other choose the SD card, this fragments the user data over both the storage mediums.

1.e Modifications to OSes -

Android and ios together capture more than 85% of the world's smartphone market.ios ever since its inception has not supported SD cards. In case of Android, Google has not been so fond of SD cards. None of the Nexus devices have support for SD cards and starting with Android 4.4, Google introduced restrictions to the way in which data stored by apps in SD cards can be accessed in order to strengthen security. These restrictions essentially broke the functionality of several apps that read data of other apps stored on SD cards.

Even manufacturers such as Samsung who updated their devices to Android KitKat had broken some of the device's functionality and had to fix the same with follow ups.

2. SD cards will continue on low end handsets -

2.a Price conscious consumers -

Most consumers who buy low end smartphones are often highly price conscious and manufacturers try their best to cut corners wherever possible to sell their devices at attractive price tags. This often leads to manufacturers loading the smartphones with very low internal memory of low quality. Since many low end smartphones are bought by first time consumers, the lack of enough internal memory isn't even noticed by the consumer since the consumer doesn't really know how much a 4GB or 8GB internal memory allow him to store.

Imagine you're buying a car for the first time and haven't used or bought a car before. You're given with two options. A model whose tank can store 40 litres of petrol and another model whose tank can store 80 litres of petrol. If you're unsure how much petrol you need at one go, you might opt for the 80 litres model but if you're someone whose on a tight budget(like most first time smartphone buyers) you would go for the 40 litres model.

2.b Performance issue non-existent in this case -

With just 4GB of internal storage, SD cards are a necessity. Also in such cases a SD card wouldn't really degrade the performance since the NAND(internal memory) itself will be of very cheap quality to start with. These smartphones often come with very weak processors and low RAM, hence the chances of the SD card becoming a bottle neck are reduced even further

2.c Race to bottom -

In most emerging countries its always a race to the bottom and the 4GB internal memory standard will never run out of fashion. For example lets say this year a particular smartphone maker Y makes a smartphone costing $80 with 4GB internal memory, now if a competitor X next year provides 8GB for the same price then Y will also start providing 8GB models at $80 in response to competition. But this doesn't mean the 4GB model is completely discarded rather the manufacturer Y will go a step lower and make $70 smartphones with 4GB internal memory and so on the saga keeps continuing with X again bringing 8GB at $70 and Y bringing 4GB to $60.

1.d No cloud -

Most emerging countries have very low broadband penetration and even high speed wireless networks are patchy and expensive when compared to the average income. This means its almost always necessary to download data and store it in one place since continuous stream of data in real time isn't possible. Since internal memory is already low, that one place of storing data is nothing else but the SD card.

Conclusion -

SD cards have always played an important role in smartphohes but its not difficult to see them losing popularity eventually in high end phones yet they will always continue to have a place in low end smartphones.


**Note - For the sake of simplicity I am referring Micro SD cards as SD cards in the entire article.

Microsoft's struggle with Mobile

When someone speaks of mobiles and particularly smartphones, Microsoft isn't the first company most people think about. Microsoft's journey in the mobile space has been a rough one even though it was one of the first companies to enter this space with Windows CE in 1996, Pocket PC in 2000 and Windows Mobile in 2003. Windows Mobile was not as successful as Windows. With increased competition from Android and iOS, Windows Mobile got a complete refresh in the form of Windows Phone.

With Windows Phone, Microsoft became aggressive in the smartphone arena. It struck up an exclusive partnership with the then dominant Nokia and spent heavily on marketing.

Although initially Microsoft's attempt with Windows Phone seemed successful, over time the efforts started fading off and by now most analysts believe that  Windows Phone would at some time in future meet the same fate as Symbian and WebOS.

So has Microsoft given up on Mobile ?

The answer is for the most part NO, Microsoft's new CEO Satya Nadella clearly said that going ahead the two priorities for Microsoft are Cloud and Mobile.

In this post I will try to list down the efforts Microsoft has been taking to keep themselves relevant in the mobile era to the end user.

Buying Nokia

Buying up the mobile division of Nokia was the biggest effort Microsoft made towards the mobile arena. As I mentioned earlier, Microsoft struck an exclusive deal with Nokia for Windows Phone. Nokia was the only manufacturer exclusively making Windows Phone devices in the form of their Lumia brand and supported no other OS. All other Windows Phone manufacturers made Android smartphones along with Windows Phone devices. The three major Windows Phone manufacturers were Samsung,HTC and Nokia. Initially Samsung, HTC and Nokia all three devoted resources to Windows Phone.

As time passed by it became increasingly clear as to which OSes were being preferred by developers and subsequently consumers. Those OSes were none other than Android and iOS. Most developers developed apps for Android and iOS alone and left Windows Phone out in the cold. Even if they made an app for Windows Phone it would be less feature-rich or would receive less updates compared to its iOS or Android counterpart.

Samsung and HTC both realized that Android was turning out to be better than Windows Phone in terms of apps, ecosystem, popularity etc. Subsequently both HTC and Samsung concentrated their efforts on Android and stopped churning out Windows Phones in a significant manner.

While Samsung and HTC were diverting their resources towards Android, Nokia was stuck with its exclusivity deal with Microsoft. Consequently Nokia had no other go but to keep pushing its Lumia line of Windows Phone smartphones. As Nokia became the sole global vendor of Windows Phone, over a period of time they ended up achieving more than 80% share of the Windows Phone market.

Despite such a significant market share of Windows Phone, Nokia was never able to convert the same into healthy financials. The company's mobile division had been in loss ever since 2011.

When Nokia's exclusivity with Microsoft for Windows Phone was set to expire it was clear that Nokia would adopt Android. Had Nokia dropped Windows Phone and adopted Android, Windows Phone would be all but dead since as I mentioned above Nokia was the only manufacturer taking Windows Phone seriously which was evident by their 80% market share.

To prevent this Microsoft on September 2013 announced that it would buy Nokia's mobile division for an estimated $7.2 billion. With the closure of the acquisition Microsoft was able to protect the majority of meager 3-5% share Windows Phone has in the global smartphone market.

Efforts in emerging countries:

The chart above makes it clear that low end models such as Nokia Lumia 520 and Nokia Lumia 620 were the most dominating Windows Phone devices. Microsoft had understood that almost all of Lumia's growth was coming from emerging countries such as India. A vast majority of the smartphone market in emerging countries is controlled by local smartphone vendors.

1. In order to entice these vendors of emerging countries, it was necessary for Microsoft to make the cost of producing Windows Phone devices as minimal as possible since these vendors work at razor thin margins,

2. Cancelling license fees - The first step towards reducing the cost of producing Windows Phone devices was obviously to cut down on licensing fees
Microsoft has made most of its money through licensing various kinds of software. Initially with Windows Phone Microsoft planned on following the same model. Later on Microsoft realized that it was competing in a market where Android commanded more than 75% market share and Windows Phone had less than 5%.
Clearly in such a market Microsoft could not ask vendors to pay for its software especially when the AOSP version of Android was completely free.
Microsoft as a result removed licensing fee on all devices that ran Windows and were less than 8 inches in size.

2b. On screen buttons with Windows Phone 8.1 -

The second step Microsoft took towards enticing manufacturers of developing countries was to bring support for on screen controls. This in turn helped manufacturers reuse a particular smartphone design for both Android as well as Windows Phone.

2c. Support for Dual SIM -

The third step Microsoft took was to bring dual SIM support which was long wanted in Lumia devices and often a make-or-break it factor for end consumers buying smartphones. Most emerging nations work on a contract-free model. Users pay the price of smartphones upfront and subscribe to carrier services separately. Often in these countries carriers keep coming up with special offers. Most users prefer to have one SIM slot for their main number which they use for communication. The other SIM slot often consists the SIM of the carrier which provides good offers, as soon as the carrier stops the offer, users buy a new SIM from another carrier whose offers are better.

These efforts brought some results when a number of local manufacturers released devices based on Windows Phone 8.Miia, Micromax,Prestigio, Yezz, BLU, K-Touch and InFocus were subsequently named as hardware partners later on in the year. All these are country specific manufacturers with a special focus on low end hardware.


3. Solving the app problem -

Any tech enthusiast will tell you that one of the main reasons why Microsoft's Windows Phone continues to lag behind iOS and Android are because of lesser apps. Both iOS and Android have more than a million quality apps to choose from whereas Windows Phone doesn't even reach half a million. This app problem has had serious effects in the growth of Windows Phone and Microsoft has taken steps to tackle the same.

3.a Universal apps with Windows Phone 8.1 -

With Windows Phone 8.1 Microsoft had already advanced towards a universal app platform to some extent. The idea behind this was to make use of the developer platform for Windows and use them for Windows Phone since a single code would be able to run on both Windows as well as Windows Phone

3.b Project Islandwood and Astoria

With the launch of Windows 10 the biggest step Microsoft took for Windows Phone were projects Islandwood and Astoria. With Project Islandwood, iOS developers will be able to take their ios apps and build them for Windows. Microsoft has developed an Objective C toolchain and middleware layer that provide the operating system APIs that iOS apps expect. A select group of third parties have been using the Islandwood tools already, with King's Candy Crush Saga for Windows Phone being one of the first apps built this way. King's developers had to change only a "few percent" of the code in order to fully port it to Windows Phone.

For Android, there is Project Astoria. Rumors of Android apps on Windows have been floating around for some time, and in Windows 10 Microsoft is delivering on those rumors. Astoria will allow Android apps to run in Windows. Specifically, Windows Mobile (and yes, that's now officially the name for Windows on phones and sub-8 inch tablets) will include an Android runtime layer that'll let them run existing Android apps (both Java and C++) unmodified. Unlike Islandwood, which will require developers themselves to recompile their software to bring it to Windows, Astoria will in principle work with any old APK, without requiring the developer to do anything but publish the app in the store—as long as the APK sticks to the APIs that Astoria will provide.

3.c Carrier billing -

Microsoft recognizing that the growth of Windows Phone is coming from emerging countries has actively partnered with operators to enable carrier billing for apps. In most emerging countries credit card pentration is very low and often carriers are the main gateway for financial transactions, the sucess of initiatives like M-Pesa by Vodafone in Africa is enough proof of the role carriers play to enable transactions. As of today Microsoft boasts to have partnered with around 90 operators around the world to enable carrier billing.

The app gap has always been a real problem for Windows Phone. With projects such as universal apps, Astoria and Islandwood Microsoft plans to make developing apps as easy as possible for the end developer. With carrier billing Microsoft is trying to make paying for apps as easy as possible.

4a. Going cross -platform

Points 1, 2 and 3 have detailed the methods Microsoft has taken to protect and grow Windows Phone. But Microsoft itself understands that Windows Phone alone won't be able to provide for a firm standing in the smartphone market. Since its inception, Windows Phone has never been able to grab a double digit market share of the smartphone market. Despite all the efforts Microsoft is making towards Windows Phone it is highly improbable that Windows Phone alone will ever match the market share of Android. 

There is a saying "If you can't beat them, join them" - Microsoft following the same is now actively trying to develop its apps and services for Android as well as iOS.

4b. Developments of apps for other platforms -

Under Satya Nadella, Microsoft  realized its insignificant share in the mobile space. It thus launched

MS Office on Apple’s iOS that was earlier available only on Windows, Windows RT, and Windows Phone. Microsoft launched Office on iOS for free. The company later launched Office for Google’s Android too. According to Microsoft, within one week of its launch on iOS, there were 12 million downloads of Word, Excel, PowerPoint, and OneNote for iPad.

Google and Apple have not shown much interest in making their apps and services available for Windows Phone users.

According to Quartz, Microsoft has launched about 100 apps on both Android and iOS. Microsoft is more concerned with other platforms than its own Windows Phone. There are only a few apps, such as Snipp3t for iOS, that are only available on other platforms. Skype for both iOS and Android has received a number of app updates. Plus, the general consensus is that Office for iPad displays documents better than Windows tablets do.

Microsoft has also been aggressively pushing Outlook on Android and iOS devices through acquisitions of Accompli and Sunrise. As of recently Microsoft is also allowing Dorpbox users to edit Office files directly from Dropbox itself.

4.b Pre-installing apps on other Android devices -

Lately Microsoft has also been persuading manufacturers such as Samsung and others to pre-install Microsoft apps on their devices.

Microsoft caught a big fish when its convinced Samsung to pre-install a range of Microsoft apps on Smasung's Galaxy S6 and Galaxy S6 Edge. According to Samsung's own estimates the Galaxy S6 and Galaxy S6 Edge are estimated to sell around 70 million. If even 10% of these Galaxy users start using Microsoft apps/services Microsoft will get a whopping 7 million users.

Apart from this, Microsoft has also made a strategic agreement with Cyanogen whereby devices running Cyanogen OS will be loaded with Microsoft's apps and services, once again giving Microsoft a significant opportunity in the Android market place.

Conclusion

While Microsoft's presence and influence in the smartphone market is limited because of Windows Phone's market share, the company by going cross-platform and by striking various partnerships has a real chance in the smartphone market down the line.

Note -
I have tried to list down as much as possible however if you feel that I have missed something please let me know and I will update the post accordingly.

HTC and Sony: What led to the decline of the two giants

Sony and HTC are two brands I embraced ever since I was a kid. I still have a Sony TFT television in my house, its 17-18 years old but still works like a charm. Apart from Nokia, the only other smartphone manufacturer that caught my eye when I was young was HTC. I still remember how impressed I was with the fit and finish of the HTC device as well as its software. I was too young at that time and had no access to the internet so I don't know the name of the device but the HTC smartphone I saw was what made me curious about smartphones and tech.

Both Sony and HTC have had golden periods at one point of time. Sony milked money from its Trinitron TV series and Walkman whereas HTC was the most dominant Android smartphone manufacturer 4 to 5 years ago.

Lately however both companies have been having a rough time. Sony's mobile division has been the biggest money losing unit for few quarters now. In case of HTC the company's profits have steadily dwindled for the past few quarters on a year to year basis and for sometime the company was in a loss.

Currently the future of both these giants in the smartphone market is a big question mark. In this article I will try and explain that.

Developed markets

Developed markets such as US, Japan, South Korea are highly profitable markets with most of the sales occuring in the high-end segment. This again happens because of two reasons

Consumers generally have enough disposable income to afford high end handsets. Carriers generally subsidize the cost of a smartphone, thereby making a $600-700 seem like a $200 smartphone.

Both the above factors lead to a highly profitable scenario. For example an iPhone 6 retails for around $600-700 unlocked. The cost of making the iPhone 6 is just around $250-300. Definitely Apple has a huge margin when it comes to the iPhone 6. The millions of iPhones Apple ships every quarter makes fixed cost such as R&D, marketing etc even cheaper on a per device basis. Combine these two and the millions of shipments Apple makes every quarter and its hardly any wonder that Apple is currently one of the richest companies on earth.

But for all the money developed markets have to offer, they have their own challenges as well :

Marketing - Competing in developed markets requires significant investment in marketing. A particular company needs to make sure their brand reaches each and every person. Some companies like Samsung have spent millions of dollars in marketing and its widely believed that marketing played a key role in Samsung's dominance of the US market when it comes to Android

Carrier relationships - If any smartphone manufacturer wants to be well established in developed markets  they need to make sure their smartphone is available on at least all the national carriers.

Specs - Specs play a crucial role in determining the fate of a smartphone in developed markets since most smartphones are available around the $200 on contract mark. Hence in such a scenario when price is more or less the same, specs prove to be the deciding factor when buying a smartphone. If a manufacturer does not have the best of specs, it needs something exclusive to convince users to buy its smartphone.

Design - The design of a smartphone also plays a role in determining its fate. A pleasantly designed smartphone can win the hearts of consumers and this has been proven by HTC One M7, LG G3 and Samsung Galaxy S6.

A manufacturer needs to fullfill all the four conditions mentioned above to be sucessful in emerging countries, failing either conditions can prove to be fatal and leads to a downfall. Both Sony and HTC have lacked in either of these areas that has lead to their downfall in America and other developed markets.

HTC

HTC as mentioned above was at one time the most dominant Android manufacturer in the world. HTC's downfall started around 2011. The first reason for HTC's downfall was marketing and the second reason was specs. HTC's downfall can be divided into parts

Part 1 -

During 2011 HTC launched several devices. The problem was not that HTC launched several devices, rather the fact that HTC launched several variants of its flagship handsets. All the flagship variants were launched with a gap of few months between them and none were marketed in a proper manner. Sometimes HTC advertised its HTC One X, other times HTC One X Plus and so on. While HTC kept diluting its high end, Samsung grabbed the oppurtunity and marketed its Galaxy S2 and Galaxy S3 heavily. Along with this the decision of HTC to choose Nvidia's Tegra instead of Qualcomm's Snapdragon created additional problems.

Part 2 -

During 2011-2012 HTC dealt with marketing problems and kept losing ground to Samsung and Apple. In 2013, HTC got its act together and launched just one smartphone which was the HTC One M7. The company had also truly innovated this time with a unibody aluminium build, boom sound speakers and generally speaking HTC's One M7 was the best Android smartphone in the market. HTC had also improved its marketing with the launch of HTC One M7 although it still was lower compared to Samsung or Apple.

So what lead to HTC's downfall this time ?

Firstly Samsung's Galaxy S2 and Galaxy S3 had made Galaxy the other name of Android. Samsung in general became the brand people connected with when Android was spoken of. HTC had lost quite a bit of relevance. Along with this lost relevance, the 4 MP camera that HTC decided to put behind the One M7 also to some extent caused its failure. I know many people won't agree with me on this but let me explain.

The world of specs -

Specs often time represent a glimpse into how a user's experience with a device would end up being. The Android market is one where specs matter a lot to people and often times end up being the point of differentation between smartphone manufacturers. When it comes to Android, most manufacturers at the core are running the same software/OS with modifications of their own. The most significant way an Android manufacturer can distinguish itself from another Android manufacturer is by the hardware specs. The sad part though is when it comes to hardware specs many end users end up correlating bigger to better. 

Numbers and Quantity matter more to people in terms of hardware specs. This has been pretty evident with the move from quad core to octa core processors. From the move of Full HD to Quad HD displays and the ever increasing camera resolutions.

If you ask the tech geek sitting next to you, he will tell you that Quad HD displays provide very little added clraity compared to Full HD displays and in fact strain the GPU and battery more. The same tech geek will also tell you how a properly optimized dual core smartphone is enough and octa core smartphones are a nuisance. However tech geeks like these represent a very small portion of the population and for most people bigger specs are simply better specs.

The only manufacturer that doesn't involve in such specs war is Apple and the reason for that is Apple's exclsuivity of iOS (As I said in point 3 above that a manufacturer needs to compete in terms of specs and if they aren't ready to do that they need something exclusive).  The fact that iPhone runs iOS "exclusively" is enough of a reason for people to buy the iPhone and is the only reason the Cupertino-based firm saves itself from meaningless specs wars. It is only Apple which can sell a "flagship" smartphone in today's age with a dual core processor and yet be sure people will line up for days to get their hands on it. If an Android manufacturer tries to sell a smartphone with a dual core processor in today's age people will laught at its face.

The same bigger is better mentality is what affected HTC's One M7. People simply saw the 4 marking next to the mega pixel count and thought its a bad camera. Only few took the efforts to dive deeper and learn more. In fact I even saw certain tech authors criticize the HTC One M7 for sporting a 4MP camera. On the overall I agree the camera on HTC One M7 wasn't so great but it wasn't so bad either. Yet in the tech world, specs are specs and bigger is better. The 4MP marking simply wasn't big enough to classify as good enough.

In 2014 with the launch of HTC One M8, HTC still maintained the 4MP camera. Its only now with the HTC One M9 that HTC has opted for a 20MP camera but unfortunately this year with the S6, Samsung has fixed the single most biggest complaint with the S series and that is the design thereby ending HTC's biggest leverage over Samsung. This time again despite having a higher mega pixel count, HTC's One M9 falls short compared to the Galaxy S6 and iPhone 6 when it comes to camera. 

Only thing is if HTC had a bigger mega pixel count with the M7/M8 despite not having an equally good camera, its design leverage over Samsung could help it win. With the Galaxy S6 Samsung has reduced the design leverage.

Sony -

Sony was never big in developed markets to start with. Until recently Sony never partnered with US carriers to sell their devices on contract. Only from last year has Sony started parterning with Verizon and T-Mobile. 

The only two developed markets where Sony made an impact was Western Europe and Japan. Sony's impact in Western Europe had also started declining as consumers flocked to cheaper devices made by Huawei. The only developed market where Sony still has a considerable influence is Japan and a large part of that is because of Japan being Sony's hometown and the general sense of patriotism amongst Japanese for Sony.

On a side if you notice device makers like LG that have executed all the four points properly have found great success. For example with the launch of LG G3, LG executed all the four points mentioned above properly. LG marketed the G3 extensively. They had provided the device on all major US carriers. They had brought one of the best specs to the table like being the first global manufacturer to bring a Full HD display to their smartphone. Also they had a innovative design which felt like metal and the display to body ratio was amongst the highest in the industry. This in turn helped LG fit a 5.5 inch screen in a body that measured shorter than the HTC One M8 that sported a 5 inch display.

These efforts paid off immediately and LG was able to increase its share of US smartphone shipments dramatically.

Most developed smartphone markets are reaching saturation very fast. Within 3-4 years many developed markets will start facing negative growth,this will make it all the more difficult for HTC and Sony to break in.

Emerging countries -

Emerging countries are the future of smartphone markets. Smartphone prices are dropping at rapid rates. In fact rapid will be an understatement to describe the decline in price of smartphones. During 2011 a smartphone such as Samsung Galaxy S2 costed $800 or so unlocked in the Indian market. Today smartphones of comparable specifications such as Redmi 2 can be bought for 100$.

Both Samsung Galaxy S2 and Redmi 2 have more or less the same specs. Of course probably the display of S2 is better claibrated, processor of S2 might be a little more powerful and camera of S2 might be better. But more or less the specs are similar and so is the overall performace. The S2 maybe slighly better than Redmi 2 but still what's more fascinating is the price drop from $800 to $100. This is a staggering 87.5% drop in price in just a matter of 4 years which equates to a 20% price drop every year. Unless and until drastic changes are made to Android such that it becomes a resource hogger specs of smartphones like S2 and Redmi 2 along with proper optimisation should provide a decent user experience for a first time smartphone buyer.

The reason why I made the comparison above is to show the rapid rate of decline in smartphone prices. At this rate its not hard to imagine a smartphone like Redmi 2 costing less than $40 in 3-4 years. Couple the $30-40 price tag with the low smartphone penetration in emerging countries and its not difficult to imagine these countries would face record growth in smartphone shipments for the years to come. Developing countries have a lot of untapped market which any manufacturer can capitalize upon.

However all this untapped market comes at the cost of margins. The dynamics of emerging markets are different, I will state some of them -

Consumers generally have very low disposable income. This makes them extremely price conscious. Even a $10 difference in the pricing of smartphones can alter a cosumer's buying decision.Unlinke developed countries, carriers in developing countries don't involve in subsidizing smartphone prices. This means users have to pay the full price of the smartphone upfront.

The above two mentioned points effect sales in emerging countries vastly.

As explained in point one, people in emerging countries simply lack enough disposable income to afford high end smartphones, hence more often than not people end up buying low end and mid range smartphones in the range of $100-$300. Now obviously a manufacturer selling a $200 smartphone can't expect the same kind of margins as that of a $800 smartphone.As explained in point 2 the lack of subsidies makes buying high end smartphones difficult, apart from this when smartphones like One Plus One deliver the same specs as something like the Galaxy S5 or HTC One M8 for just $350, the pricier $700-$800 smartphones again get a fair share of competition.

Couple points one and two mentioned above with the always increasing competition in emerging countries and its no wonder that margins are always decreasing when it comes to emerging countries. Even if HTC or Sony come up with a smartphone with good specs at $200, its just a matter of weeks before some Chinese manufacturer undercuts them.

Emerging markets despite all their potential for growth are markets with very low margins for every smartphone sold. Emerging markets are a race to bottom that has no end.

To give you an illustration of how low margins are when it comes to emerging markets, take this rough example into consideration. This Forbes article gives a good image of how much Xiaomi earns. 

Xiaomi's profit from its "smartphone" sales alone was $56 million in 2013. Xiaomi sold around 18.7 million smartphones in 2013. If you do the math, this means Xiaomi earned an average profit of $3 on every smartphone sold during 2013.

In case you're thinking Xiaomi is a small company and thereby has low profits then let me clear this right away. Xiaomi as of the time of writing this article is the largest smartphone manufacturer in China and China is the largest smartphone market. So Xiaomi operates on a big scale, in fact much bigger than Sony and HTC yet its profits from smartphones alone are extremely low so when I say margins are very low I mean very very low.

A $3 margin per smartphone isn't something HTC and Sony can work upon. HTC and Sony have to spend on marketing, distribution, R&D etc.

Even if I were to assume that HTC and Sony make their business operations similar to Xiaomi and operate on thin margins it still wouldn't make sense. The reason why Xiaomi sell its smartphones at such a low cost is because in future they want to build a ecosystem of services /electronics around their handsets and capitalize on it. HTC and Sony as far as I know don't have any such plans.

So the dilemma of emerging countries is that even though they are poised for an explosion in terms of shipments, margins are awfully low.

Are Sony and HTC giving up ?

To some extent the answer is yes.

Consolidation in the smartphone market has already started. First has been the consolidation of OS segment. Android and ios have effectively pushed out Windows Phone, BlackBerry,Web OS. and Symbian.

With the growing dominance of Android and ios and a change in CEO's, Nokia effectively eradicated Symbian and chose Microsoft's Windows Phone. But Nokia and Microsoft along with Windows Phone weren't able to compete with Android and ios. Thereby Nokia exited the smartphone market and sold its mobile division to Microsoft which keeps making Windows Phone. Although the fact that Microsoft has started making apps such as Office cross-platform is a clear indication that Microsoft themselves understand that in the long run Windows Phone is not gonna survive. Similarly Blackberry now represent less than 1% of the smartphone market worldwide. WebOS was chnaged hands from HP to LG and now is used in Televisions.

ios and Android are poised to dominate the smartphone market unless and until some ground breaking OS emerges out of the blue.

What's gonna happen now is consolidation within the Android market.

The Android market has too many players and as this market saturates some inevitably have to go out of business. Sony and HTC seem two such manufacturers and there are signs of the same.

In case of Sony, the mobile division has been the biggest drag on the company's financials. Sony has already closed its mobile operations in China. The company even announced that they will produe lesser mid range and low end handsets. Also several times company's CEO had indicated that a sale of smartphone division maybe considered if financials don't improve. The recent launch of the Z4 only through a press release also shows the company's lack of interest in the smartphone market.

In case of HTC the company has started diversifying its product portfolio thereby diversifying its revenue streams. From being a smartphone only mnaufacturer the company now has a GoPro competitor in the form of HTC Re camera. The company also has a VR headset called HTC Vive. Last year the company also created a new division called HTC creative labs which would work to make apps for Android in general and even ported its famous Zoe app for other devices.

Conclusion -

Although I can't predict the future, most signs indicate that HTC and Sony are going to find it increasingly difficult to remain competitive in the smartphone market. Unless and until either companies come out with a radically innovative product or change their business strategies extensively they will face a tough time competing with others. As I mentioned in the beginning of the article HTC and Sony have been some of my most favourite companies and their contribution ot tech in general has been priceless. I would love either companies to stick around in the smartphone market and keep increasing the bar of what a flagship handset is year after year.