Built in the countries they are sold, Google has enormous profit margin advantages and stands to outsell Apple by orders of magnitudes – 10’s of millions of units globally.
Elsewhere in this blog I’ve noted with interest that some of the biggest companies on the planet are taking aim at supplying emerging markets where extreme growth is due to literally explode in coming years.
Corroborating this mega-trend is Googles’ launch of the “Android One” phone.
Curt Prins, Mobile Strategist, explains some of the deeper and very interesting details in a fascinating post on LinkedIn.com. Curt notes:
Instead of adapting to price sensitivities within emerging markets, Apple’s iPhone 6 starts at $649 (without contract) and tops out at $949. That’s an impossible purchase when the average household income in India is just US$7,700.
Talk about barriers to market entry!
Google’s Android One launched in India this week for just $105, and carrier subsidies will drive that price down into the $60s. Amazon India’s massive inventory sold out in a matter of hours. Google understands what works in Mountain View might not in Mumbai or Manila.
Notice the order of magnitude difference in price?
Anyway I completely agree with his assessment that data costs outstrip the costs of hardware — and keep users from going with smartphones. This is why some of what http://www.internet.org is doing is so important. Curt notes:
Google has also eliminated OS access from wireless carriers–like Apple did with AT&T seven years ago. Google took it a step further by understanding the great expense of mobile data for most users within India. They partnered with Airtel to allow Android One users to get free OS updates for the first six months—in time for a critical update to their more energy-efficient Android L OS. These users will also get up to 200MB of free data for app downloads per month.
I still don’t know how this will affect me and my teeny business, but I expect it will. Noticing that it is happening hopefully prepares me to position myself earlier than some who have become completely enamored with Apple and the iPhone 6 launch here in the US and seem blind that the market of billions of users remains untapped.
Investors that bought Alibaba this week? Smell the same opportunities.