Google Looks to Emerging Markets for Android's Growth

Google plans to push its Android mobile software in India and China and is exploring ways for developers to make more money from applications, stepping up competition with Apple and Nokia.

To attract programmers to its Android operating system, Google may offer tools that help them sell subscriptions, virtual goods and other items from within applications on mobile phones, Andy Rubin, vice president for engineering at Google, said during an interview.

The company also aims to put its Android system on lower-priced phones made by Huawei and LG in parts of Asia and Europe, where it is taking on Nokia, the mobile market leader.

“The down-market opportunity is about to happen,” Mr. Rubin said. “It’s actually quite a revolution.”

Google is trying to get more of its software on mobile devices, opening up new opportunities to sell advertising, its main source of revenue. The total mobile ad market will grow to $13.5 billion in 2013, from less than $1 billion last year, according to the research firm Gartner.

Google lags behind Apple in mobile applications, which are a growing platform for ads and are helping to breed customer loyalty to devices. Android users have about 65,000 applications available, fewer than a third as many as Apple, which has more than 200,000.

Google is taking steps to hasten Android’s growth. By increasing its presence in new markets like South Korea, Google managed to drive up the number of users who activated Android devices to 160,000 a day in June, from 100,000 in May, the company said. The majority of the sales of Android-based phones were in the United States.

Gartner predicts that Android will pass Apple’s iOS system by 2012 to become the world’s second-most-popular mobile operating system behind Nokia’s Symbian.

Among the incentives for application developers, Mr. Rubin said, are making it easier to accept payments within the applications themselves or to sell subscriptions.

Most Android developers still make money from placing ads within their applications or from one-time fees. That makes it harder for them to earn as much as their Apple counterparts. Of the $4.4 billion that consumers will spend on application downloads this year, Apple’s App Store will receive at least 77 percent of the revenue, according to Futuresource Consulting in Dunstable, England. The Android Market application store will collect 9 percent.

While businesses like eBay’s PayPal already allow payments to be made within their Android applications, dealing with multiple companies increases the complexity, Mr. Rubin said. Since starting its in-application payments tool May 19, PayPal has been downloaded by more than 1,000 developers, said Osama Bedier, a vice president at PayPal. Most of the developers came from China.

In connection with efforts described by Mr. Rubin involving Huawei, a Chinese maker of wireless equipment, and LG of South Korea, Huawei released four Android phones and an Android-based tablet device in February.

Getting more of Google’s software on phones in China has the potential to increase ad revenue to help offset sales Google might lose if the Chinese government refuses to renew the company’s license to operate its Internet search engine there.

Smaller Chinese manufacturers, which account for about 10 percent of the global supply of mobile phones, are also adopting Android, seeking to gain market share with lower-priced devices.

Many pin their hopes on MediaTek of Taiwan, which supplies chips for lowcost phones sold in Asia, Africa and South America. The company has joined the Open Handset Alliance, the group that promotes Android, Google said. Devices based on MediaTek may cost carriers as little as $70 each, said Carolina Milanesi, an analyst at Gartner.

Today, the least expensive Android phones cost carriers about $200, while low-cost Symbian devices run to about $170, she said.

As more lower-priced phones reach the market, more carriers will offer the devices to consumers free.

That approach will help position Android against Nokia. While Nokia controls only a fraction of the U.S. market, it is the leading phone maker globally.

“As Android develops, the main vendor who is going to feel the pressure is Nokia,” Ms. Milanesi said.

In the first quarter, more than 41 percent of smartphones shipped worldwide were powered by Symbian. Almost 16 percent used Apple’s operating system and 10 percent ran Android, according to ABI Research, a consulting firm based in New York.

Africa's cellphone explosion changes economics & society

Amina Harun, a 45-year-old farmer, used to have to walk for hours looking for a working pay phone on which to call the markets and find the best prices for her fruit. Then cellphones changed her life.

"We can easily link up with customers, brokers and the market," she says, sitting between two piles of watermelons at Wakulima Market in Kenya's capital.

Harun is one of a rapidly swelling army of wired-up Africans — an estimated 100 million of the continent's 906 million people. Another is Omar Abdulla Saidi, phoning in from his sailboat on the Zanzibar coast looking for the port that will give him the biggest profit on his freshly caught red snapper, tuna and shellfish.

Then there are South Africans and Kenyans slinging cellphones round the necks of elephants to track them through bush and jungle. And there's Beatrice Enyonam, a cosmetics vendor in Togo, keeping in touch with her husband by cellphone when he's traveling in the West African interior.

As cell-phone relay towers sprout on the slopes of Mount Kilimanjaro and the Serengeti plain, providers are racing to keep up with their exploding market.

The numbers are staggering.

Cellphones made up 74.6% of all African phone subscriptions last year, says the U.N.'s International Telecommunication Union. Cellphone subscriptions jumped 67% south of the Sahara in 2004, compared with 10% in cellphone-saturated Western Europe, according to Mo Ibrahim, the Sudanese who chairs Celtel, a leading African provider.

An industry that barely existed 10 years ago is now worth $25 billion, he says. Prepaid air minutes are the preferred means of usage and have created their own $2 billion-a-year industry of small-time vendors, the Celtel chief says. Air minutes have even become a form of currency, transactable from phone to phone by text message, he says.

This is particularly useful in Africa, where transferring small amounts of money through banks is costly.

"We are developing unique ways to use the phone, which has not been done anywhere else," says South African Michael Joseph, chief executive officer of Safaricom, one of two service providers in Kenya. For an impoverished continent, low-cost phones make "a perfect fit."

And cash-strapped governments which have had to give up their monopoly on land lines are looking to reap huge revenues from license fees, customs duties and taxes on calls.

"We all misread the market," Joseph said.

The mistake, providers say, was to make plans based on GDP figures, which ignore the strong informal economy, and to assume that because land line use was low, little demand for phones existed.

The real reason for weak demand was that land lines were expensive, subscribers had to wait for months to get hooked up, and the lines often went down because of poor maintenance, floods and theft of copper cables.

Cellphones slice through all those obstacles and provide African solutions to African problems.




Wildlife researchers in Kenya and South Africa have put no-frills cellphones in weatherproof cases on a collar that goes around an elephant's neck. The phone sends a message every hour, revealing the animal's whereabouts.

It cuts the cost of tracking wildlife by up to 60%, said Professor Wouter van Hoven of the University of Pretoria's Center for Wildlife Management.

"You don't have to walk around the bush searching for the animals," he says. "I have sat around in Europe and was able to monitor animals in the mountains using a cellphone that had access to the Internet."


An elephant is fitted with a collar equipped with a cellphone, GPS system and software that sends data on the pachyderm's location in Kenya's Samburu Game Reserve.

Saidi, the Zanzibar fisherman, can now check beforehand whether prices justify him sailing his catch to the Tanzanian mainland, while Wilson Kuria Macharia, head of the traders' association at the Nairobi market, says he no longer has to spend two to four weeks at a time roaming across Kenya and Tanzania in search of fresh produce.

"A few mobile phone calls take care of what used to be the most grueling part of the business," said Macharia, 61.

Cellphones also make traders more competitive, meaning better prices for farmers, he said.

People who don't own a cellphone can use public telephone centers linked to cellular networks, creating badly needed jobs.

Across the continent, in Nigeria, privately run cellphone services arrived in 2001 and started out charging $150 just to sign up. Nowadays four companies vie for customers by offering free sign-ups and introductory air minutes.

The number of subscribers in the nation of more than 130 million has jumped from about 700,000 to over 10 million, and hawkers make a living selling air time cards to motorists trapped in traffic.

On the downside, however, bus passengers on cross-country journeys have to turn off their cellphones because criminals are known to use them to coordinate highway robberies.

Inevitably, cellphones have become status symbols. "If you do not have one, your friends will laugh at you and say that you are outmoded," says Akpene Rose, a 23-year-old hairdressing student in Togo, a tiny West African country where every sixth person is estimated to have a cellphone.

And just as inevitably, there are those who wish they had never been invented.

Ayi Aime, a 60-year-old Togolese, says both her school-age daughters have cellphones. "I do not know how they got them. I do not mind," she says. "But the persistent noisemaking, constant ringing, has become a nuisance."