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Investing in BRICS Communications

Written by Brian Hicks
Posted August 10, 2015

I recently talked about the telecommunications goldmine that is the country of India.

Only 28% of the Indian population owns a mobile phone, yet that low percentage amounts to more than triple the number of mobile phones in the United States. The population of India is so immense that the developing market is incredible.

But there are plenty of market-specific problems that need to be addressed before a boom can take place.

Last June, I talked about India's need for improved network coverage.

Today, we're going to talk about another necessity: cheap phones.

Market Segments

According to a 2013 Gallup survey, the annual median per-capita income of India was just $616, the 99th out of 131 countries and the lowest of the so-called BRICS (Brazil, Russia, India, China, South Africa) emerging national economies.

However, the mean income tells a different story.

This is because the wealth gap in India is massive. The country's top 10% holds nearly three-quarters of the total wealth. The country's 1% holds nearly half.

This is a segment of the market already addressed by mobile phone companies. The other side of the market — the side with the smallest income — is what requires special devices.

A handful of companies have already tried to break through with their own low-cost devices, but the killer solution has yet to be found.

Last year, I talked about turnkey solutions for smartphone manufacturers, including a project from Google called Android One.

India was the first test market for Android One, an affordable smartphone platform. Eleven months after the project launched, Google is reportedly re-tooling its approach.

The problem was that the first group of smartphones designed under Android One came to retail in India at prices too high to secure mass market adoption. The Karbonn Sparkle V ($62), Micromax Canvas A1 ($89), Spice Dream Uno ($79), and Lava Pixel V1 ($180) all fall above India's "magic price point" of between $30 and $50.

This hotspot in pricing is where tech adoption is significantly faster, and it's a marketing phenomenon that's been observed across the globe. In the United States, for example, it's often said that the magic price point for tech adoption is $99.

In the coming weeks, Google will reportedly be re-launching the Android One project with a cheaper turnkey solution for smartphone makers.

Google expects there to be a billion Indians online in the next 10 years, and most of the first-time users will be accessing the Internet via their mobile phone.

This is where Google's interest lies. When these individuals come online, they will have Google's search and services at their fingertips first and foremost. The value of this position is tremendous and could seed Google's dominance over the next decade.

Good Investing,

  Tim Conneally Sig

Tim Conneally

follow basic @TimConneally on Twitter

For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.

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