Microsoft, Google Eye Emerging Mobile Markets as Firefox Looms

Microsoft Corp. (MSFT) and Google Inc. (GOOG) have no intention of leaving wireless customers in emerging markets to the new Firefox operating system, which phone companies said they hope to establish as a rival platform.

Microsoft is working to lower the specifications for its Windows Phone operating system to allow it to run on cheaper devices, said Greg Sullivan, senior product manager for the platform. Google is looking at expanding payment options for applications to make it easier for customers without bank accounts to buy them, said Jamie Rosenberg, vice president for the Google Play store.

“Payment systems is the biggest opportunity there, but it’s also the one that can take the longest,” Rosenberg told reporters during the Mobile World Congress in Barcelona. “It is an area that we’re looking at very carefully.”

While Google’s Android has cemented its dominance in the smartphone market, billions of users in lower-income countries don’t have a web-surfing handset. With the backing of hardware makers and network operators who want to reduce their reliance on Android, Mozilla Corp. on Feb. 24 unveiled a new operating system focused on the extreme low end of the market.

Finding a way to maintain the “cool” options available through smartphones for lower-priced phones is the key to making significant inroads in emerging markets, Broadcom Corp. (BRCM) Chief Executive Officer Scott McGregor said in an interview at the Irvine, Califonia-based company’s booth in Barcelona.

Cheaper Cool

“There is a dual trend with smartphones,” McGregor said. “There are high-end smartphones for people who are relatively price insensitive, they want the coolest piece of technology, and there are also people who say ‘I only want to spend $100,’ so we’ve helped take what’s in the cool, high-end smartphones and driven the price down.”

Demand for smartphones continues to soar, accounting for almost half of all mobile phone sales. Manufacturers shipped 219 million smartphones last quarter, 36 percent more than the year earlier, led by Samsung Electronics Co. and Apple Inc. (AAPL), which dominated half the market, according to a report last month by IDC, the Framingham, Massachusetts-based research firm.

“The population of the emerging markets is extremely large and that’s an attractive factor right there,” McGregor said. Regular mobile-phone users in those regions are “going to replace those with smartphones so the world is mostly going to go to smartphones. If you can bring that into the hands of people in these markets, it’s just a huge opportunity.”

Africa

Microsoft this month said Huawei Technologies Co., which already is a leading hardware maker in Africa, would bring the $150 4Afrika Windows phone to seven markets initially in the region. Nokia Oyj, the world’s second-biggest maker of mobile phones, unveiled its 139-euro Lumia 520 this week, its cheapest Windows phone so far, in an attempt to broaden its smartphone range and increase volumes.

As other Microsoft hardware partners like Nokia and HTC Corp. sell more Windows phones, they should be able to drop the price of individual handsets, said spokesman Bill Cox.

“One of the things is scale as we start to sell more of these phones,” he said. “We’ll be able to better negotiate for parts, drive the cost down, and that just happens now.”

Windows-based phones may at some point retail for as little as $100, said Tony Mestres, vice president for the platform’s partner and channel marketing. While cheaper ones may lack some features like cameras, they still stay close to the responsiveness of their pricier peers, Sullivan said today at the Barcelona convention.

Firefox Phones

Firefox-based phones will cost about $100 initially, America Movil SAB (AMXL) Chief Marketing Officer Marco Quatorze said at the software’s presentation. LG Electronics Inc., Huawei, ZTE Corp. and TCL Communication Technology Holdings Ltd.’s Alcatel One Touch brand are already planning to introduce smartphones running on it, executives said on the eve of the MWC convention.

Android developers are starting to program slimmed-down versions of applications for emerging markets, Rosenberg said. Google is already facilitating shopping for emerging-market customers by offering Google Play gift cards and to bill purchases directly through the phone operator, he added.

Smartphone growth in countries like India has been subdued partly because of cost, Android-platform founder Andy Rubin said. Infrastructure that’s fast enough to stream videos and other content is only now being built, he said.

“That’s gonna take a little while, but when it does, a lever is going to switch,” he said.

To contact the reporters on this story: Cornelius Rahn in Barcelona at crahn2@bloomberg.net; Adam Ewing in Barcelona at aewing5@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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