MTN and Vodacom’s budget smartphone battle

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South Africa’s two largest mobile operators are duking it out in the entry-level smartphone market, and cutting out the big-name handset manufacturers in the process.

Vodacom this week announced the Smart 6, a 4-inch handset running Android 4.4 (KitKat) that includes 4GB of storage, support for microSD cards up to 32GB and a 1 400mAh battery.

Vodacom Smart 6

Vodacom Smart 6

Almost simultaneously MTN announced it was cutting the price of its equivalent devices, the Steppa 2, from R999 to R799. The Steppa 2 runs Android 4.3 (Jelly Bean), also sports a 4-inch display (with the same 800×480 resolution as its opposite number), the same storage options and a slightly larger 1 500mAh battery.

Given MTN’s handset was released in late 2013, Vodacom’s latest offering looks a little lack lustre, but then the target market for these devices aren’t specification chasers — they’re those users who would otherwise be buying a feature phone because most smartphones are prohibitively expensive.

Devices like the Smart 6 and Steppa 2 are great for introducing people to smartphones and giving people their first taste of the internet. They’re also great for operators because they get users accustomed to using (and thus, buying) data and encourage them to spend more on handsets down the line. Because once users have had a taste of the smartphone experience it’s pretty hard to go back to feature phone life.

These devices aren’t good news for device manufacturers, though. While plenty of Android manufacturers make budget devices, and even the likes of Microsoft have tried making in roads into the entry-level phone market, it’s almost impossible to compete with operator-branded handsets.

Not only do operators benefit from enormous economies of scale but they have enormous influence over marketing and which handsets get promoted. Sorry for you Samsung, Huawei, Microsoft and the rest.

Nonetheless, moving into the handset market is a shrewd move from operators who need to find alternative revenue streams like hardware and over-the-top services in the wake of falling voice and SMS revenue. And hopefully it’ll force manufacturers to come up with ever cheaper handsets that still offer a respectable user experience. We can hope, right?

 

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