After Android success in India, Google eyes feature phones with KaiOS

Internet giant invests in Hong-Kong based KaiOS which power feature phones by Jio, Micromax and Nokia

After dominating the Indian smartphone market with close to 95 per cent of all devices running on its Android operating system, technology giant Google is now looking at capturing the country’s low-cost feature phone space. 

The Mountain View, California headquartered company has led a $22 million investment in Hong Kong-based KaiOS Technologies Inc., the maker of Kai operating system which powers feature phones of leading brands in India such as Micromax, Nokia (HMD Global makes Nokia phones) and Reliance Jio among other. While India is home to the fastest-growing smartphone market in the world, the size of its feature phone market continues to be just as large. 

The investment from Google is in line with its Next Billion Users initiative that looks at connecting and serving new Internet users or those for whom it is still hard to get online. It will also help Google gets its apps and services such as Google Assistant, Google Maps, YouTube, and Google Search onto feature phones.

“We want to ensure that Google apps and services are available to everyone, whether they are using desktops, smartphones, or feature phones,” Anjali Joshi, Vice-President, Product Management, Next Billion Users, said in a statement. “Following the success of the JioPhones, we are excited to work with KaiOS to further improve access to information for feature phone users around the world.”

Demand for feature phones in India actually saw a big spike in the first quarter of 2018 even though the demand for smartphones remained flat. This was largely because feature phone users who for years were upgrading to smartphones, began buying newer feature phones such as the Reliance Jio phone.

According to market analyst Counterpoint, the feature phone market in India grew by 97 per cent year-on-year in the quarter that ended March. Globally, KaiOS saw demand rise by 11,400 per cent, with 23 million devices powered by its OS being shipped during the quarter.

“Google’s strategy for connecting the Next Billion users is to reach out to bottom of the pyramid users and KaiOS is offering a very good opportunity for them to reach out to them. The form factor remains the same while it adds functionalities such as apps and connectivity,” said Tarun Pathak, Associate Director at Counterpoint Research.

Pathak added, it will take another couple of years for smartphones and component manufacturers to be really able to offer compelling devices in the sub-Rs 3,000 segment. When this happens, more feature phone users will upgrade to smartphones, but for now that’s not the case. Currently, only 3 per cent of smartphones sold in India cost between Rs 2,000 and Rs 3,000.

Rather than waiting for the market to play catch up, Google is going after feature phone users knowing that even if they do end up upgrading to smartphones at some point of time, they will have access to the same services. Essentially, Google is setting up a pipeline for customers to get into its ecosystem. But instead of focusing on just low-cost smartphones, it is now broadening that horizon.

“This funding will help us fast-track development and global deployment of KaiOS-enabled smart feature phones, allowing us to connect the vast population that still cannot access the internet, especially in emerging markets,” said Sebastien Codeville, CEO of KaiOS Technologies.

Even outside of India, the sales of Android smartphones dipped 14 per cent in Q1 of 2018 as more people opted to buy feature phones, whose sales grew by 38 per cent. Majority of this growth was driven by HMD Global which revived the iconic Nokia feature phone brand powered by KaiOS.