Canada has the largest percentage of smartphone users in the world, as over 85% of Canadian phones are smartphones. America is next, at 70%. (It’s worthwhile to note that Canada has 23 million smartphones out of 27 million total, compared to America’s 230 million out of a total 333 million).

 

Many Western European countries also have a large amount of smartphones; UK, France and Spain are all over 30% and Germany with 25%. South Korea and Japan are both heavy smartphone users as well, with 57% and 61%, respectively.

 

So What’s the Problem?

 

Smartphones have been on an explosive growth trend, but one of the common patterns consumers struggle with is purchasing a new phone every 2 years. Within 6 months, most phones are outdated. While this competition is a good problem to have as it offers wider options and better phones, it also raises the price of the phone considerably. Manufacturers can only count on a few months of sales to recoup costs.

 

One unfortunate byproduct of this is that it eliminates about half of the world’s population in terms of affordability. This means businesses are missing out on half of the potential customer base.

 

Taking the opening percentages aside, there are a number of growing smartphone markets besides America and Western Europe that are developing an insatiable demand for smartphones – especially lower end ones. China and India, which collectively make up over 2.5 Billion people – only have 290 million smartphones – less than 20%. Compare this to 1.9 billion total handsets, and this is a niche market ripe for innovation and change.

 

Xaomi agrees.

 

China and India don’t have the individual wealth that other developed countries do. But this didn’t stop Xaomi from surpassing Apple in China’s Q1 sales, either. The lower cost smartphone skips on the price, but has some of the same features as other Androids. In a country that isn’t willing to pay $600 for a new, high end phone, it seems that Xaomi has disrupted the pattern of the “major players.” They’ve announced their expansion, and their success may prompt companies to adapt a similar business model to offer competition in this market.  Chinese consumers would benefit from Apple, Samsung, Lenovo and other major manufacturers become more competitive in price, for example.

 

OnePlus has also released a high-end, low cost smartphone (yes, there is such a thing. It’s new and kind of a big deal.) The OnePlus One has hardware to rival HTC, Samsung and Apple, but with a much lower price tag. OnePlus is a Chinese startup that has gone global almost overnight – and they stand a good chance to develop into a major player. Like Xaomi, they’re threatening to fill this market which has been void of options for a long time.

 

Finally, Google has also heard the consumer cry of the price factor, and has created the Nexus 5. Coming in at $349, this is the least expensive smartphone from a major manufacturer – without feeling like a fancy paperweight. It still has a 2.26 GHz quad core processor, 8 MP camera, and is running Kit Kat – the first Android to do so.

 

Smartphones have been on an explosive growth trend, but one of the common patterns consumers struggle with is purchasing a new phone every 2 years. Within 6 months, most phones are outdated. While this is a good problem to have as it offers wider options and better phones, it also raises the price of the phone considerably. Manufacturers can only count on a few months of sales to recoup costs.

 

 

Affordable Smartphones

 

One possible solution is Google’s modular device. This device is intended to be fluid and dynamic, able to adapt hardware at the same rate as the software. The idea behind this concept is to be able to replace individual parts, rather than the entire phone. Need a new processor? No problem, buy one and snap it in place. Bluetooth stopped working? Buy a replacement part and snap it in. The parts are expected to be a fraction of the overall phone, making upgrading practical, without having to sign a  contract or re-configure everything about your phone.

Don’t get too amped up though, it’s still an ongoing project – and the first few prototypes (due out sometimes in 2015) may have some bugs to work out.

 

In the meantime, new competitors like OnePlus and Xaomi are filling the market with superior smartphones at a price other companies simply haven’t been. This trend will eventually work its way into the Western markets, but we can’t help but to wonder – will this be the solution China and India are looking for?

 

With the current trends of smartphone market share growing, it’s only a matter of time before the rest of the world catches America and Canada’s smartphone percentage. Smaller companies are creating demands for their products, and this will likely lead to larger manufacturers altering  their pricing to be more affordable (Read: realistic).

 

In a world completely connected to smartphones, this opens up an entire world of software possibilities. What’s next? Presently, smartphones make up about 25-30%, but one estimate by Ericcson states that the world will have 5.6 billion smartphones by 2019, and smartphone “traffic will increase 10 times between 2013 and 2019.”

 

Affordable Smartphones

 

In a world so vastly connected, 65% of which will have 4G available, what can we accomplish? This opens up the doors for worldwide collaboration, but will also aggregate demands in an increasingly global economy. There will always be regional, macroeconomic differences, but some apps, like Google Maps, have worldwide benefit. This allows the ability to create an app anywhere in the world, and be used anywhere else in the world. With the collective talent pool of increasingly more countries becoming connected, the innovation will skyrocket.

 

In many ways, it already has.