Jason Yeaman is the mobile guru

The conundrum of smartphones for everyone

The conundrum of smartphones for everyone

Everybody pays. It just depends on when and where.

I was told a story about a gent who wanted to go on a cruise, but the cost of the ticket was more than he though he could justify. He had heard from friends and family that that there are hidden costs in the events and the parties you can attend while on the cruise. So he decided that he would bring what he could in the way of subsistence, and avoid the temptation to spend any money he didn’t have to. So, he stayed in his cabin during the social events, the classes, and the fancy dinners…even though he could hear everyone having a great time.

He was content enough to be fortunate enough to be on a safe and sea worthy vessel, on its way to his destination.

At the end of the cruise while disembarking he was approached by the events coordinator who asked him why she hadn’t seen him the entire time underway. When he finally confessed that he brought food with him because he couldn’t anything more than the price of the ticket, she regretfully told him that all of the food and events on the cruise were included in the price of the ticket and that she was sorry that wasn’t made more clear to him.

Cost

When it comes to your thoughts on mobile technology purchase, you may come to the conclusion that the platform is simply the means. That the end is the access to the services that the platform allows or supports. This posture can be short sighted, because eventually the focus will be placed solely on cost. When the focus becomes solely on the retail value of the device, things can become obscured, and because of the length of time that most will people will use a mobile device, the timing couldn’t be worse.

It becomes the self-perceived exclusionary point for the consumer. It can be difficult to assess Total Cost of Ownership of the device: the cost of access to a data connection, the cost of the web and data services, repairability costs and the like – if you can’t get past the out-of-pocket up-front cost of the device. Like a theme park you have never been to: If you don’t like the cost of the ticket, you will never know what it is like to ride their rides.

The Rides

People who buy mobile technology, do so to have access to the basic services that an internet connected mobile platform provides. While the providers of the tools and services may differ and the platforms themselves offer different ways to access them, the core motives are:

  • Internet access
    • Data services
    • Web services
  • Access to tools
    • Native Applications
    • 3rd Party applications
  • Voice and telephony services
    • Phone
    • SMS/Messaging

People want to be able to use their devices to connect with people. They want to connect to systems. They want to consume content on the internet and some want to create content on the internet. Some want to watch YouTube videos, others want to produce videos for Vimeo. They want to make financial decisions based on the data they collect, and execute those decisions using the product, and they want to know that their data is private and secure. Many platforms provide these services at no cost, as an incentive to buy. Other platforms choose not to inform the prospective user about the services it does not provide. The difference is usually cost, but what is not understood is that the cost will be paid or the service will not be provided. It has to be paid up front, or down the road where the can got kicked.

Some are content with just the phone, SMS, a few social apps and a browser. But many people realize all of the things that are possible to create only after they have made their platform decision. They realize the cost of privacy and security only after their data has been compromised. They realize the level of effort on support of their purchase by the manufacturer only after they find out about a security exploit that will not be fixed. They find out about the services that are provided by their platform or on other platforms for free only after they agreed to buy them from the network provider.

Total cost of ownership isn’t realized until long after the initial investment has been paid, and technology isn’t cheap…even though it should be. It should be placed at a price-point that broadens the availability to all demographics. But instead of the market figuring out how to make mobile technology affordable, it decided to obscure the numbers to make them seem smaller.

Market Compensation

Because cost becomes the paramount factor in the mobile tech purchase process, and the monetary cost of the device or platform becomes the first point of exclusion for just about everyone, the market has compensated for this behavior with subsidization. Subsidizing masks the total cost of ownership even further, by bundling the costs of the device and the data and voice connections, SMS services, back-up services and repair warranties, and other services that are unique to the service provider or retailer. The demographics of users in tech are now qualified by the term known as, “Monthly Payment”, which the user is responsible for an agreed upon length of time, usually 2 years.

This monthly fee can include more than one device, multiple lines and a number of connections to the internet, so the individual costs are not realized. Neither are most of the bundled services. Most of those services are never even used. When they are, the user finds out that the out of pocket expense for these services – like the repair warranty, are more expensive than just getting it fixed yourself.

These are the issues that the owners of mobile technology deal with. But what about people who cannot currently afford a smart phone? As stated above, the exclusionary point makes sure that any individual without access to a smartphone cannot be cognizant of his capability to be productive, create and perform. With the focus on price point, the consequence becomes the capabilities and limitations of the platform.

When it comes to the latest in performance and capability in mobile technology, the demographic that is more likely to have access to it are those who have more disposable income. The price of the device is simply the entry fee. The ongoing cost of the operation of this the technology is rarely discussed.

The Government Fix

Governments are becoming more involved with the integration of technology into society. Government focus is placed on the cost of innovations and how they regulate and tax creators. Governments also focus the social and cultural divide between those with access to technology and those without, and how to fill this gap. Government is created by some people and then solves some of those people’s problems with other people’s money. In this rush to get internet connected mobile devices into the hands of the less affluent, both governments and big tech companies have sought to find a creative way to get it done.

Champions of this endeavor will declare at how inexpensively it was achieved. Not how well thought out the solution was, as severe limitations on the capability to produce content on these platforms becomes more widely spread in news. The short lifecycle, vulnerability to malware, exposed personal and private data, identity theft and overall insecurity will be justified by the low up-front cost.

Tech on the cheap

Last week, we were reminded of what a cheap $400 mobile computer was capable of. While these results were obtained at initial launch and it is possible for platforms to be buggy, the OnePlus 3 wasn’t chastised because it was buggy. It was criticized for its poor performance despite what the spec-sheet promised, and that OnePlus over stated and under delivered when they released their latest, “flag ship killer”. While we still have a long way to go before emphasis is placed on the real world performance of a device instead of what printed on the side box, it is gratifying to see a small but slow shift away from this perception that if it is on the box, it must be true. But credit should be given to OnePlus for their vision, despite coming up short again. They think they can build a cheap handset that can compete with handsets that aren’t cheap.

A man shows an alleged illegally modified handset
A man shows an alleged illegally modified handset

Next week in India, a smart phone called the Freedom 251 will be delivered to those who pre-ordered the handset at its release in February. Freedom 251 is a handset targeting rural India ??. The OEM, Ringing Bells, states that the device was created to bring mobile connectivity to everyone. It features Android 5.1, a 4 inch IPS display, a gig of RAM, 8 gigs for permanent storage, cameras…etc. Essentially everything you would think someone would need for a mobile computer. What makes the Freedom 251 so special?

It cost $4.

But not for everyone. Only the millions or so that tried to pre-order it in February. For everyone else it will cost:

About $8.

Who buys it

Everyone with $4. Or $8. But if we put the spotlight on those people that Ringing Bells said the device was created for it would be people who have never owned a smartphone because they couldn’t afford it until now. People who have never known what it’s like, what it can do. What it can’t do. What their experience is going to be like for the next 24 months as they go thorough the stipulations of the contract. People who have never been on that metaphorical cruise ship. Some of these people might believe it’s a scam, like some in the Indian press have stated. Dr. Kirit Somaiya, a member of the Indian Parliament has called it a Ponzi scheme.

The Freedom 251 in white, with some white-out
The Freedom 251 in white, with some white-out

But the Indian government is why projects like Freedom 251 are even viable, according to Ringing Bells CEO. Stating that the price is so low, because the main objective is to get technology in the hands of poor Indians…despite taking a loss on every handset sold. The CEO says the loss is hedged by a government program that rewards local Indian manufacturing. He says this despite the fact that the handsets produced in a raid are actually built in China and rebranded…with white out. This raid was sanctioned and conducted by the Indian government. A government who had officials at the official announcement of Freedom 251 in February.

This is how we solve the conundrum of smart phones for everyone?

The hard line

If it isn’t obvious what is happening here, let me point it out: Even if Freedom 251 is legitimate, there has to be a way for for Ringing Bells to recoup the loss they are taking on each handset sold. They will do it through advertising, which means the personal data of poor people will be harvested to market other products to poor people. This is how everyone pays. The tax payer pays for programs like the Indian Manufacturing incentive. The OEM pays the initial investment up front in hopes that the advertising revenue at the back end will be the end that justifies the means, cutting every possible operational and support overhead cost and still be legal.

The first time smartphone users will end up paying the most. Not monetarily, but in the way of risk to personal data and identity theft. They will pay in frustration when they find the lack of capability of their handset, even though advertisers are making millions from the data that is being syphoned every time they use it.

Indian tech culture seems to be very embracing of the open standard philosophy. I would imagine that the tenets of the open internet have something to do with that. How everyone and everything on the internet should be treated equally. I was inspired when I read the story about Mark Zuchebergs project to get free internet to the people of India who didn’t have it or could not afford it. The project was rejected by the people of India because it did not provide the whole internet. If there is such a thing. That because the service only provided connective services to some environments, like Facebook…it was effectively blocking the rest of the internet.

India says no to FaceBook internet
India says no to FaceBook internet

So rather than let their poor people have shitty internet, Indians chose not let them have it at all. I read a quote from an Indian about the project being blocked by the people and the government that said something like, “Even if I spend 90% of my time on Facebook, the other 10% is just as important.” This is what inspired me. Not because I agree with him, because I most certainly do not. I was inspired at the solidarity he felt with his countrymen affected in this program, who were supposed to be people that couldn’t afford the internet (and wouldn’t know what it is like to spend 90% of their time on Facebook) but he knew that Zuchebergs partial internet was not the answer to having zero internet.

The Freedom 251 is shipping on Android 5.1, a two year old operating system. So it isn’t going to support the things that were updated in 6.0, will have nothing that ‘N’ does when it rolls out, and isn’t likely to ever be updated. It is a project that is based on a bet that advertising revenue will cover the loss, so if revenue isn’t meeting expectations users can expect lowered privacy and increased ad exposure. 15 million people signed up to pay $4 for this, but didn’t want free Facebook?

Maybe we should figure out a way to do it right, instead of doing it cheap or free.

 

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