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May 31, 2010
 

SO Links: Week 21

Took last week off. Here are a few items from this past week's research:

Filed under  //   Android   Bangladesh   Brazil   computing   Dell   OLPC   Russia   science   smartphones   technology   Women  
Posted by Scott Smith 

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January 8, 2010
 

Super Fakes, Open Source and Informal Channels of Innovation


Photo by Samout3

A recent string of interesting signals, including yesterday's New York Times post about the Chinese smartphone fake encountered at CES with the iPhone look, Android guts and faux HTC splashscreen may provide an interesting view of where innovation in mobile apps and services for emerging markets may come from in the near future. These signals tell me that we are approaching a point where said innovation is no longer just going to come from "official" device and application makers, but are starting to emerge from hidden development "dens" in places like China, Russia or Thailand as well as from Kenyan startups or American giants.

The numbers paint a story of probability. Somebody is actually counting and forecasting these illicit grey-market activities as best they can, and the most recent figures, from research house iSuppli, put Chinese grey market shipments at at least 145 million units for 2009. That's a growth rate of over 43% over 2008, and represents about 13% of global handset volume. This, at a time when the legit market has been slowing. And in those 145 million units, somewhere some interesting new innovations are taking place, and in the 145 million customers, some folks are getting what they want.

As Jan points out, at least a portion of these devices' buyers know what they are getting at purchase, and likely make their purchase decision based on a value for money tradeoff. They may be getting access to the (glancing) look and (approximate) feel of a smartphone, the cachet of the counterfeit brand, or, in the case of the Times example above (I suspect increasingly in the next few years) they are after some hybrid formulation of open source flexibility with proprietary look and feel. 

The latter effect is where we start to cross over into innovation territory it seems. In the past a hacker would have to reverse engineer or obtain a crack of an OS like Symbian, or fake up some melange of a platform to run on. Since the advent of an open source system like Android, which has allowed the legit developers to roll a mobile OS of their own, this is changing. One week it's HTC or Motorola making a new Android derivative and handset, the next it is Lucky Dragon's Mobiles 'R' Us with a smartphone/e-reader with MP3 playback. Or, more importantly, a device with apps written to suit local tastes, which presumably run beyond knock-offs into utility territory. If the big mobile companies aren't innovating for the grassroots fast enough, or can't be everywhere at once, the expertise gained over time in making passable hardware, combined with the ability to crank out a platform tuned to local tastes, puts Lucky's operations on a collision course with Moto or Nokia. Over time, this more responsive operation may win an increasing number of customers, as price and value converge. 

Imagine a time, five years hence, when West African developers creating apps for the specialized needs of the region crank out cheap Ivorian handsets from a customs-free, loosely governed black market zone like Bouake, where black market pirates roam free even today, making ersatz Arsenal tops and pseudo-Murakami LV backpacks. They will know the local market, they know how to make the supply chain run, and they can provide regional support. Not that far fetched.

Informal innovation, even illicit innovation, is nibbling around the edges now, just emerging on the radar. Whether its a no-name mobile bought in a Shanghai market, a People's Processor, a phone for the everyman, or a local operator that just happens to be seen as a terrorist organization, the boundaries around who happens to be a "legit" innovator and who is black market is blurring. Bottom-up innovation doesn't just come in an official wrapper, and increasingly, we will see consumers in parts of the world where price/performance is measured differently choose high technology from a broader bazaar of providers, as they do for low technology today. Today's No Name Inc. may be tomorrow's Notion Ink. 

 

 

Filed under  //   Android   counterfeits   design   grey markets   innovation   mobile   open source   stats  
Posted by Scott Smith 

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