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How the little known Hong Kong startup KAiOS Technologies with its low cost operating system is bringing low cost access to basic smart phone features, making them affordable for the 3 billion people lacking smartphones because of the cost. Jio phones of Reliance Technologies started this affordability change by working with KAiOS to bring out its $20 Jio phone and building a high speed 4G network in India to provide low cost data to these users. Reliance turned things upside down by bringing to India the cheapest data on wireless phone use of any country in the world. KAiOS is now the third most important operating system for wireless phones after Android and Apple. This is now spreading to Brazil, Indonesia, and Africa. 

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Millions of people who are first time users for whom affordability is an issue in countries from Nigeria, Ivory Coast to India, Indonesia, are connecting to the internet. This time not with smartphones made by Samsung or cheaper Chinese smartphones made by Xiaomi or Huawei, but by using a new smart feature phone that cuts down the price such as the Jio phone by Reliance Jio in India. This costs only about $25 compared to $100 to about $300 for lower cost smartphones These phones provide basic features, some apps, messaging, internet access at low cost. About 3.4 billion people without the money to buy costlier smartphones are turning to this just like people did 20 years ago with lowcost Nokia basic phones until smartphones appeared. Monthly cost for mobile data access to internet is $2.50 a month for all the mobile data he needs or Rs. 1750. Batteries last for days in countries where electricity is unreliable. A fruit vendor in New Delhi makes $80 a month or  Rs 5600. A Jio phone fo him costs Rs 1400 compared to paying Rs 7000 or $100 for a Chinese smartphone. Reliance partnered with Hong Kong's KaiOS Technologies Inc. which makes the most widely used operating system powering smart feature phones. Jio sold 60 million Jio phones and 370 million such smart feature basic phones are forecast to be sold in 3 years by 2022. Reliance Jio is being imitated by others. Orange SA of France has launched an inexpensive smart feature phone bundled with inexpensive mobile data plans in Ivory Coast, Burkina Fso and Cameroon and plans to put this in other former French colonies in Africa and Arab countries. WizPhone plans to introduce a $7 phone in Indonesia. KaiOS is working with Brazilian manufacturers to roll out cheap phones there.  In advanced countries Nokia is offering revamped versions of its candy bar shaped phones with added web access to enthusiasts. These cost $100. A whole new group of people who could not afford a smart phone are now being connected after Jio's pioneering effort in India. ...

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Daisuke Wakabayashi's exceptional account of how Steve Jobs directed the project to develop the iPhone starting in 2005 upto to the introduction in 2007. At one point Jobs gives Christie, the engineer leading the very small project team, 2 months to put it together or he would find someone else to do it. This is similiar to the way in which Sony's Morita approached his project team working on the Walkman telling them what he wanted to see and the size of the device. Jobs payed attention to all the details from how the phone names addresses appeared on the screen, dialing from the phone book, the swiping action to start the device, the music, and the colors on the screen. Only in on the project's detail were Bill Campbell, Apple director, and Jony Ive, Apple design chief. Christie was approached by Scott Forestall in late 2004 about this secret project codenamed "Purple." Christie is the engineer who joined Apple in 1996 to work on the Newton, and early touch screen device that failed because the technology was not developed enough at the time, making the device bulky and cumbersome. Christie was working on software for Mac computers in 2004. Greg Joswiak, Apple vice president for iPhone marketing, monitored other phone makers to see if they were coming up with a device that migrated the iPod's music features to the phone. Hence the absolute secrecy for this project. The project team is amazingly small. The practice of small teams can be found at Amazon and Kayak....

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Apple faces large hurdles in China with models made locally by Huawei and other Chinese companies that offer similar features at a price about one third less. Chinese buyers are also looking for products that are made locally by Chinese companies. As a result Apple's market share in China has declined from 9% in 2015 to 7% in 2016. The future for Apple does not look bright apart from a core group of Apple fans that look for new product launches every year. Social media comments cited here show the comments about the iPhone 7 that say buyers should not pay $159 for Air Pods, the cordless earbuds. With the economic situation changing buyers are careful to pay so much for the iPhone 7, when it looks so much like the iPhone 6. In India Apple iPhone price are much higher and remain a significant hurdle for price conscious buyers.

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Verizon's support for another ecosystem in Nokia powered by Microsoft software. This would increase its leverage with Apple and reduce the large payments for carrying iPhones.

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Nokia is initiating a search for a new CEO to replace Mr Kallasvuo who became CEO in 2006. Since then Apple's iPhone has changed the market and Nokia has not been able to match the trend set by iPhones in the mobile phone device market. Nokia's stock has fallen 42% since April 19, 2010. Nokia's response to the iPhone was to replace its mobile phone executive and to create a separate operation for smartphones. Nokia plans to have a new line of smartphones in 2010 to compete with the iPhone. The main problem is its operating system software which needs to be more sophisticated. Nokia holds about 40% of the cell phone market with Europe and countries like India being its strong points. But Nokia's margins in India are low because of intense competition. Apple has already surpassed Nokia in the profit in phones, making $1.6 billion in profit in the third quarter of 2009 compared to Nokia's $1.1 billion.

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With the introduction of the iPhone 4S, Apple announced the iPhone 3GS will be offered free, and the iPhone 4 for $99. This puts Apple iPhones priced to compete with smartphones in the middle and lower price ranges in the market. The free iPhone is a model first introduced in 2009. As the expansion of the smartphone market is now ocurring at the low and mid price ranges, companies making smartphones using Google's Android software and Blackberry's RIM are targeting this market. In the U.S., as of the end of July 2011, 82 million Americans owned smartphones, increasing 10% from the prior quarter, according to comScore. 42% of U.S. smartphone users use Android phones, only 27% use Apple phones, as of the end of July 2011, because of the price difference. In India Apple iPhones have barely made a dent because of large price differences. Rapid growth expected in emerging markets will also make this low end of the smartphone market attractive for Apple.

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The different strategies of Apple and Samsung in getting to the point where the two companies now dominate the smartphone market. Whereas Apple makes only one phone, its iPhone, Samsung's strategy is to have multiple phones in each price segment. It has five levels of Android based phones, with 2-3 models in each price segment. Samsung also benefits from doing its own maufacturing. When faced with a number of technologies Samsung's strategy is to bet on all of the technologies until one of them emerges as a winner, and then concentrate resources on that technology. It uses a similiar strategy for televisions. Apple by contrast places more emphasis on original design and profit margins over sales, gaining sales without eroding margins by being the first innovator in the market. It also has its own unique arrangement for manufacturing at lowcost with Foxconn in China that supports its high margins. Apple is secretive about its designs and promotes its brand heavily with its own retail stores. Apple also uses its innovative edge as leverage to steer profits away from carriers. Analyst estimates are that carriers such as AT&T and Verizon pay about $400 per iPhone to subsidize its cost because this is the only way to get customers into their retail stores. IDC estimates are that the smartphone market is $219 billon in 2012. Both companies are very close in volume- IDC estimates Apple shipped 93.2 million smartphones in 2011, compared to Samsung's 94 million units. Apple has market share of 23.5% in the fourth quarter 2012, up from 16% in 2010. Samsung has 22.8%, up from 9.4% in 2010. Apple and Samsung have together taken 91% of operating profits of all cellphone companies in the fourth quarter, an increase of 30% from 2011, according to Strategy Analytics....

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Apple reports a slowdown in iPhone sales, with a less than 1 percent in increase in sales, for fiscal first quarter ending Dec. 26, 2015, over the prior year quarter. Revenue is expected to decline by 11% for the quarter ending in March 2016, over the prior year, first such decline in 13 years. Analysts say Apple will have to reduce gross margins of about 40% to increase sales. Apple CFO Maestri says Apple increased prices in some markets because of the strong dollar. When the stronger dollar is excluded from results for the quarter ending Dec. 26, 2015, sales revenue increased by 8% over prior year quarter, according to Apple. As Apple slows down its shares financial performance is stalled at about $100. Apple tried to present a different picture now that China sales are slowing down- it said that users had "engaged" with 1 billion Apple devices whether iPhone, iPad, Mac, or Apple TV, in the last 90 days, by downloading an app, song or movie. These services geneated $5.5 billion in revenues for the quarter ending in December, a 15% increase over prior year quarter....

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Apple is in a quandary about what straegy to pursue in the large China market. Apple's pricing depends on its image of bringing in exciting new products. With growth slowing in iPhone sales and lack of new products like the iPhone Apple can go after the market of lower end smartphones to maintain growth. In that segment Apple faces strong competition from manufacturers who make products in-house and have the scale to compete effectively such as Samsung. Other manufacturers such as Lenovo are also surging in this part of the market. Sales figures for the smartphone market give some idea of the problem Apple faces. Smartphone sales for the industry slowed to growth estimated at 41% for 2013, compared to 136% in 2012. In 2014 IDC forecasts growth slowing even further to 17% and by 2015 the smartphone segment looks even less promising with only 12% growth. And much of this growth is likely to go to regional smartphone companies such as Lenovo Group of China, and other brands which are better at competing in the lower priced smartphone segment of below $100, say analysts. Apple sales were 7.9% of the smartphone market in China, Samsung had 15.4%, and Lenovo 13.1%, in the 4th quarter of 2012, according to IDC....

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In India 70% of smartphones sold in 2015 cost less than $150. Apple's market share in India is really small at about 2%. Apple iPhone sales were up 56% in the 1st quarter of 2016 over the same quarter in 2015, according to CEO Tim Cook. iPhones cost about $300-$1000 without a data plan in India reducing the size of the market. In May 2016 Apple applied for approval from the Indian government to sell refurbished or certified iPhones at lower cost. In India the best selling iPhone is the older 5S which costs about $300. It makes up 50% of iPhone sales in India for 1st quarter in 2016, according to Counterpoint. Apple has no model at the low end, as the SE model will cost even more at $500. The Indian market is growing at 26% in 2016 over prior year, making it the next largest market after China. Another approach Apple is taking is seeking approval to open its own retail stores and sell online. A waiver has been given by the government for using locally made parts. Apple's high prices and margins remain a significant barrier in opening up the Indian market, when lower priced Korean and Chinese smartphone models offer attractive options to price conscious Indian buyers....

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Comparison of cost of components and margins for Nokia's Lumia smartphone and the Apple iPhone 4S in 2012. The Lumia 900 retail price is $450 vs. Apple iPhone 4S for $649. Total component cost for Lumia $209 vs. $190 for Apple. Margin of $241 for Lumia vs. $459 for Apple.

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Walt Mossberg, who writes the Wall Street Journal's consumer technology review section, watched Steve Jobs up-close over the years since 1997. They met one-on-one for product introductions, long discussions about the industry, and recently after Jobs illness, at his home in Palo Alto. Mossberg describes a long walk to a nearby park after Jobs had undergone a liver transplant. It provided an insight into the man Steve Jobs was. Persistent- he called Mossberg for 4-5 straight weekends during the dark days of 1997-1998 to convey his vision of Apple products or discuss aspects of reviews. Patience and optimism about the future- Jobs always maintained a positive tone and a vision of what could be in the digital revolution, and Apple's role in it in these discussions. There is the opening of the first retail store in the Washington D.C. area, and Jobs patiently handles Mossberg's incredulity about Apple and its inexperience with retail stores. And Jobs saying that he had taken a serious interest in the details- down to the translucency of the glass. There is the meeting with Bill Gates at the fifth All Things Digital Conference, when both made their appearance together for the first time and Jobs hands a cold bottle of water to Gates. By this time Jobs had already come to the conclusion- as he once said after accepting a $150 millon investment from Gates in 1997-1998- that it was no longer true that Microsoft had to lose for Apple to succeed....