Mi-Fone seeks to increase handset roll-out with sub-US$17 handset aimed at rural areas

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Alternative handset manufacturer Mi-Fone has set out to produce low-cost handsets that will enable operators to keep pushing out to a wider range of low-earning users. It is offering everything from a sub US$17 handset without a screen to a US$35 phone with a camera, FM radio and colour screen. Mi-Fone might just be one more unbranded wannabe but its founder Alpesh Patel used to be a senior sales manager for Motorola and knows the territory. Russell Southwood spoke to Alpesh Patel about how he’s trying to break into the market.

Mi-Fone has received trial orders from a range of operators including Celtel Nigeria, Tigo Ghana, Cellcom and Orange Madagascar. Celtel Nigeria has approved the handsets for sale. For Alpesh Patel, this is the beginning of a much larger roll-out:”30% of the operators we’ve contacted have said everything is cool and that they will go ahead and list the phone. If that works out, then we will begin to open doors across the other countries in the major networks.”

In its first month of operations in April 2008 it received orders for 15,000 units and it is developing a network of dealers in key country markets. It now has several countries with dealerships: Uganda (Cell to Cell), Mauritius (Mauritel, who are also investors in the company); Kenya (Phones Express), Ghana (Melcom Group) and South Africa (XP).

The screenless sub US$17 handset came from operator demand for lower price handsets and will be available in July. It seems strange not to have a screen and is hard remembering that this is actually how phones started life. It is voice activated and does not offer SMS and aimed at the very young and the old in rural areas who may lack both the money and the functional literacy to operate a fully featured phone. The target group also includes the elderly with poor eyesight. Mi-Fone also believes that they will probably do best in new roll-out areas where people are unfamiliar with existing phones.

Patel admits:”People are baffled by it. They don’t get the idea of a cellphone without a screen. We don’t see millions selling but operators were asking for it so we cut down on all the features.” However, if they are subsidised by the operator, these phones could sell for as little as US$4-5 to users.

The rest of the company’s range which is manufactured in China varies in price between US$20-40. Although it has stripped down on a number of features, this approach has allowed it to extend battery life. Its Mi 220F has a VGA camera, FM radio and a colour screen and costs only US$35.

This is the other part of the company’s strategy which is to aim its handsets at the young and to provide sufficient design and features at a price to capture their attention. Patel believes university students in particular will be attracted by a low-cost featured phone. He believes passionately that the mobile phone is Africa‘s future and has plans to produce a mobile phone that will offer easy Internet access again at a low-cost.

It’s a fine line separating branded and generic handsets. The branded handsets like Nokia, Motorola, Samsung, Apple and others have all spent millions of dollars in creating the intangibles of the dream. The happy white smiling faces that peer down from the billboards of Africa advertising Nokia speak of aspiration. You may not yet have the wealth or style but your handset is a visible advert for who you want to be as an African.

But for all their much-vaunted mindspace, the large handset manufacturers are vulnerable in emerging markets like Africa. The large spend on research and development and the developed country overheads make it harder for them to operate with sufficient margins at the bottom of the price range. Therefore this may just (and only just) allow a very small gap through which a canny branded generic handset seller might emerge.

Meanwhile at the complete opposite end of the handset price range, Orange said it had agreed a deal with Apple to sell iPhones into its African markets. These include: Guinea, Guinea Bissau, Equatorial Guinea, Senegal, Ivory Coast, Niger, Mali, Kenya, Cameroon, Madagascar, Botswana and the Central African Republic. As noted in previous issues, the iPhone has begun to appear in small numbers in a wide range of countries already.

Now whether or not the iPhone sells in any number in Africa, the insights of its screen interface offer lessons in how to produce a handset that can lay some claim to being easy to use for Internet access. The number of data customers in Africa is beginning to take off and those users will almost certainly want a phone that does not rely on having thin fingers and thumbs.