Why Apple won’t be primary driver of mobile connectivity in Asia

Business Insider has an excellent article from Paul Denlinger on Asia’s varied digital landscape following discussions raised during the opening days of Social Media Week, which is holding an Asia event for the first time.

Paul draws a series of insightful points in relation to Hong Kong, its start-up credentials and the “big promise” of data and the web in Asia.

I like that Paul opens with an explanation that (host city) Hong Kong is not representative of the region such is the diversity in digital landscapes across Asia – a point sadly overlook by many in the West. However, his discussion of the success of the iPhone and iPad in Hong Kong and the potential growth of the web in Asia leave the suggestion that Apple may be the driver of Asia’s increased connectivity, which is far from the truth.

While Paul is right to say that Asian mobile users make greater use of the mobile internet than their western comparatives, as recent research from Pingdom (blogged here) suggested, his take on smartphones and more specifically iPhone is, itself, not representative of the region as a whole.

In Hong Kong, the favored platform is the iPhone, and the iPad is rapidly replacing the notebook for many uses. While Android is sure to make major gains this year, the Apple platforms have taken the top of the market, putting them in the same brand space as BMW for automobiles.

While it is right to talk of the iPhone and iPad topping the market in Hong Kong and the likes of Taiwan and Singapore, within the rest of Asia it does not, in fact smartphones themselves remain a niche market, albeit one that is poised to grow greatly.

All signs, data and research point to Android as the most likely device to drive smartphones ownership in markets across Asia thanks to a wide base of devices, of which many entry level devices are available for considerably less than other low-end smartphone devices.

Looking into the future, Asia holds great promise in the area of big data. While leading Chinese companies such as Tencent, Alibaba, Baidu and Sina have not been willing to share user data with other companies, mainly because the number of Internet users in China continues to grow at 22% annually, Google and Amazon have continued to expand their data center presence in Asia. So far, there are not any early stage VCs like New York-based IA Ventures which invest in big data and data mining for Asia.

Of the world’s top 20 megacities with populations over 10 million, 12 are in Asia and only two are in the US (New York and Los Angeles) . These populations are highly mobile and will be accessing their data, mostly from their iPhone, Android phones and tablets, which will be connected on the backend to some kind of analytics platform for data mining. With numbers like these, it’s easy to see that while the market has been slower to take off, it will rapidly overtake the US when it does finally get traction.

There is no doubt China, alongside India, will lead the surge in internet users in Asia based on their sheer populations, developing technologies and growing awareness of technology. Such a growth in users will surely in turn bring added interest from the West. But, even in mega cities across the region – which includes less affluent places than Hong Kong, Taiwan and Singapore – I’m not so sure that Apple products will lead the pack as is suggested.

In small, urbanised states like Hong Kong and Singapore, the iPhone and other Apple products perform well amongst a population that is, by and large, able to afford a top of the range phone and/or portable device. However, the same cannot be said for most of Asia’s other markets, where the bulk of the region’s citizens – who are tipped to be responsible for the region’s growth in internet users – live.

Paul is right to say that:

“In status-conscious Asia, where first impressions are so important, many consumers prefer to save enough to buy the best, rather than settle for second best…”

However this preference applies only when a choice can be made.

While more affluent users may buy, or save to buy, an iPhone because they prefer Apple’s app store to Google’s, this kind of rationale is restricted to those with sufficient financial base.

For many there is little choice and, increasingly, little incentive to spend what could be an extra 700% buying an iPhone over an entry level Android. As smartphone devices functionality begins to standardise – with both devices doing the basics, connecting to the web, offering entertainment and gaming options – price will become the primarily purchasing motive for many despite Asia’s status-conscious nature.

Despite my points, Paul’s article is excellent reading, particularly for anyone curious about start-up culture and the potential of Hong Kong and China.