Where the next billion will come from… enter Xiaomi.

The world’s tech media has been a buzz with the news of Facebook acquiring Whatsapp, a move that I’ve gone as far as saying its the start of a new breed of media groups that a digitally native. Such a move is somewhat dependant on unlocking the potential in global populations, as we shift toward more digital inclusion. Thus making Facebook, Instagram and Whatsapp more relevant in markets where affordability is a key barrier.

The new inclusion driver… Xiaomi

In Singapore this week consumers may be astonished at the retail price of the Xiaomi’s Redmi, but they are in for a bigger surprise when Xiaomi launches its flagship smartphone, Mi3 on March 7. Known as the Xiaomi Hongmi (“red rice” in Mandarin) in China, the dual-SIM 3G Redmi is the first handset from the company that is officially available outside of China, Taipei and Hong Kong, and set to retail online for both Singapore and Malaysia, with amazing potential for some of the world’s highest smartphone potential markets.

Xiaomi Redmi

The Chinese phone maker made the announcement on Wednesday at a media event. Consumers can purchase the Mi3 from its website on March 7 at a retail price of $419. Xiaomi’s Redmi offers exceptional value for its low price, and blows all other budget handsets out of the water. If you’re looking for a cheap Android smartphone without having to compromise on performance, look no further. Some 250 million feature phone users in the region will be reconsidering their device choice in the coming year/s.

Xiaomi, the brainchild of investor and tech guru Lei Jun, redefined the Chinese smartphone market by launching an extremely powerful smartphone running on a smartly-designed Android skin at a price almost anyone could afford. Xiaomi first began three years ago, selling 18.7 million handsets last year, up 160 percent from the year before, and it is targeting to more than double this number to 40 million in 2014. With its strong growth momentum, the Chinese player is likely to emerge soon among the top five in the Chinese market, said Melissa Chau, IDC’s Asia-Pacific senior research manager of client devices

The price point of Xiaomi’s Redmi easily delivers twice the value in features or other devices in its price bracket. It’s quite possibly one of the best budget handset I’ve seen, and with its affordable accessories, makes this the best low-cost smartphone you can get today.

Markets that will drive smartphone growth

Last year, a Google representative from the Asia Pacific predicted that mobile devices will slowly overtake PCs in the region. While this holds to be true, smartphone adoption still still has room growth for the entire Asia Pacific region, according to a recent report released by Nielsen. While the region has strong smartphone adoption rates in general, the report reveals that Asia still has its share of ups and downs, showing markets with both high and low smartphone penetration.

Not surprisingly, developed countries in the region have high smartphone penetration: Hong Kong and Singapore clock in at 87 percent, followed by Malaysia (80 percent) and Australia (75 percent). While tagged as part of the emerging market, China also boasts 71 percent of smartphone adoption.

Xiaomi Market

India

Population: 1.237 billion
Mobile Penetration: As of July 2012, India has 919.17 million subscribers in total or 76% penetration rate
Smart Phone Penetration: 18% (165 million)
Potential Upside: 500 Million+

Indonesia

Population: 246.9 Million
Mobile Penetration: 220 million subscribers in total or 92% penetration rate
Smart Phone Penetration: 23% (50 million)
Potential Upside: 150 Million+

Philippines

Population: 96.71 million
Mobile Penetration: 108 million subscribers in total or 120% penetration rate
Smart Phone Penetration: 18% (16 million)
Potential Upside: 80 Million+

What does this mean?

With the increase in affordability through devices like Xiaomi’s Redmi, digital inclusion is bound to accelerate in markets where there is HUGE upside. Thus boosting the relevance of deals like Facebook acquiring Instagram and Whatsapp. Putting heavy pressure on the mobile operators of these markets to quickly pivot to data driven commercial models.

© Scott Bales 2014. All Rights Reserved.