It has been a rough year for mobile phones, and that has led to more pressure on feature phones. One of the players in that space, the feature phone operating system startup KaiOS, is getting a small financial injection that both speaks to that pressure, but also a chance to grow in what remains an opening in the market: selling cheaper and low-end.
The Hong Kong-based feature phone startup has picked up $3.4 million from Finnfund, an impact investor out ofFinland.
Finnfund is getting financing in the form of a convertible note, which can convert into equity in a future funding round.
We reached out to the founder and CEO of KaiOS to find out if there is more financial activity in the works. The last time KaiOS raised outside investment was in the year of 2019.
KaiOS will use today's money to build out its business in sub-Saharan Africa, a major market for low-cost devices. Africa is a particular focus for the investor and it has directly backed a number of startups in the region.
Codeville said that KaiOS can expand into new markets in Africa. Finnfund shares our vision of how important it is to boost digitalisation in Africa, and we are happy to work with them.
According to Finnfund, there are 3.4 billion people in the world without internet access because they can't afford a phone. Finnfund estimates that the cheapest smartphone models can work out to be 20% of a consumer's monthly income. Finnfund's investment works out to less than a tenth of a cent per user.
KaiOS is a low-cost alternative for manufacturers of feature phones that want to compete with low-end phones. KaiOS has a number of models that are internet-enabled, with the cheapest of them retailing for $10 or less.
The startup has a long way to go.
The early years of KaiOS were promising. It began life as a fork of the Firefox OS, which was an ill-advised attempt by Mozilla and partners to build a viable smartphone platform competitor to the likes of Apple and Google. The KaiOS team saw an opportunity to target the lowest end of the consumer market, in developing economies, and to consolidate R&D aimed at these users on a single platform for advanced feature phones.
Other people agreed, and KaiOS quickly picked up hardware and software partners. Even though it grew its market share, and so it became a strategic partner to KaiOS, even though it was hedging its bets, it still wanted to make sure it played a strong role in the feature phone segment.
Things didn't play out as expected.
Some 100 million devices using KaiOS have been shipped according to the company. 500 million feature phones would be shipped annually for the next five years, according to a prediction by the International Data Corporation. The company says that over 170 million KaiOS-powered devices have been shipped, with less than 100 million active users. Today, KaiOS has a 0.07% share of the mobile market. With a share of 28.3%, Apple's iOS is the most popular operating system in the world, followed byAndroid, which has a share of over 70%.
It has a small market share for feature phones and overall sales volume is declining. The feature phone market is dominated by India, China, Pakistan and Bangladesh. Even though Nigeria is the only country in Africa to make it into the top-five markets for feature phones, Finnfund is hoping that there is still more to come.
The investment in KaiOS is an important step in connecting the unconnected. We are proud to join the group of investors who all share the same goal of closing the digital gap, becauseKaiOS has proved that it can solve the affordability problem.
All Rights Reserved © 2024
