Participation in Microsoft's 4Afrika Initiative Gives Chinese Player Greater Coverage
Earlier this month Microsoft launched the 4Afrika Initiative. The software company aims to invest $74 million over the next three years to support economic development in Africa. As part of the project Huawei has released a budget Windows Phone 8 device called the Huawei 4Afrika, which will be tailored for and exclusively available in some African countries.
I was a little surprised that Microsoft had decided to work with Huawei on such a product. Given Microsoft's closer relationship with Nokia, coupled with Nokia's previous experience in similar development programmes including Nokia Money and Life Tools, I would have expected a Nokia phone to be the project's first offering. What's more, recent growth in Windows Phone 8 sales has mostly come from Nokia's Lumia products, particularly in emerging markets like India.
I believe Microsoft selected Huawei because it could provide the most affordable Windows Phone 8 handset. This is hugely important for consumers in Africa, where prices are not always subsidised by network operators and the average income is relatively low. The recent popularity of low-cost Chinese smartphones in East Asia and India shows how consumers are becoming increasingly persuaded by price and not brand.
Microsoft has said the Huawei 4Afrika is a variant of the Huawei W1. Our estimates from this month's Wholesale Pricing report put the Huawei W1 at about €30 less than Nokia's Lumia 620. The Huawei 4Afrika is reported to cost about $150 when it finally reaches retail stores.
Clearly Microsoft is making a big investment in Africa because there's so much potential growth in technology adoption, including smartphones. But I believe this is a bigger win for Huawei. The company will be able to use the 4Afrika Initiative to expand its distribution points across Africa. Huawei sees Africa as one of its fastest-growing markets outside China; this gives the collaboration with Microsoft added significance. I wouldn't be surprised to see Huawei make further similar announcements in the next month or so.