Mozilla's Firefox OS phone might sell - because it's cheap, not because it's open

The low price for the new ZTE Open smartphone unveiled in Spain indicates that Telefonica is trying to grab first-time smartphone buyers in a saturated market
Spain unemployment – people queue outside a government-run job centre in Madrid
The ZTE Open phone running Firefox OS is being sold by Telefónica in unemployment-hit Spain for just €69. Photograph: Sergio Perez/Reuters

The announcement that the first Firefox OS (FFOS) smartphone is on sale in Spain has excited many who are thrilled by aspects of it - particularly the magical word "open" - and think that therefore it will be a raging success.

Actually, any success it has will come from the phone's price, not what software it is - or isn't - running. And the question of whether Firefox OS can build an "ecosystem" of apps to compete with Apple's iOS, Android, Windows Phone or BlackBerry's BB10? It simply doesn't arise. It doesn't need to. The majority of its users really won't care.

That's because we're now in a third age of smartphone buying. We've gone past the early adopters (perhaps 15% of buyers), and the hump of cautious consumers (another 40%-50%).

Now we're into the tail-end of first-time smartphone buyers, at least in Europe: the cheap customers.

Here's the key fact: Telefónica is selling the ZTE Open in Spain for €69 (£59) - about 25% less than the developer units - and giving pay-as-you-go (aka prepaid) customers €30 of credit. In effect, the Spanish mobile company is subsidising those customers to buy the handset. Deutsche Telekom is also going to be offering the devices in Poland in the coming months.

Why is Telefonica offering them in Spain, when it operates in many countries? Two reasons: first, Spain's economic woes (with youth unemployment at 56.4%, and overall unemployment at nearly 27% in May) mean that cheap handsets are where the growth (if any) is; and second, because it already has the highest penetration of smartphones in the big EU countries - 66%, against 64% in the UK (and 57% in Europe), according to ComScore's measure for 2012. In the half-year since that ComScore survey, that number will have kept growing - mostly fuelled by cheaper Android phones.

Data from KantarWorldpanel shows that Android handsets made up a jawdropping 92.8% of sales in the three months ending in April. That's more than any other of the "big five" European countries (UK, Germany, France, Italy, Spain); more even than urban China, according to Kantar's figures for the same period (which shows iOS having a 26.1% share in China, against just 4.1% in Spain).

Spain, we might conclude, isn't a premium smartphone market, and those who don't yet have smartphones probably don't set a high priority on owning one.

But at Telefonica's prices, the buyers aren't going to be buying them in order to deluge Snapchat with pictures or enliven Twitter with their geolocated thoughts. Hell, no. They'll want them to make phone calls, and perhaps sometimes to download an email, and more occasionally find their way to a destination using a map.

Naturally, that's not how Mozilla sees it. "The launch of Firefox OS marks an incredibly exciting time for the Web. Firefox OS powers the first smartphones built entirely on web technologies and will stimulate an inspiring new wave of innovation for the web," says Jay Sullivan, Mozilla chief operating officer in an obligingly manufactured quote. "We are proud to deliver an experience for first-time smartphone users that will delight them and really put the power of the Web in people's hands."

There's a key clue there in that phrase "first-time smartphone users". It's 2013, anywhere between five and ten years (depending which date you use) since the start of the smartphone revolution, and these people haven't begun using a smartphone yet. Why? Because they're still using a featurephone. They either don't care about having the internet on the move, or haven't been able to afford it.

That doesn't mean that there aren't potentially lots of those buyers. The ZTE Open may well sell millions of units.


Frankly, I don't expect that the majority of buyers of these phones will care about HTML5, nor whether its power has been unleashed on mobile.

So who does care? Here's another quote from the press release from Mozilla: "Operators, OEMs, and developers are growing ever more interested in the emergence of a truly viable alternative mobile platform that offers them new economic opportunities independent of today's incumbents," said John Jackson, IDC's research vice president.

Ah, yes. That's quite a telling analysis in one threatening little sentence. If the ZTE Open and its Alcatel sibling do well (which, as I say, they may well do), that will give Telefonica leverage in negotiating pan-European contracts with Apple, Samsung and other handset makers in the future. For all the lofty talk about "operators, OEMs and developers", it's only the first which will benefit from these handsets doing well. OEMs will find themselves screwed down on subsidies - with these cheap handsets held out as a threat - and any developers who can get these customers to spend any amount of money deserves every penny, because it's going to be hard-won. For Telefonica, the millions of euros that the ZTE Open may end up costing it will be money well spent if it means less money spent subsidising higher-end handsets in future. It's a brutally commercial move.

Yes, I know. You'd like to believe that Firefox OS will be a raging success on its own merits; that its "open" nature will attract the hordes who must be out there, aching for a mobile operating system built on a browser. It's not true. Those people already bought an Android phone. Especially in Spain.

And a closing thought? The UK has the second-highest penetration of smartphones in the EU "five". Telefonica owns O2. Will we see the ZTE Open here too, priced to attract those diehards who have been hanging on to their old Nokia phones until they drop them one time too many? Perhaps that's how the featurephone ends: not with a whimper, but with a bang on the floor.