There?s an interesting piece telling us why some of the local smartphone manufacturers are beating the pants off Samsung and Apple Apple in certain foreign markets. Really, it?s an application of one of the central insights of Friedrich Hayek, the Nobel Laureate economist.
Here?s the point they make about the Indian market:
According to IDC India, the golden formula of the Indian smartphone space is to have a sub-$200 smartphone with a large display (phablets account for a third of all smartphones) and dual-SIM slots. This is something that local smartphone brands have caught on quickly while the global brands are yet to realize it. A quick search reveals that Samsung has just one, LG has a couple while Sony Sony has no smartphone with a 4-inch or bigger display priced below Rs 10,000! And that is where most of the action is happening.
This isn?t the first time this has happened either. The same happened during the adoption of the earlier generation of feature phones:
This is a repetition of the scenario that unfolded around five years ago when local brands like Micromax first emerged and launched dual-SIM feature phones in India. Nokia Nokia, still the market leader at that time, ignored the trend, mistaking it for a fad. Nokia did not want to enter the dual-SIM market because it would have been detrimental to its carrier partners elsewhere. Finally, after losing out to local vendors and Chinese manufacturers in the feature phone segment, Nokia had to launch dual-SIM phones in 2010.
And the point from Hayek is one of his central ones: all knowledge is local.
Hayek is using it to point out why you cannot plan an economy centrally, hand down orders from the top to tell everyone what to do. For there?s no way that that centre or top can have enough information to do such planning successfully. The knowledge is all in the minds of the people out there actually doing things: this is why markets work better as a coordination device because it?s the people with the knowledge doing the coordinating. Not the clueless and ignorant people back at the centre trying to do the planning.
There are of course reasons why Apple and Samsung (and other such industrial behemoths) can do well. Economies of scale for example, the ability to devote vast sums to developing the technology and so on. But that?s not enough: that still leaves room for the people who understand what local markets really desire to muscle into the marketplace.
In a way it?s all rather cheering. That the scrappy little upstart company still has a chance of beating the blog bestriding colossus that is the multi-national corporation. Simply by knowing more about what it is that people really desire.
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