A Blog on Jordan

Everyone has been going nuts on the Zain vs. Orange advertisements on the Apple products. I think it is very important to analyze the telecom market in Jordan as the world is ongoing a smartphone revolution at the moment, and the major players in the game will be determined in the coming years.

In 2007, Apple announced the iPhone – a phone that would supposedly revolutionize the smartphone industry. After Apple announced the iPhone, the world has realized how backward and unusable our phones were and a revolution was imminent. Apple has triggered a phone revolution.

All manufacturers had started the race towards producing better smartphones. Even companies like Samsung and LG (who always had fancy hardware but terrible software) starting improving their smartphones, and enhancing their email and social networking capabilities. Later down the road, Google’s CEO quit Apple’s board and Google joined the club. This left us with three major software smartphone manufacturers: Apple, RIM (BlackBerry) and Google. Apple and BlackBerry have proprietary software, and therefore manufacture their own handsets while Android is open source and many hardware manufacturers like Samsung, Motorla, LG and HTC have started making Android phones. Yes, Nokia is the leading mobile phone manufacturer in the world, however I do not believe it earned a name as a part of the top major smartphone manufacturers.

The #1 country in this revolution is obviously, the United States. An image below shows how other countries such as the U.K, still have a majority of the Symbian OS as the leading smartphone OS. Therefore, I assume it is fair to say the the U.S is leading the revolution. Google and Apple are both American companies, and RIM’s biggest market is the United States. Furthermore, according to AdMob, iPhone users in the U.S are around 10 million, and iOS users are about 18 million. The second country behind is the U.K with only 2 million iPhone users and 3.7 million iOS users. (source: http://blog.nelso.com/2010/06/iphone-os-penetration-by-country.html)

As a small developing country with only 6 million people, these numbers are far from Jordan’s reach. The majority of Jordanians do not own a smartphones. As a matter of fact, 60% of the Jordanian population pay 7 JD or less per month for the phone and are on prepaid lines. The GDP per capita in Jordan is around $5,000 while in the United States its around $45,000, where most people have a two-year carrier contract. It is very rare for me to walk here in the U.S, and find someone not using some sort of smartphone (mainly an iPhone, Blackberry or an Android).

The market here is highly competitive and smartphones often brand themselves with a carrier. You never find “Abu Ahmad Link”, or may I say “John Link”, since everyone can afford (and would prefer) to buy a subsidized $200 phone and gain the benefits of an awesome service and warranty. No one wants a used $15 phone. You only visit an AT&T, Verizon or T-Mobile store. Smartphones are usually branded with carriers. For example, iPhone = AT&T. That’s it. Apple carries out a marketing campaign alongside AT&T advertising both. The Motorola Droid is Verizon, the Samsung Galaxy S Captivate is AT&T, BlackBerry Bold with T-Mobile and AT&T. The logo of the carrier is often printed on the handset.

When a smartphone is branded with a carrier, the smartphone manufacturer often subsidizes the phones. I bought both, an iPhone 3GS and then a BlackBerry Bold 9700 both for $199 (140 JD’s). The only “trick” is that I need to sign up with a two year contract with them. That way, over the course of two years they will actually cover the cost of the phone (~$600). For some reason, people here are ethical and rarely try to get around the two-year contract and appreciate the service they are paying for (that’s because its actually a GREAT service). Most don’t even have time to waste on saving $100 or $200, and instead focus on how to make money. The social security number shows how reliable one is, so no one wants to jeopardize that anyway. In Jordan, we have no social security number that matters and records all your moves, and our society is filled with unethical scammers that are willing to dedicate all their time in ways to go around to save say, 10 JD a month, instead of actually work towards something productive and make 200 JD a month extra (one could argue the reasoning behind that is there are almost no chances or opportunity in Jordan).

An example of how competitive the market is, is the killer campaigns that both Verizon and AT&T carry on each other. They hire top marketing analysts that analyze the market and create campaigns that cost millions of dollars to convince the consumer that they are a better network. They refer to each other by name, and compare both networks. Their campaigns often revolve around their strength vs. their competitor’s weaknesses.

We are not used to that in Jordan or even in the Arab world. Therefore, when Orange and Zain both put up their indirect but obvious ads, everyone was shocked and every single blogger had to write a post on the issue. Now lets compare both the Jordanian campaign and the American campaign. The American campaign stated clear and true facts comparing both networks. In Jordan, they are only fighting on “Apple products”. I find this quite pathetic. because I doubt Apple is interested in any revenue generated in Jordan. The number of people who pay over 40 JD per month on their phone bill are about 2-3% of the population (according to a study in July 2010). The only reason Orange officially offers the iPhone (which sells it at outraging prices, and the plans are almost monetary equivalent to U.S plans, which is RIDICULOUS compared to the average Jordanian income) is that the mother company, Orange worldwide (France Telecom) signed a deal with Apple for the iPhone. Orange Jordan gets the latest iPhone around 6 months late! The iPhone cycle is typically 12 months, meaning 6 months after its release a new phone will be released by Apple! Basically they are both gambling with their luck. Orange wasn’t given exclusivity because it earned it, but for the mere fact that it’s part of France Telecom – who gained exclusivity. It has no leverage! Apple could go tomorrow and sign a deal with Zain and just kill the whole campaign between both companies.

Both Orange and Apple would kill for any opportunity given to them by Apple. Sadly, Apple has no time to negotiate deals separately with small entities (potential users in each company would not go over 15,000) and would only negotiate with the bigger owner (such as Zain in Kuwait or Orange in France). And therefore, Orange and Zain will never get to directly negotiate deals. I also believe that Apple is not willing to subsidize smaller franchises and would rather to give the larger subsidy to larger Orange franchises with an actual market, for example in France, Israel, United Kingdom etc…

Instead of focusing on something that is not within your power, and Orange’s iPhone exclusivity is just a matter of luck and not as a result of their hard work and excellent network, they should both run campaigns against each other targeting ACTUAL facts about their own companies and not Apple! For example, Zain could boast how good their customer service is as opposed to Orange. Orange on the other hand, could campaign on its pathetic 3G network (the United States is ready to install LTE fourth generation in 2011) and how slow Zain’s EDGE is.

As for Umniah, I am not going to even start. I worked at Umniah as an intern last summer, and they are JUST about to launch Blackberry (which has been in the United States for more than 10 years now).

We should face reality and stop thinking that we are part of that worldwide revolution. In Arabic “ma 7ada dari 3anna”. I would suggest that both companies would focus their efforts on improving their networks, gaining economies of scale and lowering their prices, and actually fixing our terrible infrastructure. I realize that the government is a big obstacle in front of all that, but those two telecom “giants” in Jordan are not even putting any effort towards improving Jordan’s telecom. I realize that we have a great challenge, and that poverty in Jordan is everywhere, but those companies should stop acting like AT&T and Verizon who are in the world’s highest GDP per capita country, and realize that we are a third world developing country with huge challenges infront of us.

Apart from the problem that manufacturers will not be willing to subsidize the Jordanian market, the government is a huge obstacle in the development of our telecommunications market.