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May 07, 2015

Indonesia Still Slim When It Comes to Smartphone Use

Sometimes it seems like smartphones are just everywhere. It's not hard to look where there's any concentration of people and see that someone's got a smartphone out and is merrily typing away or listening to music. But there are some places where the smartphone—despite the best efforts of all the smartphone makers out there—isn't quite catching on. One of these places, according to new reports, is Indonesia, where smartphone penetration is still considered to be quite low.

The Indonesian government is said to be expecting 35 million smartphones produced in the country every year starting in 2017. Indonesia's wireless ambitions don't stop there, though, as the government expects the wireless network to be upgraded to 4G speeds by 2017 as well. This may prove to be a taller order than the country can stomach, though, as reports suggest that a 3G network is still being built. But the Indonesian government seems to address that point as well, hoping for a total investment of $4.5 billion in the telematics sector.

Businesses are reportedly beginning to heed Indonesia's call, with foreign investment coming in from several fronts. Samsung is said to be on the way, setting up a $20 million facility through Samsung Electronics in West Java. Oppo and Haier are likewise engaged in the final stages of construction, and the three firms are looking to do big business therein. Samsung is set to produce around 800,000 cell phones annually, with an eye toward expansion later, and Oppo is set to make between five and 10 million mobile phones annually. Haier, meanwhile, is targeting 2.5 million per year, though the three totals combined won't even comprise half of the Indonesian government's 35 million device annual goal.

But Indonesia isn't just a good target because the government's so clearly enthusiastic about smartphone development; Indonesia has a population of 250 million people, which is approaching the same population as the United States. Per capita income is on the rise, suggesting a vibrant middle class in the making, and about half the population is under the age of 30, meaning that there are plenty of young consumers with plenty of cash on hand, making it a fine target for the rising smartphone market. Word from Frost & Sullivan, meanwhile, paints a major growth picture; while smartphone penetration was just nine percent in 2012, it was at 23 percent in 2014, and by the end of this year it's expected to clear 50 percent, suggesting major growth ahead for those able to take advantage.

The demographics are certainly primed for growth, and with the government seeming to actively encourage said growth thanks to a set of new rules, it's likely to prove only a matter of time before the appropriate numbers of devices land in stores and users start laying hands on them. It's hard to get around the sheer number of factors working in favor of smartphone growth in the region, so to suggest that there will be many more Indonesians with smartphones soon just seems too likely to miss.

Only time will tell if the development keeps proceeding, if the middle class remains robust, and if the new rules have the desired impact, but the Indonesian smartphone market right now is looking like a pretty good market to be in. 

Edited by Dominick Sorrentino

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