KaiOS raises $50M, hits 100M handsets powered by its feature phone OS

Published May 22, 2019

While Android and iOS have locked up the market for smartphone operating systems, a feature phone platform that has the distinction of being the world’s third biggest mobile OS is announcing a hefty round of funding to continue its expansion. KaiOS, which makes the OS that powers devices like Nokia’s feature phones and Jio’s devices out of India, has raised $50 million from Cathay Innovation (which led the round) and previous investors Google and TCL Holdings.

The funding takes the total raised by KaiOS — which has now shipped 100 million devices across 100 countries — to $72 million. It comes less than a year after Google invested $22 million in the business — a strategic round that also marked KaiOS beginning the process of creating native integrations of different Google services like Maps and (more recently) Assistant into the platform.

KaiOS is not disclosing its valuation, but Sebastien Codeville, its CEO, confirmed it is “definitely up.” (PitchBook put it at a very modest $43.75 million last year on the back of Google’s earlier round.)

We actually knew a little about this round back in February, at MWC in Barcelona, when KaiOS announced new handset partners and a raft of new features. A spokesperson for KaiOS told TechCrunch the delay in closing the deal and making it public was due to a need to coordinate with different stakeholders.

As it turned out, KaiOS’s timing for this announcement turned out to be pretty interesting. The big news this week in mobile is what kind of an impact Huawei will face in the wake of a U.S. regulation barring it from doing business in the U.S. One development in that story has been just how serious Huawei is about building its own operating system to replace Google’s Android and its related services.

This is big news because while Huawei is currently the world’s second-biggest mobile phone maker, we haven’t seen any platform gain reasonable mobile phone traction against the hegemony of iOS and Android outside of China — including the failure of Firefox OS, which retreated from the market only to reemerge, phoenix-like, as KaiOS two years ago — in part because of the extensive ecosystems that have coalesced around these two.

But while all eyes are on smartphones, KaiOS’s funding and general growth represents an interesting alternative for markets, carriers and consumers that might be in the market for what KaiOS refers to as “smart feature phones.”

Today, the company counts companies like Reliance Jio, Google, Facebook, Twitter, Orange, MTN and Qualcomm among its partners, and it’s been building an interesting, two-pronged strategy for targeting people both in developed and developing markets.

As Codeville describes it, in emerging markets (which are KaiOS’s primary target), its devices are being purchased by first-time phone users, or those that have had very basic, non-data mobile phones and are upgrading without the big step and expense of smartphones. “We are bringing people to internet usage with a device they are familiar with,” he said of the form factor. “Other key characteristics are a long battery life, a keyboard and a more resistant touch panel.”

The developed market, he added, was an interesting opportunity because of the amount of professionals and others who want pared-down devices for weekend use to unplug from their daily grind.

Many had left feature phones for dead with the growth in popularity of devices like the iPhone, app stores and, of course, apps themselves. But research from Counterpoint found that feature phones still accounted for almost 25% of all handset shipments in Q3 of last year, working out to a $28 billion market opportunity in the years ahead. Today there are some 1.5 billion feature phone users, an interesting number to consider as smartphone sales continue to feel the crunch.

KaiOS, now with 85M feature phones shipped, doubles down with Google, carrier deals and more

Published February 25, 2019

As the rate of smartphone sales continues to slow down and decline, a software startup called KaiOS — which launched in 2017 from the ashes of Mozilla’s failed Firefox OS mobile project as a provider of an internet-based feature phone OS, feature phone apps, and corresponding HTML5 app store that all work over advanced mobile data networks — is betting that there is still a big, lucrative market for cheaper, lower-end feature phones, and it’s announcing a slew of news this week on the road to leading it.

With 85 million phones now shipped in more than 100 markets with handset brands like Nokia and India’s Jio, KaiOS now has an expanded partnership to put more Google services natively into KaiOS phones, specifically deeper integration with Google Assistant and Google Maps, and the debut of a YouTube app — one of the most popular apps of all on smartphones — for KaiOS. For context, KaiOS (based in San Diego but with the majority of its R&D in Taiwan) raised $22 million from Google last year and had already worked to put basic Assistant and Maps functionality on its phones.

(We also understand KaiOS is on the cusp of another big round.)

Alongside this, KaiOS is launching several new handsets with feature phone handset makers; deals for KaiOS-powered phones with developing market carriers Ooredoo and Orange; and the launch of several new services: its first advertising SDK, KaiAds; and Life, a suite of services for first-time mobile service users to help them figure out how to use their phones and provide content and functionality around things like mobile banking and access to health, education and other services.

Ooredoo is active in North Africa, the Middle East and Asia, and it will roll out phones first in its home market of Qatar. While Orange is the incumbent carrier in France, its efforts with KaiOS will be focused first on its footprint in Africa.

While the main mobile story in the last 10 years has been about the ineluctable rise of smartphones boosted by Apple’s iOS, Google’s Android, and a huge range of handset makers using the latter to push the boundaries ever more on what it means to have a portable computer in your pocket, KaiOS Sebastien Codeville says that this does not tell the whole story.

In developing markets, it’s about offering something less expensive than smartphones but loading them with all the features that a smartphone affords, a crucial way of bridging the digital divide in places where a phone will be a person’s only way to access the internet.

“Yes, smartphones are quite affordable as the least expensive models are now priced at around $35, but KaiOS is $15-20. It’s still half the price of a smartphone,” he said in an interview. “There are 2G feature phones priced at $7-8 dollars, but they don’t have access to most mobile services. KaiOS is something in between.” It also helps that KaiOS is easy on battery life, with a handset typically able to last five days on one charge.

In more mature markets, it’s about picking off specific categories of users who have not been well addressed by smartphone makers. “Seniors are looking for phones with keyboards because of dexterity issues. The use of a touch panel is not easy for them,” he said. “And manual workers might be looking for more rugged products, and others may just want companion phones that can help them mostly disconnect on the weekend, or can be used for sports. Smartphones are not good solutions for these, either.”

This, in fact, is why a company like Google, whose Android operating system has helped to usher in the existence of the sub-$50 smartphone, is working with KaiOS. “We are a distribution platform to customers that they cannot access,” said Codeville.

While Assistant and Maps have been on KaiOS phones before now, the deeper integration will mean a couple of different things. First, KaiOS phone users in more local markets, specifically India, Indonesia, Mexico and Brazil, will now be getting the services. And second, those who are using features like Maps or Assistant will now also be able to enter requests using their voice — a key component not just because you may be using these when you’re on the move, but because text entry into keyboard phones can be fiddly.

“If you look at the emerging markets, we’ve seen that the number of Assistant users has multiplied by seven,” Google’s Behshad Behzadi said earlier today as part of a bigger announcement to expand Google’s language and device support on mobile. “The main reason for this is that for the new users which are coming to this technology for the first time, voice is really the easiest and most natural way for them to use their phones. It’s removing a technology barrier for these users.”

Despite their close working and investment relationship, Codeville also admits that Android is also KaiOS’s biggest competitor, too, since it is the OS that powers the devices that are most likely to rival feature phones in terms of price and functionality.

Android may be a rival, but it’s also a template of sorts for KaiOS. Up to now, the feature phone startup has made small revenues from licensing, said Codeville, but the business model for KaiOS is mostly focused around revenues from its app store, and soon from what it hopes will be a lot of advertising around content and apps that people use through the KaiOS browser, in the form of KaiAds.

Available to developers in the form of an SDK, this is a supply-side platform that will tailor ads to work specifically on KaiOS and other feature phones, a segment that hasn’t really been addressed that well up to now because so many feature phones have smaller screens compared to smartphones, and have not really been designed to work with internet-based services. One of the key features of KaiAds, the company says, is that it renders ads in 200 milliseconds or less.

If advertising is KaiOS’s stick, then its suite of ‘how-to’ content and services, Life, will be the carrot, so to speak. Codeville would not go so far as to say that this is the company’s effort at corporate social responsibility — “We’re just a startup,” he protested — but he did confirm that the service does serve a dual purpose. It’s not just an effort to get people more acquainted with using the services, but in doing so, it will help grease the wheels of KaiOS’s business model.

“If we want to be sustainable and have a long term life of our own, we have to develop the monetization,” he said. Life, he added, will be very localised and will roll out country by country, likely starting with regions in Africa.

Sailfish v3 sets its sights on 4G feature phones

Published February 26, 2018

With the smartphone OS market almost entirely sewn up between Google and Apple, what’s an alternative operating system maker to do? Take an interest in feature phones, that’s what. Today Jolla, the Finnish maker of an Android alternative called Sailfish, has announced v3 of its platform. At a press conference at the Mobile World Congress tradeshow in Barcelona it’s… Read More

KaiOS, a feature phone platform built on the ashes of Firefox OS, adds Facebook, Twitter and Google apps

Published February 26, 2018

Mozilla called it a day with Firefox OS for mobile handsets back in 2015 and said it would test the waters for an IoT effort using some of the same technology (and it has). But that hasn’t spelled the complete end for the tech on mobile devices. Quietly, a company called KaiOS, built on a fork of Firefox OS, launched a new version of the OS built specifically for feature phones, and… Read More

Microsoft offloads Nokia feature phone business to Foxconn for $350M

Published May 18, 2016

Nokia mobiles Microsoft is selling the feature phone business it acquired from Nokia back in 2013 to a subsidiary of Chinese manufacturer Foxconn for $350 million, it announced today. At the same time former owner Nokia said it has inked a deal to license its brand to HMD Global, a new Finnish company run by ex-Nokia and Microsoft devices staff, to “create a new generation of Nokia-branded mobile… Read More