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

While Android and iOS have locked up the market for smartphone operating systems, a feature phone platform that has the distinction of being the worlds third biggest mobile OS is announcing a hefty round of funding to continue its expansion. KaiOS, which makes the OS that powers devices like Nokias feature phones and Jios devices out of India, has raised $50 million fromCathay 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 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 to be that it is definitely up. (Pitchbook put it at a very modest $43.75 million last year on the back of Googles 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 that the delay in closing the deal and making it public was due to a need to coordinate with different stakeholders.
As it turned out, KaiOSs 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 US regulation barring it from doing business in the US. One development in that story has been just how serious Huawei is about building its own operating system to replace Googles Android and its related services.
This is big news because while Huawei is currently the worlds second-biggest mobile phone maker, we havent 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, KaiOSs 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 likeReliance Jio, Google, Facebook, Twitter, Orange, MTN and Qualcomm among its partners, and its been building an interesting, two-pronged strategy for targeting people both in developed and developing markets.
As Sebastien Codeville, the CEO of KaiOS, describes it, in emerging markets (which are KaiOSs 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 fromCounterpoint found that feature phones still accounted for almost 25 percent of all handset shipments in Q3 of last year, working out to a $28 billion dollar 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.
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