Commentary

The Next Billion Customers: Emerging Markets Need Services From Brands And Carriers

Apple, Google and Facebook are arguably the defining technology brands of the current generation, and are each vying to define the next. All three have enjoyed scarcely believable success and growth over the past fifteen years -- driven first by the dot-com boom and more importantly by the cell phone and smartphone revolution, and everything that has come with it in terms of content and applications.

Each of these companies has been hugely successful building its customer base to the incredible one billion mark worldwide -- driven most by consumer demands for more content, apps and functionality on the move.

Now, every one of these companies is approaching a saturation point as a result of its incredible success -- Apple has reportedly cut orders for iPhone 5 parts as demand in the Western world is not as fervent as it once was. Android is fast approaching a similar point, and Google is at a similar situation where it has just about launched products for everything it can that is useful in the West. Facebook has hit the one billion members mark, survived its rocky IPO and supposedly sorted out its mobile woes. They have all come from different places but have converged on where the future is -- mobile.

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So what’s next for this trio? How do they keep shareholders happy and win their next billion customers? Those billion new customers are not in the Western or developed markets. The next billion customers will come from emerging markets where the feature-phone-laden audience is ready to be brought into the smartphone age.

On a similar note, it was recently revealed that Wikipedia is aiming for a billion mobile users with the help of consumers in developing regions, where both carriers and brands are realizing the opportunities to reach new customers with smart partnerships and products. Wikipedia has partnered with mobile operators to provide free mobile access to its site and has already grown to an impressive three billion monthly mobile page views.

The prospect of partnering with carriers in emerging markets is attractive to Western brands. Carriers there have a unique, direct billing relationship with their customers in an environment where bank accounts and credit cards are unfamiliar. In fact, results from our recent Upstream Emerging Markets Mobile Attitudes report, which polled the views of 3.670 consumers across Brazil, India, Nigeria and Saudi Arabia, found nearly half of all emerging market consumers (42 per cent) favored payment through their MNO when purchasing content such as mobile apps or alerts. It was forecast for 2012 that 1.7 billion people in emerging markets would have a cell phone but no access to banking services (McKinsey, GSMA and CGAP report), making paying for products and services through their operator relationship a more trusted and efficient option.

The Trojan horse model used in the West where a phone is pre-loaded with apps/services which the customer then pays for by credit card simply isn’t an option in the emerging world -- something that was selected by just 14 per cent of the consumers polled. However, both brands and carriers now have an untapped opportunity to provide new services to these consumers for which they can pay via their cell phone bill.

There is plenty of demand in emerging markets for access to email, the Internet and social networks and with the right billing mechanic (through operators) there are plenty of opportunities for brands and operators to bring services to these markets that are not yet available. There is also a clear appetite in emerging markets for applications that are more wide-ranging in content, from what are popular apps in the West (gaming, music) to a focus on health care and educational apps that are more relevant to these new audiences.

Data from our research shows that consumers are prepared to spend money on all manner of products and services such as mobile banking, educational materials and health and agricultural information services that they can use in their daily lives. Apps related to education are of interest to over half of respondents (52 per cent), followed by business (47 percent), then health (41 percent), and almost one in five who would use their mobile to access political services (19 percent).

We have seen handset manufacturers such as HTC develop handsets for emerging markets, so mobile marketing and over-the-top services like WhatsApp are sure to follow suit. Major brands such as Facebook may be the ones to create these OTT services, however, there is an even greater opportunity for mobile operators to create their own versions of Spotify/iTunes/app stores -- as they already have the critical reach and established billing relationships with these customers that brands do not.

This would be a fresh opportunity for operators in emerging markets to generate massive revenues, by providing these much sought-after apps and services that are simply not accessible to the customer base in these markets due to their current billing set-up.

The smartphone boom is coming to the emerging markets -- the demand is there and the questions to keep in mind are who will offer it to this different customer in the most compelling way, who will get there first, and can operators in these markets move quickly enough to strategically position themselves as a much more important part of the value chain?

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