Saturday 10 December 2011

Creating business around of the next billion

One of the strategic goals of Nokia is to bring out mobile phones and devices to the next billion people in the developing world, namely in Africa, India and Asia Pacific. To this day reaching out this goal has only seemed to provide value and opportunities for phone vendors, network manufacturers and mobile operators. However this perception is going to change due to evolution of affordable mobile devices. Just few years ago an affordable handset in the developing world had only basic phone functions, now new devices like the Nokia Asha series handsets offer specifications that are enough to enable functioning of wide array of software applications and services in these phones. This creates an opportunity for third parties to reach out the next billion and create business around them.

Now many people are probably wondering what kind of business can be created. When answering this question it is important to remind us on how market in the developing world differs from the market in the developed world, and what consequences and opportunities it has...

Computers aren't ubiquitous, in fact they are very rare in the developing world. For example in the United States there were 762.152 computers per 1000 people in 2004, in India the figure was 15.531 per 1000, and in Niger the figure was as low as 0.716 per 1000. What this means is that people aren't using software and services that people in the developed world have accustomed to use with their computers, software like spreadsheet and word processing are virtually unknown for the most people in the developing world. This is a clear market opportunity to offer already invented and tested software products to new markets.

Information is expensive. In the developed world we have gotten used to buying books from the Internet or from our local bookshop without giving a notice on the price of the book. We also have gotten used to looking up information from the web or streaming it over the network. Things change much in the developing world: books are expensive even if you discount the cost of content, this is due to both people having much lower incomes, but also due to smaller scale of operations increasing costs such as logistics. The same is true with electronic distribution, electronic distribution that relies on data connectivity is out of question as the cost of connectivity if available is out of reach of regular consumers, and distribution based on tangible goods such as Compact Discs suffers from small scale of operations and everything that comes with it.

The opportunity here is in making the information and distribution of it inexpensive. This can actually be done by creating a peer-to-peer distribution framework where people can swap content between their phones with Bluetooth connectivity. With this method we can minimize costs by a large degree and as an added benefit marketing and advertising can take advantage from natural social networks of people. The challenge in this method is how to ensure digital rights management and compensating content authors. Other opportunity for content distribution is by binding affordable service offer like the Aircel Pocket Internet with a walled garden content delivery platform.

External entities can also be customers. In developing countries there are multitude of external entities ranging from non-governmental to governmental and intergovernmental organizations working in multitude of different projects. These organizations are potential customers with some having quite deep pockets, even better is that these organizations can be easily approached as their administrative functions are usually located in the developed world. Potential projects to offer can range from digitization of information into mobile form to different kind of educational applications that can either assist learning or help in some other way.

Overall I deeply believe that reaching the next billion can create business opportunities for a large number of parties. However to reach this goal, software companies need to be brave and open minded, things work differently in the developing world, but that doesn't mean that they work poorly, they work differently and one who masters taking advantage of this difference can create value if not in large scale then at least in adequate numbers.

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