More Mobile Functions Lead to Greater Privacy, Security Concerns

Over 350 telecommunications industry, public-sector and development-community leaders congregated in Johannesburg, South Africa October 13-15 for the 3^rd “MobileActive” conference. The annual event focuses on the role of mobile technology in healthcare, economic development, education, human rights and democracy. Vital Wave Consulting analysts at the conference were struck by the number and depth of discussions around privacy and security issues, especially among mobile health (mHealth) professionals. With Google, Yahoo! and Microsoft announcing the formation of a privacy-focused Global Network Initiative this week, and the recent launch of an ambitious multi-partner project to use mobile phones to combat HIV and tuberculosis in South Africa, such discussions were both timely and indicative of a potential opportunity.

The concern among many health professionals and mHealth project participants (including operators, content and service providers), is that, in many developing countries, mobile phones are not necessarily owned or used by a single individual. Low-income users often share phones, leading to legitimate privacy and security concerns. A text-message reminder to take HIV medication, for example, could have social repercussions for the receiver if it is seen by another person. And a farmer who receives a cash transfer from a family member must be certain that the people who borrow his phone cannot access the funds. Such privacy and security issues will become more important as the functionality of mobile phones expands.

There is an opportunity for software developers, handset makers, operators, service providers and content providers to address consumer demand for privacy and security safeguards on mobile devices. Companies that offer safer, more secure hardware, software and services will be rewarded for differentiating their solutions and understanding the concerns of their customers.

Also in the news:

• Microsoft looks to a simpler OS and cloud computing
• Dell debuts “Sandeep the Plumber"
• RIM’s Blackberry expands to key Latin American markets

The mobile phone is the computer for Africa

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by Karen Coppock

During a break-out session in the MobileActive08 conference in Johannesburg last week, a participant from Uganda asserted that the mobile phone is the computer for Africa. This proposition was heavily debated amongst the group, with some voting in favor of the computer (argument: have you ever tried to work on a spreadsheet or edit a Word document on a mobile phone? The screen is simply too small to be one’s only computing device) and others voting in favor of the mobile phone (argument: affordability, ubiquity, ease of usage, etc.).

One concern with computers was the requirement for literacy. Yet someone in the group mentioned that literacy is also an issue for mobile phones as SMS messages are so much more affordable than voice calls and many of the MobileActive08 projects revolved around SMS text messages. A very sharp participant from Zambia mentioned that there is an old tradition of letter writers – people who used to write letters for people who were not literate. She said that there is evidence that this trend could be translated to the mobile phone environment with the emergence of SMS writers or people that will send/read a text message for someone if they are not literate (either reading/writing literate or technically literate).

Regardless of its shortcomings, the general agreement in the small group was that the mobile phone may very well be the only computing device that millions of Africans ever experience first-hand. There is an opportunity, therefore, to develop tools that enable the mobile phone to become easier to use as a computer (i.e., docking stations for mobile phones with connections to a monitor, keyboard, external speakers and/or a mouse) …thus far the CellC and Vodacom mobile phone booths across South Africa have not exploited this opportunity, but perhaps that is the next step in the technology’s evolution in Africa.

Pre-paid funeral plans....

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by Karen Coppock

From Soweto to Joburg to Limpopo, tombstone and funeral service signs dotted the landscape in all of the places we visited in South Africa last week. Billboards advertised tombstones, coffins, and even pre-paid funeral packages. Funerals are a big business in South Africa and unfortunately, with the spread of HIV/AIDS, it is a growth industry in Africa. The poor (and middle class) often experience the double trauma of both financial and emotional devastation when a loved one passes away. Our local researchers noted that in certain traditions, the family of the deceased is responsible for butchering a cow for their town every day from the person’s death until their burial. This cost is over and above the expenses of purchasing a coffin and a tombstone and has to be incurred even if the deceased person was the primary breadwinner.

Entrepreneurs have created business model innovations, such as pre-paid funeral packages and funeral insurance, to enable families to mitigate the financial losses associated with funerals yet still fully participate in traditional rituals. Both firms and families benefit from these innovations. Firms benefit as their clients’ lack of a constant income does not necessarily impact the firm’s bottom line. Families benefit by enabling a dignified end for the loved one and limited funeral-related debt for the surviving family members. Identifying this type of win-win situation is key to success in emerging markets…and in business in general.

Cloud Computing – No Borders but Different Rules

Vital Wave Consulting provides services to large technology companies, capital investors, and foundations, but we have a typical Silicon Valley soft spot for hopeful start-ups. Earlier this week came the news of an Australian couple, John and Jeanne Nicholls, who emerged from their garage with a $100 palm-sized device that relies on “cloud computing” for processing and storage. Their company, ThinLinX, will soon launch several models of the Hot-E, a solid-state thin client aimed at “cost- and power-conscious small and medium businesses, schools and developing countries where fully-fledged PCs are prohibitively expensive, impractical or draw too much power.” The Nicholls claim to be partnering with a large but unnamed software company to develop the device.

Much of the value proposition cited by ThinLinX (e.g., affordability and low power consumption) is reminiscent of previous ill-fated devices such as AMD’s Personal Internet Communicator (PIC). Success in this category of device depends almost entirely on availability of broadband and the viability of cloud computing. Cloud computing, or remote software delivery and data storage, is the subject of intense interest (and investment) by Sun, Google, IBM, Microsoft, Amazon, and others. Merrill Lynch estimates the cloud computing market will grow to $95 billion by 2013, and IBM will spend $360 million for a new cloud computing data center in North Carolina (their ninth such center worldwide). So far, however, enterprise has been reluctant to relegate their storage and processing to server farms due to security concerns, and consumers seem resistant because of a lack of broadband access or unfamiliarity with the model.

New devices like the Hot-E, along with a growing host of cloud-based applications and online operating systems (e.g., OpenOffice, GoogleApps, Glide) may not be enough to draw the masses into the clouds. But additional efforts by Microsoft or top global PC manufacturers could tip the scales for broader adoption. Whatever serves as the catalyst for mass adoption of cloud computing, there will be dazzling opportunities for many companies, from garage-dwelling entrepreneurs to small software developers to multinational IT companies. Success in emerging markets will likely come to those who understand that, while cloud computing services are technically available anywhere there's a broadband connection, adoption and use will not not necessarily follow the pattern of mature markets. Successful cloud computing companies will do their homework on local issues like broadband availability and reliability, business model appeal, user preferences and price sensitivity, while carefully choosing partners who contribute toward a strong and financially viable value chain.

Also in the news:

• Asustek anticipates healthy ‘09
• IBM sees continued strong growth in emerging markets
• Yahoo! struggling with low ad revenues

M-Pesa is our hippo!"

Safaricom’s mobile money transfer program, M-Pesa, received additional praise last week, but more emphasis was placed on how the service is causing grief to Kenya’s traditional banks. (One banker laments: “Money transfer on the cell phone is a great idea, but you do not allow innovation to outsmart regulation.”) With M-Pesa, mobile phone users can transfer money in increments as low as $1.25 for a small transfer fee. Recipients can then withdraw cash from one of several thousand M-Pesa agents countrywide. 3.6 million Kenyans subscribe to the service, transferring approximately $2 million a day to friends and relatives around the country. Now the banks are complaining that excessive regulation prevents them from entering the market. These are the main points of the article, but a cursory reading would miss the readers’ comments, where the real action is.

Where else (besides on the street) can you find raw anti-bank sentiments like “You closed our accounts and chased us like dogs. Don’t bark at us.” Or, for those who speak Kiswahili, “The sly person is in trouble when the fool gets smart.” And our favorite: “M-Pesa is our hippo,” a vote of confidence for M-Pesa that may also allude to the fearsome habit of the hippo to stomp on whatever comes between it and the river. These comments are a window into the attitudes of an important segment of the Kenyan population - technology-savvy users who can afford to spend time and money submitting comments to an online forum. They may not represent the masses but they can set trends that influence lower-income populations.

Indeed, Safaricom (40% owned by Vodafone) has significant popularity among Kenyans. This good will has been cultivated with blatantly nationalistic marketing and a refusal to block SMS text messaging during a political crisis in December and January. Now it seems the company is also benefitting from the impression that they are resisting the banks, where few Kenyans have had a positive experience. But popular support is not enough. Technology is innovating faster than regulation – and not just in East Africa. Like voice and text messaging before it, money transfers and other mobile services are being adopted quickly and widely only in countries where the regulatory environment allows or encourages them, and cross-border transactions are largely prohibited. Growth will come to mobile service providers who work within the regulatory environment and keep the pressure on government regulatory bodies by stressing the social benefits of their services. Quantifying the benefits of mBanking, mHealth and other mobile services may not win as many hearts as a patriotic advertisement, but it will solidify the support of critical partners in the private and public sectors.

Also in the news:

• Nokia invites mobile application innovation
• Microsoft offers software suite for Portuguese low-cost initiative
• A shift in Indian Telco investment

Governments and the Development Community Warming to Private Sector

Nearly everyone in the development community (and a growing list of business executives) is familiar with the “MDGs.” The term is short-hand for the UN’s Millennium Development Goals – a list of eight ambitious objectives that, if achieved, would provide better education, healthcare, nutrition, gender equality, and communications technology to a far greater percentage of the world’s poor. Lately, Ericsson’s President and CEO Carl-Henric Svanberg has been quite vocal about his company’s support for the MDGs. Ericsson has joined the UN’s eHealth initiative and is raising awareness of the role of telecommunications in achieving the goals at the Volvo Ocean Race.

When the MDGs were conceived eight years ago, there were only 738 million mobile subscribers, which represented approximately 12% of the global population (assuming one subscription per person). Today, over 3.5 billion people – half the world’s population – own mobile phones, and the GSMA estimates that mobile networks will cover 85% of the world’s population by 2010 – five years before the MDGs are supposed to be achieved. Ericsson’s Svanberg points out that the Millennium Development Goals are now being re-thought in terms of how mobile technology (and technology in general) can contribute toward their achievement. In fact, nascent sub-industries like mServices – the delivery of critical services like healthcare and banking through mobile phones – have gained valuable support from governments and influential development organizations. Many of these organizations have learned important lessons and refined their roles and expectations for private-sector partners. In a recent investigation for the UN and Vodafone Foundations, Vital Wave Consulting identified six strategic recommendations for effective mHealth implementations. Many of these recommendations have an implicit requirement for private sector involvement.

Governments and development organizations manage entire ecosystems that serve the basic needs of millions of people. Despite resistance to (or mistrust of) the profit motive by many in the development community and emerging-market governments, a growing number of organizations are seeking ways to bring the private sector into achieving the MDGs. There is a residual assumption that private companies are still best involved as donors and philanthropists. However, the smart business manager will identify and seek out new opportunities presented by those who want to work with private-sector partners to (profitably) create efficiencies, improve communications, and provide better access to information and services.

Also in the news:

• MSI has the wind at its back
• mBanking prospects remain positive in Africa
• Motorola and wi-tribe bring WiMax to Pakistan

For your information...

How much do you pay to call information (411) from your home phone? How much from your cell phone? How would you find the nearest Italian restaurant on the fly? It might surprise many that dialing information from a cell phone is free and easy, thanks to Microsoft’s Tellme, Google’s GOOG-411 and several other services. According to Tellme, 40 million people in North America find information each month with its service, which is available on any phone but more common as a downloadable application on smart phones. When integrated with other tools, the service allows user to, say, search for a movie theater showing the latest blockbuster, get a map to the theater and buy tickets. Google’s service is by most accounts less impressive than its rivals, but followers of emerging-market news may have noted that the company just made it available in two of the largest cities in India, and plans to expand into three more.

Google may be on to something. The value proposition for a voice-based information service in India is different than it is for users in developed countries, where information is relatively easy to come by through other means (phone books, websites, maps). In India, as in many other emerging markets, information tools such as phone directories and maps with street addresses are often not as readily available. There is evidence that Indian mobile phone users are ready and willing to use their handsets to find information. JustDial, a local start-up, claims that 24 million Indians have used its phone-based information service, though the company has been criticized for selling phone numbers to marketers. Google has not announced plans to make its voice-search service profitable; the company claims that it is simply building a phoneme bank to develop its voice recognition systems. But it’s not difficult to see how Google could turn a profit from voice-based search. Unlike web-based ads, the “click rate” for results of a phone query would be very high. In fact, users might not even know whether the results they receive are “sponsored links” or regular query results.

Though operators in India (and elsewhere) are hesitant to partner with Google, they may as well accept voice-based information services as a means of motivating mobile users to spend more minutes on the phone, thus increasing ARPU. If Google (or a competitor) begins to generate ad revenue from the service, operators could negotiate a small cut of those revenues in exchange for promoting one service over others. In the long term, Google has the opportunity to make itself a primary source of information for a large and potentially lucrative customer base – the same role it plays in more-wired mature markets, only through mobile phones instead of computers. Growth opportunities will spread initially to local content providers acting as information brokers, and then – as more people in emerging markets acquire data-enabled handsets – to software developers who integrate other applications (e.g., geosyncing, m-payments) with information services.

Also in the news:

• Venezuela orders 1M Classmate PCs from Portugal
• Mobile services stay strong in spite of meltdown
• Google reveals open wireless network intentions