Tuesday, October 19, 2010

Emerging Markets Go Social

Online users from emerging markets are more engaged in the Internet than their counterparts from developed countries. So concludes a recent survey of nearly 50,000 online users from around the world. User engagement - as determined by levels of usage, behavior and attitudes towards the Internet - is far higher in Egypt and China, for instance, than it is in countries such as Finland and Japan. Internet users in emerging markets are also more engaged in social networking, instant messaging and blogging than email and static Internet pages, which are more heavily used in developed counties. And people in emerging markets are becoming avid online users despite having less access to affordable and reliable high-speed Internet than in developed countries.

The results of this survey comes on the heels of a host of reports underscoring the increasing global importance of social networking. A recent report published by Intuit on the 20 trends that will shape the next decade cites social networking and collaboration as key trends that will infiltrate education, work and life. The McKinsey Quarterly spotlights the impact of digital communities, networks and collaboration on the business landscape while also focusing in on how Asian countries such as Malaysia, China and India differ in their Internet usage habits and content preferences. What is clear from these reports is that - while individuals in emerging markets have become increasingly digitally savvy and connected - they are still thirsty for content, tools and services that will enhance their experience as citizens, consumers and employees. 

Unleashing this demand will require creative product, partnership and promotional strategies with a little help from improving infrastructure. There is an opportunity for multinationals to make social networking tools available on low-end devices, still pervasive in the developing world, while fostering the development of localized applications. Bringing in new partners such as advertisers and other third parties to defray the cost of the device and services to the consumer can improve accessibility and catalyze further network effects. Finally, there may be opportunities to utilize the Internet as a sales channel and social networks as a promotional vehicle, but companies may want to tool their approach to local usage patterns and preferences.

Tuesday, October 5, 2010

Tablets, Tablets Everywhere: Time to Stop and Think

Each day seems to bring the announcement of a new tablet product by a major computer or mobile handset maker. Recent weeks have seen the launch or planned launch of new tablets by Research in Motion, Toshiba, HP and Dell. Since Apple's iPad was launched, the tablet has become the hottest form factor in hardware. Tablets were once a product category considered by some observers as a niche area, but manufacturers are now feeling the pressure to offer compelling functionality and sleek looks so as not to fall behind the market leader. This trend is not confined to developed markets. Lenovo, China's leading PC maker, announced but then recently delayed a "hybrid" unit that combines the functionality of a laptop and a tablet. The government of India sponsored the prototype production of a new $35 tablet that drew inevitable comparisons to the OLPC laptop. It has pleasantly surprised some reviewers with its performance, although considerable skepticism remains.

The flurry of activity in the tablet space recalls the explosion of interest in the netbook category several years ago. Netbooks took off in 2007 after the release of the ASUS Eee and the OLPC XO-1 on the premise that they were ideally suited to low-end consumers (especially in emerging markets) because of their lower price point and emphasis on accessing Internet content rather than hard drive-based content. In early 2009, ABI Research predicted that almost 35 million netbooks would be sold globally, with the total rising to 139 million by 2013. A year later, however, the tablet phenomenon happened, and netbook sales are now falling globally, which many are attributing to the rise of tablets such as the iPad. 

Whether tablets (or other factors) are responsible for the slowdown in netbook sales, these events illustrate the dangers of making long-term predictions about the growth of products or product categories based on current sales data. This risk is particularly relevant in emerging markets, where young, urban consumers often want to be seen using the most cutting-edge devices. Sales projections based on current or historical trends can provide useful context for managers, but firms would be wise to supplement these numbers with a critical analysis of the broader ecosystem and underlying consumer needs in the markets in which they operate. Market intelligence that capitalizes on rich qualitative information can yield important insights on anticipated behavioral trends for key market segments.