New Incubation Labs Boost Mobile Innovation in the Developing World

Egypt's Technology and Entrepreneurship Center recently announced agreements with Nokia to establish mobile application incubation initiatives in Egypt known as mLabs. The partners will provide training, certification, business mentoring and other services to local universities, entrepreneurs and developer communities in order to encourage growth of local mobile applications and content. Incubators - like the mLabs network  supported by infoDev, Nokia and the Government of Finland - seek to build a community of mobile technology entrepreneurs and accelerate development of locally oriented mobile businesses. mLabs typically offer services such as technical training, business training and access to important players in the mobile ecosystem like mobile operators or investors. As the mobile application market is expected to reach $15 billion in revenue in 2014, with over $10 billion going directly to mobile application developers, mobile incubators are expected to multiply in the coming years.

Vital Wave Consulting research has shown that the number of mobile incubators are increasing globally.  However, they are still at a nascent stage and exhibit a range of business and operating models.  These findings are part of a larger report Vital Wave Consulting recently authored for infoDev, Finland and Nokia to support mLabs - and other mobile application laboratory initiatives globally - in the development of sustainable business models. A global landscape analysis of incubators included in the report reveals that there is a spectrum of laboratory-types. At one end are grant-funded laboratories that focus on social returns and assist NGOs and local governments in the delivery of public services. At the other end are profit-driven incubators that work with entrepreneurs to develop commercially viable mobile applications to compete on a broader national or international scale. Other incubators combine these two models to achieve profitability and social returns. Public or private organizations, or a consortium of public and private entities working in partnership, can be equally well suited for sustainability.

While the mLabs movement is still in its early stages, and critical success factors and lessons learned are still evolving, it is clear that many different approaches for operating these programs have enjoyed initial success. Regardless of the business model, mobile application incubators will have increasing impact on the local mobile industry of developing countries, especially in the area of value-added services (VAS). The private sector would do well to pay attention to the growth of mLabs and to the development community as an influencer and investor in application development. Furthermore, for all stakeholders involved - such as development agencies, network operators, handset manufacturers, investors and mobile platform providers - promoting local business models and enabling entrepreneurs to build applications relevant to their local communities are essential components to driving demand for the products and services they offer. 

Undercut on the Low End: Rethinking Strategy in the Mobile Handset Market

The huge and rapidly growing Indian mobile handset market once seemed like a boon to developed-country manufacturers, but lately it is starting to cause them some sleepless nights.  Formerly the dominant player with over 70% of the market, Nokia has seen its share slide to 31.5%.  Samsung, meanwhile, recently lost the number-two spot to the relatively unknown Chinese brand G'Five, which now holds a 10.6% share to Samsung's 8.2%.  Although Nokia and Samsung still make up the largest share of the market, fierce competition from domestic and Chinese companies is quickly changing the market landscape.  Last year alone the number of Indian domestic handset manufacturers grew from five to 28. These companies have learned that they can score by addressing rapidly changing consumer preferences, such as longer battery life and feature-rich phones with low price points.

The shake up in the Indian handset market points to the challenges Western companies are having in maintaining a strong presence in emerging markets as new players offer value products in the low- and mid-markets with rock-bottom prices and novel features.  While not alone in struggling in the Indian market, Nokia stands out because it is being squeezed on the low and high ends, and in both emerging and developed markets.  In the global smartphone market, rising competition from such large players as Apple, Research in Motion, and Motorola has eaten away at Nokia's market share.  Commentators note that Nokia's market share loss is due in part to an insufficient focus on consumer needs and the emphasis consumers place on style and design, which rings similar to what is driving its loss in the Indian market - a lack of understanding the demand the Indian consumer has for cheaper, feature-rich products.  The fierce competition in markets such as India means that companies like Nokia need to find a way to stand out in the crowd, as they risk losing their competitive edge in low-cost device markets to homegrown emerging-market players.

One potential strategy is for multinational companies to move into solutions that require more than just the ability to manufacture cheaply, such as offering ancillary or end-to-end services that bind consumers and business customers more tightly to certain brands.  Nokia is pursuing this path with its Ovi suite of mobile services, with some success so far. Focusing on offerings that go beyond hardware can help shield companies from competition in low-end device categories by increasing customer loyalty and providing a new revenue stream.  Learning how to do this requires an understanding of evolving local preferences and trends, but it can help companies hold their own as competition intensifies.