Gold Rushes and Good Deeds

As articles on Myanmar (or Burma) pop up in the news like so many mushrooms, there was some debate about whether to address the opportunities in the country as a corporate or philanthropic issue. (Vital Wave alternates between corporate and philanthropic editions of the Nugget. With a business-forward approach to development, and an emphasis on sustainability and social responsibility in business growth, we try to provide something of value to all readers in each edition.)

Most reports on Myanmar, particularly in the telecoms and mobile services space, see it as the next big Gold Rush. Breathy pronouncements about the untapped, 50-million-person market and the inevitable rapid uptake of smartphones promised steep growth rates and high profits. But in reality, the companies that stand to build an honest, sustainable, and profitable business in Myanmar are already active in other Southeast Asian markets, paving roads to the gold-laden Burmese mountains with years of relationship building and regulatory battles. In short, you know who you are, and you know what to do. 

Far more intriguing is the potential role of the development community in Myanmar. The country presents a unique opportunity to measure the true economic and social impact of mobile technology in relative isolation. All those claims about the broader economic bump from ICT investment can now be validated or improved. But few development organizations will be content to stand back and observe. There will also be a vital role to play in implementation and education. Many reports on mobile services conclude that a significant barrier to adoption is a lack of understanding of exactly what a smartphone can do. In most markets, operators, handset manufacturers, and service providers are content to let awareness grow organically. In Myanmar, however, the technological literacy gap is likely to be wider than in other Asian countries, particularly in rural areas. Development organizations can steer the perceived utility of mobile phones toward self-empowering tools and services, and away from time- and resource-sucking games and social media sites. They can also help educate users about the potentially negative impact of new technologies - loss of privacy, ubiquitous advertising, and government surveillance. As the Gold Rush in Myanmar unfolds, the development community can ensure that some of that gold dust settles on Burmese entrepreneurs, activists, women, students, teachers, doctors, farmers, and so many others.

Development is Dead, Long Live Development

Flowminder, a non-profit based in Sweden, was lauded last month when they partnered with Orange Telecoms to release illustrated data - gleaned from anonymized and aggregated cell phone signals - on population movements in West Africa. The data helped health officials predict the possible spread of Ebola and decide where to focus medical resources and information campaigns. Meanwhile, in India, a start-up called Biosense is adding to its growing collection of mobile-based diagnostic tools by building an online platform for the country's poorest people to share ideas (particularly health solutions), create a business plan, and raise capital through crowdfunding.

On the surface, these two organizations have little in common. One is non-profit, the other a private company. One focuses on data, the other on devices. But they also share a few very important characteristics: 1.) their work is only possible in a world where billions of people are using mobile phones, and 2.) they represent the future of development. That's a big claim, but it's getting harder and harder to argue against the transformative impact of mobile technology on traditional development models. In the old days, an aid group or a company swept into a developing country, identified a problem, and announced a grand plan (preceded by a pilot project) to address the issue. Today, mobile phones have turned every project beneficiary into a stakeholder (or a potential customer). And the growing importance of data is transforming measurement and evaluation, product design, and partnership equations.

The transition to mobile-based, data-driven development creates myriad opportunities for both public and private organizations - something Flowminder and Biosense understood before the rest of us. A faster-paced, better-connected development landscape will require greater agility, an on-the-ground presence, and a comprehensive approach. Funders and companies that can deliver this agility and work well in a broad, diverse collection of public and private partners will set the directional needle for development in the years and decades to come. 

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.

Broadband Expansion Driving Opportunities in Emerging Markets

Broadband Internet is a topic on the lips of many these days, and a lot of the conversation has revolved around the benefits that expanded access to broadband can bring. The announcement this week that the number of fixed broadband subscriber lines in the world hit 500 million in July showed how far access has come - and how far it still has to go. The International Telecommunications Union (ITU) recently called on policymakers and regulators to improve access to broadband in emerging markets, citing the growing body of research linking broadband expansion to economic development. This research has demonstrated that broadband has a greater connection with economic growth than other communication technologies such as fixed-lines and mobile phones and dial-up Internet.


Yet despite its rapid growth, broadband access is uneven in emerging markets. In many countries, mobile broadband networks are poised to take off much faster than fixed-line broadband. The market opportunity associated with billions of mobile subscribers has spurred the delivery of Internet-enabled mobile services and mobile network upgrades to accommodate those services. There are already many more mobile phones than PCs, while the cost of fixed broadband has been found to be, on average, three times more expensive in emerging markets than mature markets. This trend is not lost on mobile phone players like Nokia, which is staking its claim to the next billion internet users on localized services and affordable smartphones that aim to rival the PC.

Despite these broadband trends, PC makers are unlikely to cede the next billion internet users to the mobile industry. Even with nearly 2 billion internet users, the "next billion" sit in the middle market with a level of household income that makes a low-cost PC within reach, especially with financing. Furthermore, most of these potential customers live in cities, where PC manufacturers have established distribution networks and Internet access is increasing as a result of falling broadband prices and a rise in public Internet access points. Understanding why and how consumers want to use the Internet may hold the key for companies throughout the value chain to capturing these next-generation users.