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.

Translating the "Huge" Opportunity into Actionable Forecasts

Market research firms and the business media have finally caught the emerging market bug and are yelling from the hilltops that the opportunity is “huge.” Forrester’s recent study received considerable media attention by stating that by 2015 most PC growth will occur in Brazil, Russia, India and China and the world will have 1 billion PCs in use by the end of 2008. The research says that in order to capitalize on this growth, hardware and software manufacturers will need to make a fundamental shift in their businesses and it gives nods to some of the heavily-marketed multinational initiatives.

With such compelling numbers and media attention, it is no wonder that technology companies are investing in programs targeting developing countries. Indeed, there has never been a more compelling time to invest. Senior executives no longer need convincing and emerging-market consumers are prioritizing technology spending. However, many large-scale emerging-market initiatives have failed in spite of the overwhelming opportunity, and business managers are advised to proceed thoughtfully.

Emerging markets are different and less intuitive, even for experienced business managers. Corporations that insist upon actionable analyses, sound data, and scenario forecasting will gain a competitive advantage in navigating the gauntlet of emerging-market opportunities. Business managers are well advised to apply the same sound strategic analyses to emerging-market endeavors as they would other business opportunities. Using new dynamic tools and broad sources of data, corporations can mitigate the risks associated with emerging markets and secure their share of the “huge” opportunity.

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• Sun sees networked computers as the key to bridging the digital divide