Smartphones: Winning the Internet in the Developing World
CAPE TOWN, SOUTH AFRICA, NOVEMBER 26: Teenage boy calling on the mobile phone with other friends around in Bo-Kaap, Malay Quarter, Cape Town in Cape Town

CAPE TOWN, SOUTH AFRICA, NOVEMBER 26: Teenage boy calling on the mobile phone with other friends around in Bo-Kaap, Malay Quarter, Cape Town in Cape Town

If the World Wide Web conjures images of computer hardware, a monitor, or even a laptop, then you are probably reading this from Europe, North America, or another mature market.

In the developing world, if someone were to be asked about the web, the answer would undoubtedly involve a mobile device, where user growth is moving on an upwards trajectory. There are markets, like Kenya, where over 99 percent of all internet users access the web via a mobile device. In Africa, over half of all internet users access the web via mobile devices.

The market for smartphones has hit a saturation point in some mature markets, and between 2014 and 2015 the top ten smartphone markets in terms of growth by value are all emerging market states. Around the world, smartphone sales grew by 23 percent in 2014 to over 1.3 billion sold, with an increasing percentage of sales coming from emerging markets. In fact, the fastest growing continent for smartphone sales is South America.

Over the next several years, growth is expected to accelerate. For instance, according to the IDC, by 2018 smartphone sales in emerging markets will account for nearly 80 percent of total global volume in sales.

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According to market research agency GFK, smart phones are finally reaching price points in the US$30 to $50 range, making them affordable to the emerging market consumer class – those earning a baseline annual income of around $2000 to $4000.

But phones are getting even cheaper. Mozilla is launching a $25 smartphone in India. Chinese smartphone maker Xiaomi is making emerging markets a cornerstone of their growth aspirations for 2015 and beyond.  Microsoft through its phone manufacturer Nokia (acquired in 2014 for over $7 billion) is playing an insurgent role to expand its presence in emerging markets.  There’s even a persistent rumor that Apple is developing a low-end smartphone for emerging markets.

So what does this mean for the savvy investor? Where can an investor find value and opportunity for a trend that hasn’t fully developed?


As the BBC detailed in a 2013 story, rudimentary feature phone apps are widely used – as a necessity of everyday life – in India to help people navigate public transportation, among other tasks.  In Ghana, an app called Esoko provides farmers with up to date prices for varying agriculture products so they can obtain market prices.

Apps that appear in emerging markets likely have a look and feel that is different than those in developed markets. Afterall, lower-end smartphone apps need to have a smaller amount of downloadable content to make them cheaper to receive for the 85 percent of emerging market consumers that pay for cell phone minutes and data via topping up. Not to mention, prices must be affordable for a consumer making an income in the four-figure range.

Companies such as Jana are coming online to service these consumers with limited incomes but desiring access to apps that can enhance their business or livelihood. Jana has developed a platform where users can test out (and even use) apps without having to download it onto their phones.

Other apps like OKHi in Kenya are solving problems such as geo-targeting in places where there aren’t physical addresses.

Even the heavyweights are beginning to take note. In what is presumably an initial test phase, Facebook quietly launched a simplified version of its mobile app in early 2015 across a selection of eight developing countries in Asia and Africa. The redesigned version runs on slower 2G internet connections, and takes up only 252 KB of space.

Some apps are focusing on data collection in the B2B space. Journey Apps (creators of apps against Ebola – profiled on Frontera) have built a platform that works to anonymously collect large amounts of data for businesses and governments. In places like Africa, where data is often hard to come by, the platform potentially fills a tremendous gap in the market, but also has such applicability in mature markets that the firm has set up a new office in Silicon Valley.

There’s hope that smart phones could make government more accountable and responsive to the needs of citizens. While in India this has translated into selfie booths (to allow individuals to take pictures with a Prime Minister Modi hologram), in Uganda, there’s an app that allows citizens to directly query the country’s president.

Of course, it would be remiss not to mention the (in)famous Flappy Bird App, developed in Vietnam and beloved by smartphone users everywhere.

While the emerging market smartphone app industry is still in its nascent stages, companies operating in this space are resourcefully building solutions to what is a growing market of consumers and filling significant gaps in both the B2B and B2C segments. Truly, it’s a domain with tremendous upside.

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