A profound theme underlay many of the developments announced this week at Nokia World. I summarise it as follows: smart mobile services for the next four billion consumers. It’s not just the world’s well-heeled digital elite that will enjoy the rich facilities provided by modern mobile devices. There’s huge latent demand for these services from people in the economic underclasses worldwide: a demand that should, and can, be met by increasingly low-priced handsets.
“Nokia Money” exemplifies this theme. As Martin Perez explains in Information Week,
Nokia introduced a mobile payment service Wednesday that aims to make using your phone for financial services as easy as making a call or sending a sending a text message.
…it is likely emerging markets will be the targeted first because they are “underbanked” or “unbanked.” The potential market for mobile payment services is huge, as there are an estimated 4 billion mobile phone users, but only about 1.6 billion bank accounts.
One of the prize-winning essays of last year’s Symbian Essay Contest, “Opportunities with smartphone technologies for the base of the pyramid“, written by Dhaka, Bangladesh, BRAC University student Iftekhar Ul Karim, provides a range of ideas to stimulate thinking about potential novel uses of smartphones for users in the so-called ‘Base of the pyramid’ (BoP) – the four billion poorest people on the planet:
The reach of smartphone technologies has not yet covered in toto the ground of BoP, nonetheless Symbian devices can innovatively rein in this concept of B24B (business-to-4-billion) that champions new thinking and new ways of doing business for smartphones in the world’s poorest markets. Hence the BoP could be the biggest potential opportunity in the history of smartphone technologies…
Succeeding with smart mobile services for this expanded marketplace requires several things to happen:
- Innovative thinking about which services make most sense for these users;
- Ease of developer experimentationwith novel services;
- Reducing the costs of high-capability handsets.
As a great example of a lower-cost high-capability handset – and as a sign of even cheaper devices in the future – consider the Nokia 5320, announced in the lead-up to Nokia World:
New Delhi, India and Espoo, Finland – The latest addition in the Nokia touch phone portfolio, the Nokia 5230, is designed for those who lead an active life and use their mobile phone as their primary instrument for music, photos and videos, as well as sharing their lives online. With the Nokia 5230, consumers can get new content, be it songs from the Nokia Music Store or apps, games, videos and other services from the Ovi Store, directly from their phones. The solutions offering is complemented by A-GPS navigation and the latest version of Ovi Maps with aerial images, 3D landmarks for over 200 cities and terrain map views for pedestrian and drive navigation.
“Competitively priced at 149 EUR, we believe the Nokia 5230 is an unbeatable offer for many new customers who aspire a device that stars in music, mingles with social networks from Facebook to MySpace, navigates you to where it happens, when it happens, and comes in an array of dazzling colors, ” said Jo Harlow, Vice President, Nokia…
The quoted price of just 149 EUR is before any network subsidy kicks in. As recombu.com states:
Expect it to be free on a contract and around £100 on pay as you go, which is cheap for a touchscreen handset.
Some writers have been unimpressed by this kind of device, even asking that they be removed from statistics of smartphone market share. They imply that, unless a device has the price-tag of the likes of an iPhone, it’s of little interest for developers. The claim is that many people who buy any lower-priced Symbian-powered device are unaware of the possibility to download applications onto the device – or that they couldn’t afford these applications. I disagree. Where these writers see a reason to yawn, I see many reasons to become really excited. Mobile phone users in the quickly growing markets in, say, India and Indonesia, have great interest in the possibilities of their devices – especially when it’s the first computing device they own. These mobile devices help the users to bridge information gaps, social gaps, and economic gaps.
As for pricing, here’s something worth bearing in mind. Suppose an app sells for a particular price, P, in a country such as the USA. If the price in India is P/10, there’s a good chance that 10 times as many people will buy it. The opportunities are huge, for developers who are prepared to find them.
Me too.
The advantage of mobile apps is that they cost most of the times very little (less than 2-3 Euros each). This is pretty cheap and makes these apps accessible for almost everyone. And let’s don’t forget the hundreds of free apps.
It’s sometimes hard to project what is available in other countries.
A lot of assumptions are made that aren’t necessarily true. One thing that isn’t true for a lot of countries outside the US or Europe is the near universal availability of credit cards / debit cards / bank accounts. Think about things like having to go pay your electricity bill in cash, in person at the end of the month and having to queue for it. Or pre-paid electricity meters.
Whether a phone is the best way of reforming a financial system in a country seems doubtful to me.
A lot of these things then trickle down to application developers — how do you get paid for your app if it isn’t a simple paypal click?
Hi Arno,
Good point! That’s why I think a lot of the innovation in mobile services in these countries will come from developers and entrepreneurs based in these countries, rather than from developers and entrepreneurs based in (eg) the US or the EU.
Rather than trying to reform the whole financial system, a more modest but still useful goal is simply to allow people in these countries to make and receive payments via their phones and phone bills. The videos shown in support of Nokia World contained people who seemed genuinely pleased at the new opportunities this service would bring them.
One option is “integrated operator billing”. Some app stores are already set up to work with operator billing – where the cost of the application is added to the monthly phone bill of the user. For example, Ovi Store already has operator billing relations with 27 operators.
// David W.
It’s been a while since I’ve travelled to Indonesia — I’ve lived there for a while, and it’s an interesting country.
Things probably have changed a lot since I left — but at the time cash was king, and bank accounts only for the very rich. Never mind credit cards or cheques. Interesting experience to buy a new PC and have to pay in in cash when the largest bill at the time was only worth about 5$.
Another random example of one of those things that boggles the mind that I’ve heard from a friend who went on holiday to Bali:
There’s a coke vending machine on the airport. Indonesian currency being what it is (grubby hard to read paper currency mostly, and coins that are not worth enough unless you’ve got a handful of change, and inflation that is a bit higher than in the West so prices need adjusting a bit more frequently), the coke machine hadn’t actually been adapted to Indonesian currency. Instead, it worked with cafetaria tokens. Which you could buy, with paper money, from the guy sat on a stool next to the vending machine, whose sole job it was to sell these cafetaria tokens — that only worked in this vending machine. Queue once to get a token from the guy, queue twice to get your ice cold coke.
Again it is a wonderful country and possibly a truer free market economy than a lot of countries in the west, with a lot of entrepreneurial spirit, but you will need to change your mindset deeply to do business in a place like that.
I think Zain is already doing some remarkable things with person to person finance in Africa? Maybe naively I expect that the USA and Europe will actually learn a whole lot of things about how to do finance in alternative ways from these initiatives.
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David,
Great thoughts.
I posted my thoughts on how providing “Identity” to the 4 Billion will play a huge role in the next 3-5 year. Would love you thoughts.
Andy
http://developer.sonyericsson.com/community/people/ajbraun/blog/2009/09/08/the-braun-identity
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