Why MWC is all about emerging markets

We’ve seen all sorts of news coming out of Mobile World Congress in Barcelona this week, but I think the biggest overall trend is a renewed focus on emerging markets. The most noteworthy announcements centered on those promising markets include:

  • Mozilla unveiled an impressive list of carrier partners for Firefox OS, which will begin to come to market on handsets from several different manufacturers by mid-year. The Spanish operator Telefonica will make the first Firefox handsets available in Brazil, Colombia, Spain and Venezuala, and 17 other carriers will continue to roll out the platform in Eastern Europe and Latin America. And like my colleague David Meyer wrote, the web-based smartphone platform may restore some balance to the smartphone industry by reclaiming some control from Apple and Google.
  • The two biggest phone manufacturers trotted out new bargain-basement handsets aimed directly at budget-constrained users in emerging markets. In addition to two new Windows Phone-based handsets for European and American users, Nokia introduced two super-cheap feature phones for emerging markets – one of which will retail for about $20.  Meanwhile, Samsung took the wraps off REX, a lineup of four Java-based handsets that will start at about $60 and offer smartphone features like a power-saving browser and touchscreen interface. (The REX line will compete directly against Nokia’s Asha gadgets, which have found substantial traction in the past six months.)
  • Facebook unveiled an intriguing initiative through which it will underwrite users’ mobile messaging activity within its apps and sites on specific carriers. The massive social network is partnering with 18 carriers in Portugal, the Philippines, Saudi Arabia and elsewhere to pay the data costs of that messaging, which in turn is discounted or even free to users. The experiment is something of a canary in a coal mine for the “sender pays” business model in which content or messaging providers – rather than users themselves – fork over money to network operators.

Emerging markets have been a major topic in mobile for more than a decade, largely because wireless networks have been built out in many areas where traditional fixed-line networks have never existed.  And those markets have become even more important as the handset penetration rate in more mature regions such as North America and Western Europe approaches the saturation point. Canalys recently predicted that areas such as Brazil, China, India, Indonesia and Russia will account for 70 to 80 percent of additional smartphone shipments this year, comprising 38 percent of the global total.

Different markets, different landscapes

But while demand for affordable devices and services is a common theme in those emerging markets, they each offer unique challenges to outsiders looking to gain a foothold. Mobile advertising revenues will be substantially more important in some of those markets than in established markets because of economic factors, as eMarketer recently predicted. Handset vendors in China must compete against a surfeit of cut-rate gadgets and knock-offs produced by countless vendors looking to make a quick buck. And after four years of trying to penetrate the Indian market, Apple is finally making headway by increasing distribution of its iPhone and embracing installment payment plans.

Those challenges are well worth addressing, though, because so much growth potential remains in emerging markets. Only 21 percent of all mobile subscribers in China enjoy 3G access, for instance, and it’s still a mystery when 4G licenses will be issued. And while the smartphone penetration rate in India reportedly stands at only 4 percent, the country is so big that it still ranks fifth among overall smartphone subscribers. The U.S. and Western Europe have been the epicenter of the mobile data explosion as Android and iOS have driven tremendous growth. But as the headlines out of MWC this week have illustrated, the near future of mobile is very much centered on emerging markets.


Relevant Analyst
Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

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