Kate Bulkley, Media Analyst.

The web in the palm of your hand

By Kate Bulkley

Prospect Magazine

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For Prospect Magazine June 23, 2011

Big brands are battling over the pink and green future of mobile internet

The future for the mobile phone looks big, even bigger than the 3.3 billion people (half the world’s population) that already own one today. And despite some bumps in economies like debt-laden Spain, Greece and Portugal, mobile phone growth in markets like India, China and Africa are galloping at a breathtaking pace, with 200 million new mobile customers signing up in India in 2010 alone.

Not only have two-thirds of new mobile subscribers in the past two years come from emerging and developing countries, but crucially these areas of the world are increasingly using phones that connect them to the internet. It is these ‘smart phones’ that operators and application developers are betting on to drive a large part of the new growth. Indeed, by 2014, of the estimated 1.4 billion new mobile phones expected to be sold globally, 37 per cent of them will be smartphones, according to IHS Screen Digest.

Smartphones are clearly the most rapidly growing segment of the mobile market in both the developed and the developing world because their cost is falling. A lot of the credit for that has to be given to companies that you might not have traditionally associated with the mobile industry—namely Apple, Google, Facebook, Twitter and even Yahoo. These companies are shaking up some of the biggest mobile players, including handset giant Nokia, which is losing market share to Apple and Google phones and has recently teamed up with Microsoft to try and reclaim ground.

Google put mobile at the front of its strategy several years ago because it saw the power of the personal device, developing its Android operating system in an attempt to translate Google’s dominance of internet search onto mobile handsets. And, of course, Apple changed the user experience with its app store, allowing developers and content publishers an easy route to customers, with the result being lots of cool apps from recipe guides to games like the fantastically successful Angry Birds. “Apple really opened the market up to developers and content publishers,” says Ronan De Renesse, senior mobile analyst at HIS Screen Digest.

Paired with rapid improvements in the power supply of mobile phones and in their built-in processors, top-of-the-line smartphones will only become cheaper over the next few years. Despite big concerns about data protection when using mobile email and social networks, in Europe a whopping 40% of Vodafone sales are now for smartphones and a third of those were running Android. In May, Vodafone announced a sub €100 Android-powered smartphone that it will begin selling this autumn preloaded with Google Maps and Gmail as well as Facebook and Twitter apps. “We’re finally getting to mass market penetration with smartphones,” says Lee Epting, director of global content services at Vodafone. “We are moving from a lifestyle device to a lifeline kind of device; from it’s cool to have a smartphone to it being about my lifeline to my digital and connected world.”

Technologies like near-field communications (NFC) that turn your mobile into a virtual wallet, allowing you to wave it at a reader which will deduct the cost from your bank account, are the next services that will spur smartphone adoption and usage.

Meanwhile, companies like Yahoo are working hard to bring mobile internet to the large parts of the world that have no third-generation mobile networks and where lower income levels mean that few can afford mainstream smartphones. Earlier this month (June), Yahoo and microchip company MediaTek announced a partnership to pre-load instant messaging, email and Flickr photo sharing on regular mobiles destined for countries like Vietnam, Indonesia and India. “We are now exploring services that will get us into the next billion (of mobile users),” says Epting. “When you get into rural areas SMS (texting) is still a prominent channel. It’s all about accessing information—like a farmer who can get the latest crop prices on his mobile phone.”

“I think the future for mobile is pink and green,” says Mark Selby, vice president of partnerships at Nokia, referring to the target market of women and sustainable and efficient technology. “Smartphones have been designed mostly for men but we need now to bring in a greater understanding of women as family managers and entrepreneurs,” he explains. Selby also points to growing concerns about recycling of mobile components and the need to make mobile more energy and memory efficient and to use mobile bandwidth more efficiently.

Creating business models for lower-income countries is key to a lot of the next phase of growth, and a lot of that is about making mobiles attractive to women. “It’s about the hardware (handsets) and tariffs but it’s also about defining some new business models,” says Epting. For example, in Latin America 80 per cent of roadside stands are run by women and an app developed by TiendaTek uses an Android smart phone and a barcode reader to let these women connect to their suppliers more easily. The app won the Women.org ‘Base of the Pyramid’ challenge last year, but Epting is clear that these kind of apps have to be made affordable to low-income users. “I think part of the answer is about getting brands involved. We still need to build these models. If the one thing that is being put into these women’s hands is a mobile phone, then brands like Revlon who want to reach women have to be there.”

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