Last week, the BBC had a news report on the Emerging Market handset programme launched last year by the GSM Association. Its aims – to bridge the ‘digital divide’ and give mobile communications access to 80% of the worlds population by 2010. An ambitious programme, and one that Motorola has made strides with their handset that will retail for $30. From the article,
Mr Phillips said the GSM Association was trying to reach many of those
people who live beneath the shadow of the networks but do not have a
phone by making affordable handsets specifically for developing
US phone firm Motorola won the competition to create a
handset for so-called emerging markets and its winning designs, the
C113 and C113A, were unveiled in early 2006.
The handset costs only $30 and at the 3GSM World
Congress, the GSM Association announced that it had orders for more
than 12 million of them.
On the other hand, this article on the potential growth of emerging markets for cellphones by the Gartner Group has an interesting snippet,
"even more competition among
manufacturers to make cheaper, affordable handsets," so the profit
margin in selling phones is shrinking. Other observers, however, think
the exploding market in developing regions will provide opportunities
beyond those available now from selling ever-more-complex mobile phones
to the U.S., European and Japanese markets.
This exemplifies CK Prahalad’s assertions that the ‘fortune’ at
the bottom of the pyramid will be derived from volume not margins. 12
million phones are twelve million phones – even if the profit that
Motorola makes is just a dollar a piece, that more than recoups their
investment in this development, I should say. Compare that to the cost of developing an even more advanced phone with all the bells and whistles for the first world markets – marketing and promotion alone would eat up a significant chunk of the investment. And as cellphone penetration increases, it allows even more services and schemes that support sustainable development in emerging markets. From the Beeb’s article,
One scheme in South Africa uses the cheap handsets that
allows a handset to become a mobile payphone. Under the Sharedphone
scheme, entrepreneurs can let others make calls and send text messages
using the handset.
Mr Phillips defended plans to get handsets into
developing nations from accusations that these programs were just a
cheap way for operators to double their customer base. Others have said
that there are many other things citizens in developing nations need
before a mobile phone.
"Mobiles are no longer a luxury," he said, "they are essential business tools."
The very fact that any would argue that citizens in developing nations need many things before a mobile phone is shortsighted, imho. Yes, food, shelter, clothing, medical care et al are vital, but as much if not more are the ways and means that support a self sustainable livelihood and the means to run a business. Neelakantan writes an insightful post this morning about ‘Mobiles, mopeds and the microentreprenuer‘ that touches on this very topic,
Now imagine this. In the place where I stay, someone or other needs a
junk newspaper guy every once in a while. We post this phone number on
our notice board and it is as good as an advertisement for him. Ever
heard of a scrap dealer advertise? The mobile serves this purpose. This
is not an isolated example. Vegetable sellers, hawkers and many other
service providers expand their area of operation using mobile phones.
moped has, for long, been a loyal servant of these small time
entrepreneurs. With micro re charge and free incoming calls adding to
the mopeds frugal cost of ownership and maintenance, these twin
accessories are a leap for the micro trader who aspires to be big some
Now, imagine this, if those 12 million phones that have been ordered all do their part – whether it is in South Africa, where the entreprenuer rents out minutes to others unable to afford a phone, or in Bangalore where the initerant traders and hawkers use them to expand their business beyond the neighbourhoods they frequent, it sets up a chain of development far beyond the immediate profit to be gained on a $400 high profile cellphone.