Emerging markets are the key to unlocking the next billion users

Marco Veremis is the CEO and founder of Upstream.

Mobile manufacturers are falling over themselves to debut new handsets that cater to emerging markets, with BlackBerry’s new Q5 and Nokia’s new $99 device as just two of the latest entrants to the market.

Focusing on everything from QWERTY keyboards to inexpensive cost models, mobile manufacturers have clearly zeroed in on emerging markets as their next big growth market.

It’s no surprise, as there are signs that many of the mobile giants, including Google and Apple, have saturated the Western world. Instead, the next 1 billion users for these companies could very well come from emerging markets, where smartphone use is in its nascent stage and a heavy reliance on feature phone devices still exists.

Recently, we saw Google enter the competition for emerging market users, with a rumored plan to develop and build wireless networks in emerging markets including Africa and parts of Southeast Asia.

So just why is Google heading to Kenya?

Mobile phone use in emerging markets has skyrocketed in recent years, but the lack of reliable mobile network infrastructure or 3G in emerging markets has been a significant barrier to the data use required by smartphones. By creating local wireless broadband access, Google has more opportunities to not only increase use of its Internet and search engine products, but also potentially of its Android mobile operating system. In addition, stronger and more accessible networks would also improve the potential for Google’s mobile advertising and marketing, which would suffer in developing countries from expensive data rates and slow connection speeds.

But if you build it, will they come?

While emerging markets are ripe with opportunities for mobile marketing, a recent study commissioned by my company, Upstream, and conducted by third-party research firm YouGov found that mobile attitudes in emerging markets differ dramatically from those in the West. For example, unlike U.S. users, only 21 percent of consumers in emerging markets polled aspired to own an Apple handset.

Instead, removing price from consideration, users in emerging markets said they would most likely buy a Samsung (32 percent), followed by Nokia (22 percent). BlackBerry trailed the pack, with just 10 percent of the vote.
In addition, 31 percent of consumers in emerging markets want pay-as-you-go data services, and only 29 percent want to pay via debit or credit card.

The concern for most of these users is the total cost of ownership rather than device cost. Essentially, offering the right kind of device, along with the right level of data plan, is critical to success in developing countries. Unlike your typical app store, tech giants like Apple and Google will need to come up with new more flexible platforms through which they can sell content.

So where’s the opportunity in emerging markets?

One of the fundamental differences between Western users and those in emerging markets lies in the use cases driving smartphone adoption. Emerging market users are very different than those in the West; their desire to use smartphones is driven by more basic services.

In a number of countries where we operate, one of our “killer apps” is actually English lessons. Simply put, mobile strategies that have worked in the West won’t work in emerging markets, but this all means that there’s a lot of additional opportunity for brands to publish apps with completely different content than that of current apps on the market.

It may also seem strange to U.S. audiences, but 41 percent of consumers polled in emerging markets would like to purchase a mobile device developed by their favorite social network. That may seem crazy given the recent backlash faced by Facebook Home in the United States. In reality, social networks like Facebook and Twitter who aspire to “own” the handset could have major potential overseas.

Mobile in emerging markets will continue to be a competitive battlefield over the next few years, especially as device manufacturers like Apple and Google have to compete with Chinese handset manufacturers, who can deliver at the price point required in emerging markets. It will be interesting to see which of the leaders in the West leverages the differences in emerging markets to secure their next billion users.

Marco Veremis is founder and CEO at Upstream, where he sets the company’s strategic direction and spearheads expansion. He has also been Chairman of the Board since 2002. Marco is a mentor for Endeavor and Openfund, and serves as vice president of the Board of HAMAC and as an angel investor and board advisor in Workable HR.