Communities Dominate Brands

The Digital Divide in Numbers: TVs, PCs, Internet users, Mobile around the world

I have increasingly been focused on the mobile and digital opportunities in the Developing World (or perhaps should be called Emerging World). I mean the over four fifths of the planet that was not lucky enough to be born into Europe or the USA and Canada, or Oceania, or any of the Industrialized parts of Asia like Japan, Taiwan, Singapore or Hong Kong. Yes, the 'rest of the world' so to speak, all of Africa, all of Latin America, almost all of the Middle East and most of Asia that is in that Emerging World, ie China, India, Indonesia, Philippines, Pakistan etc.
 
The 'West' where most of our readers live, consists of 1.2 billion people. the Emering World has 5.6 billion people. So I recently did a bit of analysis about the main technologies and split it along the digital divide. Yes, there are 1.5 billion TV sets on the planet, but they are not uniformly distributed. We in the Industrialized World have most of them, as we have most of the internet connections, broadband connections, personal computers, cars, credit cards etc. Only one device on the planet has more owners in that part of the world where 4/5 of the planet lives - and that is mobile of course.

PEOPLE, CARS, LANDLINE PHONES

So lets do a bit of a comparison. 6.8 billion people at the end of this year. 1.2 billion in the "Industrialized World" and 5.6 billion in the "Developing World". Lets see how they split up.. Oh, and for all those statistically minded - I will use throughout this blog the metric of 'per capita' penetration rate, not 'per household' and not 'per adult' but per every person alive. Bear in mind this includes child-age people who won't drive cars etc..

But yes, lets start with cars. I have been struggling to find a very current count of all automobiles in use, but am certain it is near 920 million in 2009. Where are they? We in the Industrialized World have 600 million of them, or there is a car for every 2 people or 50% per capita penetration rate. The Developing World? they only have 320 million cars, so there is one car for every 17 people. Only 6% cars per capita.

Lets take fixed landline phones. We in the Industrialized World have had total household penetration of fixed landlines for many decades now, and in many markets the total landline penetration rate is actually declining. But the total is about 725 million fixed landline phones for 1.2 billion people or a penetration rate of 60%. How does that compare with the Developing World? There 5.6 billion people have to make do with 425 million landline phones, for a penetration rate of 8%. That means in Latin America, Africa and emerging economies of Asia, there is on average one phone for every 13 persons. Wow, thats a lot of sharing, or going without..

COMPUTERS AND INTERNET

Well, we see ever more impressive numbers of internet users, now nearing the 1.7 billion user level. That seems a nice number, but it includes those who access on a PC at home or work, plus those who access at a shared PC like an internet cafe or a school, and those who access the 'mobile internet' on a phone. So lets take a breather here. To start with lets examine personal computers. Actually, not all of them even are connected to the internet...

So yes, there are now just about 1.1 billion personal computers in total in use around the world, counting all desktops, laptops, notebooks and netbooks. How do they divide?. We in the Industrialized World have most of them, 675 million PCs for 'us' meaning a penetration rate of 56% per capita, The density means there is a little less than 2 people per computer in use. How about the Developing World? Well, they have 425 million PCs in use. Those are spread very widely, with 12 people having to share, the penetration rate of PCs is only 8% in the Emerging World.

Now, what of internet access at home and work PCs? In the Western economies, essentially every PC has either dial-up or broadband access. It will not be 100%, but is close enough, that we can call it 675 million actually connected PCs to the internet, so the per-capita internet connectivity on home and work PCs is 56% in the Industrialized World. But in the Developing World not all PCs are yet connected to the internet. Only about three out of every four PCs is, so the total home and office connected PC internet penetration rate is only 6%, at 325 million connected PCs. Yes, one internet PC for every 17 people on average.

So then there is shared PC access to the web. The internet cafe style of access, for those who do not have a PC at home or at work. Again, this is a difficult number to pin down, so this is based on only sporadic data from around the world, but I am reasonably confident the scale is right. In the  Industrialized World, there are an additional 25 million people who do not have access to a PC at home or at work but still use the internet, via an internet cafe. Note most users in the internet cafe situations do have access at home or work, this is those who have not. This forms 2% of the population in the Industrialized Countries, and gives a total combined PC based internet access population, at home, at offices, and at shared internet cafe types of situations, of 58% per capita. 700 milllion internet users.

Compare that with the Developing World. Here the majority of PC based internet users do not have access to a PC at home or work, and use only an internet cafe. I measure that at 375 million people or 7% of the total population in the Emerging World who use internet cafe access. When we add the 325 M who use home and office PCs, we get total PC based internet users at 700 million, or 13% per capita. One internet connection for every 7 people and only half of them have reasonably easy daily access via their home or office PC. Makes you re-think the digital opportunity, doesn't it?

TV AND RADIO

So lets go to television. There are about 1.5 billion TV sets in use on the planet. In the Industrialized World we have nearly one TV set for every person alive, at 79% per capita, and 950 million TV sets in total. In some countries like the USA, there are more TV sets than people. So what of the Developing World? there are 550 million TV sets in the Developing World, so there the penetration rate is just shy of 10%. Not one TV per person, one TV per ten people. Where the average household size is 4.3 people, it means that outside of the Industrialized World, of the rest of the world, essentially half live in households that do not have even one TV set. Obviously nearly a billion people live in homes with no electricity, so we need to understand this in context..

So then radio? FM type of radio has a total worldwide installed base of 3.9 billion receivers (not counting the new mobile phones with in-built FM radio). We in the Industrialized World have tons of them, in our cars, our HiFi stereo sets, our boom boxes and our clock-radios. There are 2.7 billion FM radios in the Industrialized World, so we have on avereage 2.2 FM radios per person, a penetration rate of 225% per capita. In the Developing World there are 1.2 billion FM radios, so that penetration rate reaches an impressive 21%. Or of all technologies mentioned so far, the most widely spread, where there are a little under 5 people per FM radio. Still clearly this leaves hundreds of millions of homes without even a radio to entertain and inform the family.

MOBILE BREACHES DIGITAL DIVIDE

So then we have mobile. Here in the Industrialized World we have more mobile phone subscriptions than we have people. At 1.6 billion subscriptions, there are 1.3 mobile phone subscriptions for every person alive, in the Industrialized World today. In many cases, but not all, this means two phones, so for example an iPhone owner can also carry a Blackberry. But in other cases, typical of Eastern Europe for example, there are multiple subscriptions via inter-changeable SIM cards, using typically only one phone, and the user splits traffic across different networks to save money on calls, etc. Still, like with FM radios in the Industrialized World, we have more mobile phone subscriptions than people here.

What of the Developing World? Consider the math. There are 3 billion mobile phone subscriptions, for a per capita penetration rate of 53% ! Yes, even in the Developing World, mobile phones are now so common, that across the whole region, there are more than one phone subscription for every two people! This is an enormous number in and of itself.

COMPARE

But understand, in the Industrialized World, there are roughly similar 'scale' of the main technologies. More mobile phones than TVs, PCs or cars, yes, but not dramatically more. Roughly speaking twice as many phones as PCs or fixed landlines, only 50% more mobile phone accounts than TV sets, and actually less mobile phones than FM radios.

But in Africa, Latin America, the Middle East and the Developing parts of Asia, mobile is alone, far far bigger than any other. There are nine times more mobile phone accounts than cars. There are seven times more mobile phones than personal computers, nine times more mobile phone accounts than home or office PCs that are connected to the internet. There are seven times more mobile phone accounts than fixed landline telephone connections, and five times more mobile phone users than total number of TV sets in use. Even radio, there are 2.5 times more mobile phone subscribers than all FM radios in use in the Developing World.

By every measure, mobile is the giant, the only giant, and the other technologies are the lilliputs. If you intend to communicate with prospective customers in the Developing World today, then you cannot think of mobile as the 'fourth screen' and consider possibly including it in your communication mix, as we still can think in the Industrialized World, as a luxury today. No, in the Developing World mobile is the first screen - and obviously, for as many as 1.8 billion people - one quarter of the planet - it is the ONLY screen. These 1.8 billion people do not have a PC, not a TV, not even FM radio, but they have a live, active mobile phone account. Out of all 3 billion people in the Developing World who have some kind of connection, a massive 60% have no other way to connect, than their mobile phone! Did I get your attention now?

An internet connected PC will get you 325 million people or 6% of the population in the Emerging World. A fixed landline will ring in the homes of 425 million people or 8% in Africa, Latin America or Developing parts of Asia. A wealthy 10% of the population, 550 million people have a TV set and one in five, 1.2 billion people are lucky to own an FM radio. But more than half of the population have a mobile phone subscription, 56% per capita or 3 billion. And yes, 1.8 billion people - that is six times the size of the USA - have no other connection or technology, than a mobile phone.

SMS, MMS, BROWSING

While I have you. How do you communicate with them then? You don't buy ads on newspapers, and you don't put ads on TV or radio. You also can't send them emails or hope to reach them via some clever social networking marketing on Facebook or MySpace or YouTube or whatever is the current flavor of social networking. The way to reach the populations in the Developing World is four ways - voice calls on mobile, SMS text messaging, MMS picture messaging, and WAP basic banners and browser services on the very rudimentary 'mobile internet' services.

Lets put these also into context. Voice? In the Industrialized World about 88% of mobile phone users place voice calls (oh, you didn't know that? Already 12% have stopped voice calls and use their handsets for primarily texting or instant messaging, or some other mobile internet services). In the Developing World there is the trend to abandon voice calls and it is even more pronounced in some markets. like in India where 30% of mobile phone users do not originate calls, but this then hits issues of illiteracy, such as in Africa, where if you can't write, you really can't use SMS, and voice calls are the only viable way to communicate. Still, voice is a viable communication method in the Developing World for about 85% of the mobile phone user base. That is 2.5 billion people - twice the total population in the Industrialized World.

Second comes SMS text messaging, used by 76% of the mobile phone users on the planet. In the Industrialized World out of 1.6 billion mobile phone subsciptions you can communicate using SMS and reach an active user base of over 1.2 billion. Yes, in the Industrialized World there are more active mobile phone subscribers, who send SMS text messages, than all internet based email users globally. Yes, SMS is that big. And we haven't even touched the bigger part of SMS..  Because in the Developing World, you can reach 2.2 billion active users of SMS text messaging. SMS has four times the reach of TV, twice the reach of FM radio, and 8 times the reach of home/office internet connected PCs in the Developing World. This is where you start, unless literacy is an issue in that country. SMS is the most widely used data application on the planet with yes, nearing 3.5 billion active users at the end of this year. Remember President Obama and why he used SMS in his campaign...  This is the big one.

And then MMS. Yes, that 'quaint' picture messaging service that for some reason Apple didn't even include in its wonderful iPhone. Yet MMS is the second most widely used data application on the planet, having 50% more users than email or internet search...  In the Industrialized World MMS is one of many interactive multimedia options, and only 550 million people use the technology or 34% of mobile phone subscribers. This is by the way the fastest growing part of our industry, in many leading countries it is very high majoirty of all mobile phone subscribers already, in Norway 84% of all mobile phone users send MMS messages. CNN iReport receives hundreds of thousands of user-generated pictures and videos and Informa counted that across all mobile phone subscribers on the planet, we average 3.5 MMS sent per month - counting yes you and me who don't send that many.. That means the average level is nearing one per week sent across all subscribers, and is far more among active users, obviously.

Now, lets switch over to the Developing World, where for most people their only multimedia device is the mobile phone, often a second-hand Nokia basic cameraphone from a couple of years ago, discareded in the West and imported to Africa etc.. How is MMS? This is a big number, MMS alone has a billion active users in the Developing World, and is used by one in five people in the Emerging World. Yes, 19% penetration rate by total users. While in the West we can still afford to experiment with MMS in our ad campaigns, in India, China, Indonesia, etc it is totally a must. Like with SMS, there are twice as many users of MMS in the Developing World as there are in the Industrialized World. If I could urge you the reader to do one thing with your company this week, I would urge you to expedite your involvement with MMS. It has globally 1.6 billion active users, is a very powerful interactive multimedia technolgoy, that has a 'reach' in terms of devices and networks already pre-configured for it, of over 3 billion. You can reach almost half the planet if you create something cool on MMS. The Apple Apps Store cannot reach 1% of the planet, and all forms of the internet access will not reach half of what MMS can do for you. And yes, in the Developing World, MMS is the next big thing, happening right now. Not WiFi, not Bluetooth, not 3G... MMS.

And what of browsing, basic WAP type of basic 'mobile interent' use? That splits globally so, that we have 420 million active users of the mobile internet in the Industrialized World, or about 26% of all mobile phone subscribers. We have a strong infrastructure of broadband connected PCs in our homes and offices, so the rival mobile internet is one of our options, and needs to find its place, like with the Blackberry for example, or the iPhone. But in the Developing World there is no viable rival. Mobile browsing on basic WAP services have already 780 million users, more than all other types of internet access combined, home, office and internet cafe based PC access. Globally about 1.2 billion people use the basic 'mobile internet' browser services, but the vast majority of these are in the Developing World. How many people is that per capita? it is 14%, or one in seven people in the Developing World use Yahoo or Google or Amazon or Facebook or YouTube on a phone, and importantly - more than twice as many do so than have an internet connected PC at home or work, and also, nearly twice as many access internet services on their phone, than use any internet cafe to access browser content.

So there you have it. The digital divide. In the Industrialized World we have TVs, PCs, FM radios, fixed landlines and mobile phones to consider and compare and use and more than half of the population has one of each of those. In the Developing World, the only technology that reaches half the population is mobile telecoms, and all others are tiny in comparison. For the Emerging World, mobile is not only the first screen, for over 1.8 billion people  that is four Europes or six USAs in size, it is literally the only screen. 

For anyone who wants to quote these numbers, the source for all is TomiAhonen Consulting 2009, except where explicitly mentioned as sourced from somewhere else like the ITU etc. Anyone who would like to read my Thought Piece, a free 2 page pdf file on understanding mobile in the Developing World, please send me an email to tomi (at) tomiahonen (dot) com and I will send it to you by return email.

Actually 'nobody' moved Nokia's cheese, it still dominates smartphones, slight shfits only in Q3

Well well, these are intersting times indeed.

I remember the hype was all over the blogosphere when Nokia announced its self-reproted market share im smartphones to be down to 35%, and many pundits were all over the space predicting the end of Nokia. We here at CDB reported the numbers, and wondered, who actually had 'stolen' Nokia's strong market share, in who moved my cheese and its follow up blog, we know half of who moved the cheese.

But it was far too much of a total shift in market shares in one period, to be able to be explained just by Apple and RIM, after the full results of all makers came in like Samsung, SonyEricsson, Motorola, LG, HTC, Fujitsu etc. Now we have the 'final' numbers, the 'official' numbers for Q3, 2009. The two major analyst houses who are regularly referenced as the most credible sources, IDC and Canalys have both reported their final count of the third quarter of 2009 for Smartphones. They find a bit of a difference by one or two percentage points, as might be expected, but have no argument of the order and magnitude of the big four, but if we average the two, we get these market shares for smartphones Q3 in 2009:

Nokia 39%
RIM 20%
Apple 17%
HTC 5%
Fujitsu 3%
Samsung 3%
All others 13%

Most of the story is more-or-less the same as in the "who moved my cheese" blog postings, plus or minus one percentage point, but the Nokia share is dramatically different today. Note this is reality, not the early reporting. The reality is that Nokia still holds 39% market share of all smartphones, is still bigger than the next 2 put together (RIM and Apple) and only lost 2% market share from Q2, and actually grew 1% market share from the same quarter the year before. Most importantly, the way I look at it, the relevant metric - Nokia is doing BETTER in smartphones than their handset market share globally, meaning 'all is well' in terms of their strategy.

Yes, Apple is growing very strongly from the last quarter (although, according to Canalys measurements, this quarter in 2008 vs this quarter in 2009, Apple actually lost market share compared to this time a year ago) and RIM is either holding steady or growing (IDC has them holding, Canalys growing). RIM is always a difficult smartphone brand to factor in, because they report one month later in their quarter, so their 3rd quarter is not like the others from July to September, the RIM quarter runs from August to October, and we get RIM numbers always a month later than the others. So the analysts have to make a guess about RIM.,,.

But yes, we heard a lot of hype about Nokia doing a death-dance in smartphones, like Motorola doing its death dance in mobile phones. Rubbish, Nokia is doing just fine. It did lose 2% of market share, yes, and Apple actually gained more than 2%, so Apple is winning currently and Nokia has lost some market share, but no time to panic. Nokia is still the giant, and most importantly, their smartphone market share is better than their global handset market share, so here is a global handset giant, clearly set on building its future as well in the smartphone space. None of the other big 5 handset makers, Samsung, LG, SonyEricsson or Motorola, have smartphone market shares anywhere near their global handset market shares. If you think smartphones are the future of handsets, then Nokia is executing 'perfectly' in that space. But who of the tech journalists is now going to write this story? The more 'fun' sexy and glamorous story is to write about Android or Apple being the hot smartphone. Incidentially, Android has about 3.5% of all smartphones, split across dozens of models and many makers, so in size, they are about as relevant to smartphones as Fujitsu or Samsung, far smaller than HTC. How often did you think HTC, Fujitsu or Samsung are the leaders in smartphones?

And one comment on RIM. I may still have to come back to this statistic and correct it one more time. RIM hgas said recently in October that they expect their total shipments at 9.9 million smartphones for this quarter. If that is true, and the Canalys and IDC numbers had them in the 8 million plus range, then expect RIM market share reality to be boosted by about 2 percentage points more, so the 'real' RIM market share may be as big as 22%, would be a dramatic growth rate indeed. But we wait until RIM reports officially. Certainly both Canalys and IDC indicated in their smartphone press releases that RIM is growing strongly compared to this time a year ago. The question only remains, exactly how strong had their growth been..

Ok. to the mystery of who moved my cheese, nobody really. That 2% shift in market share from one quarter to the next for Nokia is well within their normal fluctuation. As long as their smartphones outperform the overall company, they are doing just about as well as we could expect. Why the discrepancy by the way? beacuse when Nokia reported their Q3 numbers, thay only had their internal numbers to compare to, and they had over-estimated the total market size, and thought they had lost more than they had. In reality, the global market for smartphones had grown less than Nokia thought, and thus their market share in reality was better than they thought. This can easily happen in these kinds of volatile times, when the global economy experiences big shifts.

A few big numbers now confirmed - 1.2 B mobile web users, 100 B dollars SMS and 3 B SMS users

At this blog we give the state of the mobile industry in statistics, at the start of each year, and also give short-term predictions of where the mobile industry is headed. Then we wait for the 'big industry analysts' to come out and verify those numbers.

We have several numbers now to report. Lets start with my absolute fave service, SMS text messaging. I told you in January that SMS had 3 billion active users, and that was 76% of all mobile phone users. We have now heard from Portio Research, who do report that SMS total global user base has passed 3 billion users. Portion also reports on the total revenues earned by SMS, and yes, that number has now officially passed 100 billion dollars. Yes, as we told you here before, as of now, the service that is only 16 years old, has grown to such a giant, it is as big as the global music industry, plus the total worldwide movie industry, and the total worldwide videogaming industry - added together. That is 100 billlion dollars. Or to put it another way, its bigger than global radio, or bigger than worldwide book publishing,.. Not bad for a messaging platform that allows only 160 characters per message..

Then I found finally the first analyst to give an update for 2009 for mobile web/mobile internet/mobile browsing usage. Note that this is not "the real internet" on a phone, this is any kind of browsing use, both the "real internet" like say on an iPhone or email on a Blackberry; as well as the "mobile internet" ie WAP usage of what is often operator/carrier portals. Yet, if you accss Google on a phone, regardless of whether via web in the traditional HTML and WWW basis, or via WAP, it is still a browser-based service. Same for Ebay or Yahoo or Twitter or Facebook. Any browser based access on a phone, that is "equivalent" to accessing that same internet service and its (usually mobile-optimimized) mobile site.

So Yankee Group reports that we now have 31% of all mobile phone owners using the mobile web, If you feel that it cannot be, that you don't see that many users around you in your world, remember these are global numbers, so they include of course all those countries where mobile web use is far greater than PC based internet use, such as South Africa or Japan or India etc. And yes, previously it was me and my consultancy saying so, now we have a major analyst house, Yankee Group, giving us the number.

31%? how many users is that worldwide? at the start of the year we had 4.1 billion mobile phone subscriptions on the planet, so at the start of 2009, we had reached the level of 1.27 billion mobile browsing users. Then if you are savvy with internet stats, you may say, but Tomi, the internet user numbers are bigger than that, Are they? Almost all measures of internet use include PC based access, and mobile phone based access, and access from rented computer access, in the form of internet cafe's etc.

We have the actual count of unique users of home and office based PCs at the start of the year 2009, and that comes from ComScore earlier this year, and that was 1 billion unique PC based users of the internet.

Now, Yankee says 1.27 billion who surf the mobile web globally, and ComScore who say 1.0 billion are unique PC users. Obviously there is overlap, and if the total number is 1.5 billion internet users, then about 700 million will use both methods, and 500 million will access exclusively on a mobile device, and 300 million access exclusively from a PC. In any case, in terms of users, the cross-over point has now truly happened. There are more people on the planet, who surf web pages (and WAP pages) on a mobile phone than on a PC,. And now toss in the iPhone and Blackberry and various iPhone clones and see how that trend will only accelerate in favor of the mobile. Like Google CEO says, like Yahoo CEO says, like Apple CEO says, like Microsoft CEO says, like just yesterday, ESPN CEO said, the internet is going mobile (fast).

And please understand, the usage is different. The PC, often on broadband connections and with unlimited data plans, will produce FAR more data traffic, and often far longer usage hours than mobile web surfing. But also here, the trend is ever more mobile. Twitter and Facebook find that often mobile users have similar usage patterns to PC users, and then mobile seems to grow bigger... Like it did in Japan already a few years ago - Japan was the first Industrialized World country where mobile internet use became bigger than PC based internet usage.

Now, Yankee did not explicitly give that conclusion, that 31% of all global mobile phone users of the mobile web is bigger than the PC based users of the internet, so we have only the 'raw data' so far, but this is the first big research house to say so. Trust me on my numbers (numbers are my buddies), I am solid on this, the facts are coming and don't be surprised. The world already has more "browsing" users who access on a mobile phone, than on any kind of PC worldwide, and from now on, the gap will increase between the two. The legacy PC based "6th mass media" internet, is truly the "little" old internet, and the "mobile internet" is the new bigger and more wealthy internet. The change has happened...(And you should prepare to make business out of this transition, this is a big economic opportunity, this transition). And one more thing, as I keep repeating in my books and lectures - the legacy PC based internet is not going to die, just like TV did not kill cinema and radio did not kill recordings. The old legacy PC based internet will adjust and find its opportunities, even as mobile grows to be the true media giant it is headed to become, Remember SMS, already today, mobile has 3 times more data communiation users than any unique users on the PC based internet... 

And for those who would want to understand the full picture of mobile, the difference between subscribers and second subscriptions and unique phones in use, and SMS and MMS, and mobile web, entertainment, news, advertising, etc, you can always pick up a copy of my TomiAhonen Almanac 2009, a very widely referenced industry statistical resource which has of cousre all of these numbers and hundeds more in 70 tables and charts. See sample pages and many stats and charts at Tomi Ahonen Almanac 2009.

Birthdays: internet 40 years, PC 35 years, Mobile 30 years, CD Rom 25 years, WWW 20 years

It seems that the years ending in 9 make great moments for inventions, and there are truly massive ones for us to celebrate. But also, there are a number of interesting ones in years that are at the mid-point, ie 25 or 15 or 35 year anniversaries. Lets celebrate in order of age:

Just now, actually literally on 29th of October is the 40th anniversary of the internet, as Professor Leonard Kleinrock of UCLA made the first connection and communication with Stanford Research Institute, connecting the first two 'nodes' of the ARPANET what later became the internet. We celebrate 40 years of the internet, and from those very humble beginnings, at the end of 1969 there were only 4 nodes on this fledgeling global computer network, and today we have over one billion users on the internet. What a ride...  Note that this is quite fast, as previously other billion-user systems took forever to reach that level, the telephone (landline phone obviously) took over 120 years to reach a billion users. Television took over 60 years to achieve that. And the internet did it in a little under 40 years. But its not the only new billion-user system we celebrate today.

Because from 1974 we find the first personal computer. The Altair launched 35 years ago, and yes, the world has also last year passed the point of one billion PCs in use around the world. Wow.

Another milestone, which may be more subtle and treacherous, is that of the pocket computer. While nobody dared to suggest it was one, the first user-programmable pocket calculator, the HP 65 was also launched in 1974, so this, very modest but by all definitions still it was the first pocketable computer - think your iPhone today - traces its history to this year and celebrates 35 years. Star Trek's Spock would be proud...  Obviously we don't have a billion pocketable computing devices, if we define the smartphone as a pocket PC, but will soon achieve that, within a couple of years. So it will soon become yet another billion-user gadget.

Fast forward five years, and we get to 1979. It was first of December 1979, that the world's first commercial cellular automated (and 'modern') mobile telecoms network went live in Tokyo Japan, launched by NTT.ANd yes the mobile phone subscriber count will hit 4.6 billion by the end of the year. We passed a billion users in 2002, so it only took 23 years to hit a billion mobile phones on the planet.

Another massive consumer hit was launched in 1979, also in Japan, when Sony introduced the Walkman. Pocketable music players, initially cassette based Walkmans and clones, then CD players and now MP3 players like the iPod have certainly sold into the far past half billion level, although I do think we are still a way from a billion stand-alone pocketable MP3 players.. Now, if we count all musicphones also into the mix - and why not, many of them are also used as MP3 players - then yes, we shoot past another billion users. Thank you Sony..

And while the music entertainment got a massive new hit product in 1979, so too did the movies and TV industry, but this was a somewhat stillborn solution. Philips and Sony released the first Digital Video Disk system commercially in 1979. You might think that must be the DVD we all have in our homes, but no, this is the predecessor, the giant platters - size of old LP record alums, or bigger than dinner plates - but it was the start of the home video disk player market for movies, and it later spawned the smaller DVD format and another platform that is soon approaching a billion devices in use in most homes that have a TV set.

Now, while the PC is 35 years old today, the 'modern' PC is not. Those early PCs required users to go to take courses just to be able to operate the PCs. The modern PC era was ushered in by the Apple Macintosh, and all modern PCs, Windows based, Linux based and Macintosh based, can trace their user interface and ease-of-use to that ground-breaking personal computer. And yes, the Mac was launched in 1984, so it is 25 years old this year. Thank you Apple ! How many "windows" style PCs are there in use, yes, over a billion.

The really big innovation for the media industries is the digitalization of all content. The mass market solution for that was the music CD, which converted the music industry from analog recording media to the CD format and digital songs. The MP3 market such as the iPod would have been impossble without it, as all songs had to be converted to digital format. When did the CD Rom arrive? Sony and Philips introduced the CD Rom in 1984, so it too is 25 years old, and has passed a billion player devices in use around the planet by now.

Lets skip to 1989, and another technology familiar to all of our readers appears, as Tim Berners-Lee invents the WorldWide Web. Note this is not the same as the internet, even though most users today equate the internet with 'the web' - on the internet you can do a lot of various communication and data activities using the "IP" Internet Protocol. You can do emails, chat, upload and download files using FTP, do voice calls like Skype using Voice over IP, etc. None of these require users to use the WWW web browser, although often the WWW interface is now used. But like the Mac changed the geeky PC to mass markets, so too did the WWW change the internet from geeky nerds to the masses. And yes, we hit a billion users of the web a couple of years ago. But yes, the worldwide web? is 20 years old this year. Happy birthday.

I just spotted a story earlier today on Twitter, that digital advertising is 15 years old, as the first web banner ads appeared in 1984. While technically that was not the first form of digital advertising, as I have written, the fisrt ever ads on the internet were launched earlier that year, when NYNEX in New York had its yellow pages (ads) launched onto the Prodigy proprietary BBS (Bulletin Board System) in January 1984, and then not related to NYNEX, Prodigy became the first of the major BBS providers to open their system to the full internet in February of that year. That was when any internet users on the planet, could access the NYNEX yellow pages ads that had been on Prodigy..  But nonetheless, digital advertising is now 15 years old, and yes, has more than a billion people viewing digital ads (over 2 billion by now, when we add mobile phone ads which are also digital)

I want to add one interesting anniversary here that is not anywhere near a billion users, but will no doubt get there, and that is multiplayer virtual worlds. Like Second Life, Habbo Hotel, World of Warcraft, etc. The world's first multi-user virtual environment built into 3D was the Virtual Helsinki project, which was opened to users in 1999, so our virtual worlds are also ten years old. I happened to be close to the Virtual Helsinki project as my former employer Helsinki Telephone Company (now known as Elisa) was a sponsor and technology provider to that project and several of my close colleagues were invoved with it, as I had by then moved on and was employed by Nokia.

And last but by no means least, the mobile internet is 10 years old. Launched by NTT DoCoMo of Japan in 1999, its iconic iMode mobile internet was the first mobile-optimized internet service and spawned countless copies and today counting all the WAP users etc, has over a billion users. That in only ten years.. Domo Arigato, NTT DoCoMo, you have invented the fastest technology to spread to a billion users.

So 40 years for the internet, 35 years for the PC and pocket computers, 30 years for mobile phones and digital video disks as well as the Walkman, 25 years for the Mac and the CD Rom, 20 years for the WorldWide Web, 15 years for digital advertising and 10 years for virtual worlds and the mobile internet. Happy birthday all!

Musings on Mobile from Decidedly Un-3G 'Third World'

I have never thought of myself as any kind of expert on what is mobile telecoms in the Developing World (and yes, I apologize for the term 'Third World' which is often seen as demeaning, my only reason for using it this once, was to have a play on words with 3G. Regular readers of my books and blogs, know that I always refer to that part of the planet where 5.7 billion people live, which is not 'the industrialized world' as the 'Developing World'. I do understand..

But yes, I wrote books on 3G, the 'next generation' for mobile, earlier in this decade. I was the first published aauthor to discuss the 'fourth generation' ie 4G as far back as in 2002, and when the industry started the early discussions of services for that fourth generation, the CTIA invited me to lead the discussion, literally bbeing the first person alive to talk about 'services and applications for 4G' into the public domain - and yes, please do not write to me, we still don't know. We have barely found the first true killer app for 3G (mobile social networking) so lets not talk 4G here. And yes, to be very clear all that bogus hype about WiMax - cannot be 4G, WiMax is an officially recognized wireless telecoms air interface - for 3G (by the ITU, that is literally the 'last word' on anything relating to international telecoms). Don't bother me with WiMax emails or comments, that is not 4G. The fourth generation specification recommendations were just handed into the ITU earlier this month for future ratification. There is nobody today who 'has 4G' as it has not even been decided yet, what it will be, but definitely absolutely positively it cannot be WiMax, so anyone selling you 4G today is conning you big time.

Sorry about the tirade. Now, back to my topic. I often speak at the leading countries of mobile, in Japan, in Finland, in South Korea, in Sweden, in Taiwan and Austria and Singapore etc. I always thought of myself as focusing on that part of our industry, the 'cutting edge' if you will. So it surprises me, how often when I discuss the industry with experts from the Developing World, they seem to think that I am particularly well tuned into their needs, be they SMS text messaging or basic mobile banking or pre-paid phone accounts or second hand phones. Issues such as literacy, lack of electricity and extreme poverty. Of shared phones etc. And of the economics of how mobile telecoms can be viable even in very poor villages, due to family members in the cities carrying the costs of phone calls to their relatives in the villages, etc.

To me these were always areas where 'I am definitely not the expert' and would seek to deflect discussions to anyone who might be more knowledgable of those markets. But increasingly I have found many customers and contacts talking about the telecoms needs of the Developing World. And increasingly, it seems that I have had good answers and ideas. It seems strange to me, as I am not very comfortable about it, and feel I could easily write a book about money-making with 3G, but not about money-making with mobile in the Developing World...

The national interest into 3G - which often appears some months prior to 3G licenses being awarded in a given country - has recently brought me to many countries in the Developing World which are at that threshold. And by accident, I have also recently had several speaking opportunities with other markets that happen to be in the Developing World. This year I have spoken in public in Argentina, Brazil, Chile, Colombia, Egypt, Indonesia, Mexico, Pakistan and Venezuela. By coincidence, that covers Developing World countries on each of the four continents where they exist. Obviously I have many further clients who operate in the Developing World and they often use me for private workshops and seminars, or customer events. The recent heavy exposure to this market area has given me an exceptional exposure to what is on the minds of experts in these countries. What will be the role of smartphones in these markets? How about application development? Mobile banking? Is the phone the fourth screen or actually the first screen, in these markets where mobile phone penetration rates far exceed those of PCs, the traditional internet, banking accounts, newspaper circulations, and even TV sets. Is mobile advertising a viable opportunity, etc etc etc.

As I have been obsessing about the overall mobile opportunity, and collecting the numbers, increasingly I have become inundated with stats and facts about that part of the world, the Developing World, and their mobile needs. And lets put this in context a little bit. Ten years ago, 1999, we, the mobile industry, celebrated 20 years of mobile telecoms and the world had 500 milllion mobile phone subscribers. This year, 2009, we ADDED 500 million NEW subscribers, as the world approaches 4.6 billion mobile subscriptions. The total 'Western World' or more accurately Industrialized World of Europe, the US and Canada, Japan and Industrialized Asia (South Korea, Taiwan, Singapore, Hong Kong etc) and Australia and New Zealand, have pretty exactly 1 billion people. One in seven people on the planet. The other six in seven people - yes 5.7 billion people - live in the Developing World, China has 1.3 billion, India 1.1 billion, and then countries like Indonesia, Russia, Brazil etc have couple of hundred million people each, etc. Africa is another billion. 

So we in the Industrialized World have had 'full' mobile phone penetration rates in every country except Canada (they are almost there), which is usually defined at 85% per capita. In reality over 60 countries have passed 100% per-capita penetration rates and in Western Europe there are about 1.5 mobile phone subscriptions per person across the whole continent, and even the USA is nearing 100% per capita penetration rates. When counted against the total planet population, of the people in the Industrialized World, the mobile phone penetration rate is at 109% per capita. That means that most of the growth of the industry is not to Europeans or Americans or Japanese or Australians. It is to the Developing World. Out of the 500 million new subcriptions this year, the vast majority were first-time subscripitions to the Developing World, and then the second biggest part is second subscriptions... to the Developing World (yes, that is a global phenomenon too) and the smallest part is second subscriptions to the Industrialized World (oh, and yeah, a million or two to the few Canadians who didn't have a cellphone yet).

That helps explain why the sudden interest. The Europeans are not adding new subcribers, new users; they are only adding new subscriptions, often without even a second phone - as prepaid accounts - to help optimize their phone traffic costs and take advantage of pricing plans, free minutes etc. The growth is now in India, Africa, China, Brazil etc. Even Russia is already at 130% penetration rates, so Russia has 'grown past its peak opportunity' and is now adding primarily third subscriptions to those who want it..

How about the money? Very roughly speaking mobile telecoms was an 800 billion dollar global industry last year, when only measuring the mobile telecoms service revenues. If we add mobile phone handsets and infrastructure etc income, we would hit 1 Trillion. This year even with the economic decline, I am expecting our total revenues to grow, so service revenues will hit something like 850 billion dollars or so, But yes, lets look at the even 800 billion dollar number. Almost half of that last year came from the Developing World. So 1 billion people in 'the West' paid about 400 billion for their services on mobile, and the other 3 billion in the Developing World paid the other 400 billion. The revenue per subscription (not per user) in the West delivers about 33 dollars per month - so for example for the half of Europeans who have two subcriptions, this is 2x that amount or 66 dollars per month, and when averaged across all Europeans by users to get the industry average "average revenue per user' rather than per subscription, it is pretty much the same level as the Japanese and Americans who mostly tend to still have only one phone account, ie 50 dollars per month.

The  revenue per subscription in the Developing World is about 11 dollars per month. Yes, that is the average. It means that essentially every new subscription added today anywhere in the Developing World is now far under that average, and we talk of new customers typically in the 5 dollars per month spending level. Imagine building a business at that kind of economics? These are all prepaid customers, and there is no viable opportunity to offer them an iPhone on a 2 year contract haha, they would be hard pressed to even buy a one dollar app from the Apps Store, as many new first-time phone owners in Africa live on incomes of one dollar per day - yet they sign up to phone accounts. What kind of phones do they have? Most new customers now have used phones, hand-me-down phones from richer relatives, or second-hand phones moved in from richer markets such as Europe and the Middle East. Nokia, Samsung and SonyEricsson GSM phones that are about 2 years old... If they buy new phones, they tend to cost about 50 dollars or less... Bear in mind, the real unsubsidised cost of an iPhone or a Nokia N97 of a Blackberry Bold is about 700 dollars. If you don't get a monthly contract, that is what you have to pay. They have no viable mass market in the Developing World, only for the few ultra-rich that every country does have of course.

We see numbers like in India 30% of mobile phone users never originate voice calls - they may send SMS text messages, but will not make calls. They do accept calls - ie these are then billed to the caller obviously. It brings new opportunities such as the Call Me service I have talked about recently, form Vodacom in South Africa, which is a free text message you can send to your friends or family, and they then call you. It is advertising sponsored and a huge hit in South Africa.

Talking about advertising and media, in India 80% of mobile phone subscribers receive advertising of some kind. This is legitimately not the fourth screen, it is literally the first screen. In anywhere in the Developing World, it is reasonable to treat mobile as the first mass media, not the 7th, as it is by far the widest reaching mass media channel. Vital Analytics measured the Indian market this year and found that 21% of all mobile phone owners in India use paid news services or sports services on their phones. This is more than the total newspaper circulations in the country. No wonder the Economist was using mobile phones as their primary marketing channel to sell the weekly magazine and its subscriptions.

Meanwhile, in China, if we switch from one media type, news, to another, music. A massive 90% of Chinese listen to some kind of music on their phones according to LM McCann. Most of that is 'side-loaded' ie not on an over-the-air download, and usually not paid (pirated music is huge in China), but... 39% of Chinese mobile phone owners have downloaded (paid for) music on their phones. In fact one third of the total Chinese music market is already sold to mobile phones according to the IFPI. What is the most popular music type on Chinese phones? The ringback tone (ie waiting tune).
 
But mobile telecoms in the Developing World has more issues that have particular needs. Literacy. The UN estimates there are 800 million illiterate people of reading age on the planet. They are almost all in the Develoing World. And what of electricity? Many parts of where mobile telecoms is now going, there is not reliable 24 hour electricity, in parts of their markets, there is no electricity. So customers appreciate big battery lives, spare batteries (removable batteries obviously) and the local mobile operator/carrier stores have many rechargers that customers can use for free to recharge their phones. Some walk for miles to come to a store weekly, just to recharge their phones. Imagine running a business in this kind of environment.

And the lack of other infrastructure. There is no viable landline telecoms environment in most of the cities of that world. There are few personal computers, which are not all connected to the internet. Most internet connections are patchy and unreliable dial-up connections (when did you last test your website for dial-up access haha, did you assume the whole planet has broadband?) and yes, traditional wired broadband, is rare, expensive and unreliable (and slow, and often congested). But mobile broadband is spreading like wildfire to the wealther parts of that world. Mobile broadband? I mean 3G of course, in the wealthier parts of the cities, not WiMax or WiFi.

Banking? Many prospective customers do not have drivers' licences or passports or actually any reliable forms of identification. They don't have regular jobs with registered employers, and often do not even have regular addresses - they may live with relatives as guests, or be migrants or immigrants (legal or illegal) or refugees. So how do you get them 'banked' under traditional banking rules? No way. But suddenly if you offer mobile banking, you can bring banking services to the poorer parts of society, like we saw pioneers Smart Money and G-Cash do for this whole decade in the Philippines. In Kenya in only two years, M-Pesa has cannibalized 46% of the total banking accounts in the country, or in reality, spreaded banking to essentially twice the customer base that the traditional city-based conventional 'real banks' had been able to.

I have many thoughts circling in my head, and many more I need to blog about, from various discussions with friends that I have recently had. Obviously I am running a series of blogs about mobile in the Developing World, including The Gambia and Bangladesh. But if you the reader wanted a short summary of the main issues and statistics about mobile in the Developing World, I have just written another of my "Thought Pieces" - as always, only 2 pages in length, loaded with stats and facts, it summarizes this issue. You can have the pdf file for free, if you write to me at tomi (at) tomiahonen (dot) com. 



 

More Mobile Stories from Developing World, Taxis and Bicycles in Bangladesh

This is second in a series of blogs about mobile phones in the developing world. I wrote about phones in The Gambia helping the disabled find jobs in the first story of this series.

I had the pleasure to visit with Grameenphone HQ two weeks ago, in Bangladesh. They are part of the Telenor Group based in Norway, who hold a very special place in my heart, as Telenor was my first public reference, already 2 days after I started my private consultancy in Octorber 2001. We have always had a warm relationship with Telenor and I often refer to various Telenor statistics and findings, partly due to this long-standing relationship. Like most Scandinavian companies in mobile, Telenor is very open and honest with data and information about the industry.

Now, many might have thought that Telenor were crazy to enter Bangladesh as an investment. The country is incredibly poor, how can it sustain a mobile telecoms market and what can Telenor hope to gain out of this difficult market? Actually Grameenphone has been a shining example of how great a mobile network can be in a developing world country, and they just had a very successful IPO, which was oversubscribed by three times (ie three times more people wanted initial shares in the company, than were total shares available). Grameenphone has 21 million subscribers or nearly half of the total in Bangladesh against its two major rivals. Bangladesh has a total population of 160 million people, and their mobile penetration rate is at 29%.

But, lets talk of some stories from this market. I want to talk about the taxis, rickshaws (bicycle-drawn taxis) and motorbikes.

Lets start with the taxi drivers. A taxi driver had two phones. I thought that seemed a bit excessive for such a poor country, and asked why he had two phones - he said, one for incoming, one for outgoing. He is optimizing his traffic on two of the operators/carriers based on their pricing plans. If we do it in the Western World, and think our phone bills are too high, and get two accounts to optimize, of course for a hard-working taxi driver in a poor country, the proportion of his phone spending is even more out of his total disposable income, than our phone bills in our lives. And then the need to optimize is even more important. The customers in the Developing World tend to be very price-sensitive and very smart shoppers. They have more incentive to seek out the bargains, and with less money to spend, they are even more careful shoppers often, in any industry not just mobile. But yes, from another Telenor market, the Ukraine, we see how quickly second and third subscriptions can spread - the Ukraine is at 140% mobile phone penetration rate already. But yes, I remember early on saying that I was not sure if the second subscription phenomenon would be as widely-spread in the Developing World as it clearly is now in the Industrialized World (half of Europeans have two subscriptions) but yeah, the evidence is becoming overwhelming, from Chile to Indonesia to yes, Bangladesh, that we will find second subscriptions in all markets.

Secondly, just a silly story that is not Bangladesh specific, but I happened to observe this while on the journey from the airport to my hotel. There was a motorcyclist, who was texting. Now, we all know that texting-while-driving (a car) is dangerous and in many places now illegal. But still we do it. And yes, I am not a motorcyclist (Alan is..) but yeah, am sure motorbikers do that too. Perhaps not as often, and obviously not with an iPhone haha, you need a good single-handed operation phone, and obviously be quite good at it, but this motorbiker did send a message, then put his phone back in his pocket and speeded away. I tried to take a picture but he was just too fast to get done with his message, that my picture did not turn out.

Thirdly about the rickshaw taxis, the bicycle-drawn one-person taxis. These are quite remarkable right in the midst of the intense traffic in Dhaka, a city which soon will become the second-largest city on the planet in terms of population, and struggling immensely with congestion. The rickshaw bicycle taxi driver/biker, obviously has quite a horrendous job, pulling the passenger in the heat and humidity of the country, all day, without air conditioning. What a way to earn a living. And obviously at very modest income. Yet they have phones! Why would a rickshaw driver have a mobile phone? It is because it is a business tool. It helps the little entrepreneur get more business. Before the only way to get business was to bicycle around, looking for passengers. That meant biking around, sweating, for often half an hour or more at a time with no passengers. Now with mobile phones, the passengers can call the rickshaw driver, and thus the phone brings in extra business. What a wonderful gift to this hardworking entrepreneur. They love their mobile phones. 

Future of Responsibility: Why did the London Tube lady ask JMac to stop video recording?

I blogged in outrage about the incident in the London Tube yesterday, that our friend Jonathan MacDonald JMac had blogged about. So briefly, an elderly man had his arm caught in the London Underground train doors, and after the incident, the station staff were not helpful to him, but abusive, threateniging, and even in the end, a platform staff member "Ian" suggested that the elderly man should be slung under an approaching train. Luckily JMac was quick eoungh to catch part of this on video, including the unbelievable comment of sliginging the elderly man under a train. 

At JMac's blog there are already several dozen comments and the story is spreading on Twitter etc - any of our readers, please do blog about it, or tweet about it and spread the story. As it happens, the unfriendly guy, Ian the Idiot, has been having moments of megalomania before, so he clearly is in some severe need of re-training to learn how to be a customer service person. But as I am still fuming by this injustice, I am thinking of the other Tube person, the lady who asked JMac to stop video recording. Why did she do that? Does she even have the right to do that? And what should we - as society - do about it.

Clearly then Tube Lady did not think, that a video recording of the incident would be useful. Useful for whom? to Improve the quality of customer service at the Tube? or actually, she knew that what was happening was not totally ok, and she and her colleague Idiot Ian, would prefer this evidence not be collected of his behavior. She KNEW it was not going to look good on any performacne review.

Isn't this EXACTLY the RIGHT time for all to start to video record? If someone in position of power, asks you to stop recording an incident. I do not mean nuclear secrets and areas where clearly it is posted that video recording is not allowed, like say the customs area of airports. We can see the signs. But there are no signs in the Tube saying you cannot video record. There are prohibitions that flash photography is not allowed, as the flash can blind a train operator just as they come out of the dark tunnel. But the tube is a public space, and people video record in them all the time. The London Tune is the worlds longest underground system, the oldest underground, and a very famous London landmark. It is popularly photographed and videotaped by tourists all the time. 

So now this Tube lady asked JMac to stop recording. JMac obviously a law-abiding citizen, followed that request. But what i suggest we as society should do - is in any such situation, we all should immediately take out our cameraphones and start to snap pictures of the scene - pictures of both Ian the Idiot and his colleague the lady - and yes, all others to start to video record. Imgine the Rodney King beatings in California over a decadea ago. The LA Police would have dearly wanted that the person stop video recording - but the police were abusing their power. We NEED to record such instances of abuse.

Furthermore - what would it say of the intent of customer service of say the London Tube or the famous double-decker busses or some department store, etc - if their stated policy is to explicitly ALLOW and ENCOURAGE the video taping of any incident in their public spaces? Wouldnt that send out a message loud and clear, that the citizens are explicitly empowered to record indicidents, and that no officials have a right to stop it.. and that the Tube lady would not have any authority to ask someone to stop recording?

I think this calls for some citizen revolt, don't you?

FOLLOW-UP, three hours later, the Mayor of London has weighed in, asking Transport for London to do an urgent review of this incident; and the first newspaper, Telegraph, has covered the story with interview of JMac. Communities Dominate! The fascinating part - The Tube "spokesperson" said "London Underground and our staff strive to provide excellent customer service for our passengers. We are therefore grateful that this incident has been brought to our attention."

What will happen to the lady who told Jonathan to stop recording? will the staff of the Tube be new trained to allow recording such incidents in the future, if the Tube "are grateful" that the incident had been recorded to be brought to their attention? I kind of doubt it..

What do I mean, by 'next four billion'?

I spoke in Amsterdam on Thursday at the big Picnic event and in my keynote address I talked about "The Next 4 Billion". What do I mean by the next four billion?

First, those who regularly follow mobile technology, know the relevance of 4 billion as a number. That was the total global count of mobile subscribers on the planet at the start of the year 2009. To put it in context, there are 480 million newspapers printed daily; 800 million automobiles registered on the planet; 1.1 billion personal computers including all desktops, laptops, notebooks and netbooks; 1.2 billion fixed landine phones; 1.4 billion internet users; 1.5 billion TV sets; 1.7 billion unique holders of a credit card of any type; and 2.1 billion unique holders of a banking account of any kind. But 4 billion mobile phone subscriptions. Kind of puts it in context.

As I have been predicting, last year the total count of mobile phone subscriptions grew past its last remaining rival for total global technology adoption, FM radio, at 3.9 billion units. So in an absolute sense, this year mobile has become the most widely spread technology on the planet, something achieved in record time of only 30 years. It was only in 1979 that NTT in Japan launched the world's first mobile phone network into commercial production, so this December we as an industry get to celebrate our 30 year anniversary. And as Chetan Sharma Consulting just reported a couple of days ago, the total global mobile phone subscription penetration per capita, has reached 64%. Oh, and that subscription growth has not stopped, currently the world is at about 4.3 billion mobile subscriptions.

So, that is what was the first four billion. The rapid growth of what has become the most widely adopted technology on the planet. Now, what about the topic of the "next 4 billion", that does sound a bit strange. The world total human population is only 6.7 billion people. Shouldn't I be saying, "the next 2.7 billion". Or do I really mean to suggest that there will be more mobile phones than human beings on the planet, not only phones to exceed babies and great-grand-parents, but over 100% per-capita subscriptions in the poor countries of the planet, all through the Developing World? Where we have issues with not just poverty, but lack of electricity, infrastructure, and even high percentages of illiteracy. Am I being serious?

PLANET WILL REACH 120 PERCENT PENETRATION

The concept of multiple subscriptions in the industrialized world is no longer in doubt. We see the phenomenon all the time by businesspeople for example having both a Blackberry and an iPhone, etc. So today, in the Western World, it is no longer controversial to suggest that there can be more mobile phones than humans. In Europe the majority of employed adults have two phones and that trend is seen in all markets of the Industrialized World, even in the USA, which lags seriously in mobile phone adoption, today over one in six American cellphone subscribers has two phones.

I have been reporting on this phenomenon since it was first discovered in Finland over a decade ago, and was the first author to discuss it in a book, explaining the fundamentals of the concept of the multiple subscription, and gave early numbers in my second book, m-Profits in 2002. At that time it was very controversial and many pundits and experts dismissed multiple subscriptions and doubted severely if most even advanced countries could achieve beyond 100% penetration rates.

So I have been very close to examining and analysing the phenomenon of multiple subscriptions and how it impacts our industry. And I have been then reporting on the overall global trends, such as the ratio of how many of the total subscriptions are unique phone users - out of 4 billion total mobile subscribers at the end of last year, 3.1 billion were unique phone owners, and the remaining 900 million were second and third subscriptions. I also reported that the total installed base of mobile phones in use was 3.4 billion, so 600 million subscriptions are only SIM card prepaid subscriptions, where the owner has a single phone and swaps between two or sometimes three networks, by inserting the appropriate SIM card.

Where Europe today is at 115% penetration rate, and even the USA is past 90% penetratation rate per capita, and leading countries like Hong Kong, Italy, Israel, Portugal and Singapore are past 130% penetration levels - and still growing; the question has been whether the Developing World countries would ever reach those levels of penetration rates. And still quite recently I had felt that there had to be a ceiling level for the less developed countries, that was significantly below that of the advanced countries, and that this theoretical ceiling would be well below 100%.

WRONG AGAIN

But numbers are my buddies. And they keep telling me stories, correcting me where my logic and reasoning bring me to faulty conclusions. The facts on mobile phone penetration rates for the Developing World have now brought very interesting evidence. Consider the range of countries and their current phone penetration rates: Ukraine is at 140%, Russia is past 130%, Chile has passed 120%, Colombia is at 110%, Malaysia, South Africa, Argentina have all reached 100% penetration rates for mobile phones. And all are growing strong. Now while these are not by any means the poorest of the countries of the world, they are all part of the Developing World, so they are definitely different from Western Europe or from North America in terms of economic resources. And where they lead, their neighbors do follow with somewhat consistent time lags. So what happens in Argentina, should also soon happen in Brazil; what happens in Malaysia, should soon follow in Indonesia; and so forth. And yes, Brazil is past 80% penetration rate and Indonesia is past 70%. The pattern seems to hold.

SUBSCRIBERS 4.001 BILLION TO 8.0 BILLION

 

Obviously those of the Developing World countries that are more affluent will reach 100% penetration levels first, as Malaysia, Chile, South Africa, Russia etc have already done. But the mid-countries like India, China, Indonesia, Egypt, Brazil will get there too, it will just take a bit longer in the next decade; and the very poorest nations like Zimbabwe, Afghanistan, Somalia and Bolivia will grow to far beyond 50% penetration rates.

So yeah, the planet is at 64% penetration rate now. We will essentially double that in the next decade. The mobile industry? by far, by far, by FAR the biggest economic opportunity for you, our reader, in your career and lifetime. But the next four billion won't buy iPhones or smartphones, they will not have contract accounts. They will be on prepaid accounts and cheap phones. But they will join the digital online connected society, with their simple or older phones. That is what I spoke about in Amsterdam.

So here is the big news. The next 4 Billion will not be like you and me. They will not be wealthy enough to own a PC and have a broadband connection and read blogs or do any Twittering on a PC. Over 95% of the next 4 billion will be in the Developing World, and while there will be of course an emerging middle class who may aspire to own a netbook, those tend to be wealthy enough to already have a subscription today. Those next four billion will be either those who do not have any connection today, at all, or else are second and third subscriptions to those who already have one today. Either way, the behavior of those new subscribers is distinctly different from what the mobile industry has grown accustomed to in the past decades.

SIMPLE OR SECOND-HAND, YET CONNECTED

The phones. Lets start with the phones. The next four billion will need ultra-cheap handsets. Phones that are very simple. But which have very good battery life - as electricity is not a reliable resource in the Developing World. The phones need to be more rugged and sustain more dust, dropping, handling, and are expected to last for much longer than in the hands of users in the Western World. Think of the ubiquitous Renault cars and Toyota pick-up trucks in Africa. Simple, robust, indestructible. That is what a phone needs to be.

And they are often shared. So we get the phones that are designed for family use, so a phone has multiple personalities, with passwords, separate memories. My messages and phone log and address book to be distinct from that of my parents or my siblings. With the phone even ringing in a different way depending on who you try to call, so we know who the call is for. That kind of innovation. Phones developed for the next 4 billion.

And there will be an enormous flood of second hand phones into this market. When the population is too poor to be able to afford even the simplest basic phone, they will be happy to use a second-hand phone. Some will be the hand-me-down phones from the kids, who migrate to the cities to find work, get their phones, then two years later, they upgrade their phones, and send the older phones back to their parents in the vilvage. Hand-me-down phones. Second hald phones. And others will be imported as used phones from wealthier countries. Brought in from rich parts of the world like Dubai and Abu Dhabi or Singapore or Western Europe etc. Where we have a glut of recently very advanced phones. Two year old phones.

Note some startling facts about this second-hand market. One, it is all GSM. Forget CDMA or any other technology. This segment is all prepaid customers, if they have a second hand phone, it is with a SIM card, meaning... GSM. And if it is GSM, then they will prefer the brand they most associate with good phones in these markets - Nokia. It will be a bonanza for two and three year old N-series and E-series smartphones, Nokia Communicators and mid-range featurephones. Walk by any big market in Indonesia for example and see all the used handset dealers, and look at their models for sale. You will be hard pressed to find many Motorola Razrs but miles and miles of Nokias in all sorts of European branded liveries, an Orange Nokia here, a Vodafone Nokia there, a T-Mobile Nokia next to it. And that sustains a healthy Nokia refurbish/customization after-market, the new covers, new keypads, SIM-unlocking services, etc.

If you think of selling apps to the wealthiest parts of this second four billion, forget about the iPhone or Windows Mobile or Android. No, the market is primarily Symbian, on Nokia smartphones, and the only viable secondary market is the Blackberry, for this second hand GSM market. No other smartphone has the penetration currently, to hope to reach the after-market is scale to sustain any apps market.

And remember, it is a market, large part of whom are illiterate. The UN estimates that the amount of illiterate people on the planet is 800 million. Bearing in mind that of the 2.7 billion who are yet to have their first phone, about half are under the age of 15 and thus most of them are too young to be counted in the UN statistics for illiteracy, its probably nearly half of the remaining un-phoned population who are old enough to own a phone, but are illiterate. And of course, beyond those 800 million are several hundred more millions of people who are barely literate. Not literate enough to handle the menu structures of a modern mobile phone, say to install MMS settings or to re-set WAP settings or to install a ringing tone.

Illiterate customers? Well, you can toss away the printed user's guide haha, useless to this segment. What it needs is what Nokia has started to do, is to pre-install user guides as video guides hard-coded to the memory of the phone. Even as the phone is passed along to new users as second-hand, the guide goes with the phone. And if well designed and produced, will assist with visual guides that even if you do not speak the right language, you can still understand most of the phone basic features.

And it means there is an enormous opportunity to provide basic services that work on the voice principles such as IVR, Interactive Voice Response systems, the voice guided and keypad menu driven 'customer service' calling center systems that we all hate. But imagine if you were illiterate, then being able to listen to the options and even if you do not know the numbers, that you can speak to the system and make your selection - that is a godsend. You can become connected, even if you happen to be illiterate.

Then really simple things become most valuable. The in-built light of the phone is now a safety feature, giving light in the darkness, when there are no street lights and robbers and many dangerous animals hide in the night. The in-built FM radio is often the very first FM radio that family has ever had. That is the level of income that we are now looking at, where the customer cannot afford to buy a newspaper, cannot afford a cup of coffee. Does not own a TV set, indeed the family does not own an FM radio. But has to get a mobile phone, and then, if that phone also comes with an FM radio built-in, wow, it changes so much of the life. Truly enriching the experience.

MICROJOBS AND MICRO-ENTREPRENEURS

Then we get again amazing stories. For example the young teenager who goes to school and is the first literate member in his or her family. The parents, grandparens, uncles and aunts cannot read. So the uncle wants to install a song onto their family phone, a ringing tone.  Yes, this is an universal need and desire, people in Africa can be just as passionate about music as we can be. And so there is that love song that they played at their wedding. The uncle does not own a CD player, an MP3 player or even a cassette player, to play the recording of that song which is so meaningful to him and his wife, their song. But the song is now available as a ringing tone, and he has heard it, and wants 'the' song, their particular song, to be his ringing tone. But the uncle cannot read, he does not know how to go to a site to select the right song and then to do the settings to get it onto his phone. So he pays the teenager kid a small payment, like half a dollar, to get the ringing tone installed on the uncle's phone. Obviously the uncle also pays the dollar or two that the ringing tone costs, that will be deducted from his phone account, he understands that. But he cannot read, and he needs the assistance of someone literate, to do the actual installation of the song. For the teenager, fifty cents is easily a week's worth of money. A microjob. The kid can capitalize on the digital economy, even though the kid does not own a personal phone, by helping his parents, grandparents, uncles and aunts, do their basic messaging and other written actions on their phones. And make some money in the process. Isn't this wonderful?

And there are the various micro entrepreneurs, who do things such as renting a phone for the village, when the village itself is out of radio coverage, but a nearby farmer has found that when you climb up into a tree, you can get cellular coverage in the tree. So he has gotten a mobile phone, set up a ladder to the tree, and uses a timer to measure how many minutes you call, and in effect has set up a small business as a payphone operator.

Or like the phone ladies of Bangladesh, who bicycle around with phone to all networks, and arrive to your village on a set schedule every day. If you need to make a call, you know she will be there at a set time. You tell her which phone number you want to call. She knows which network that is, and gives you the appropriate phone. Then she times your call and charges you by the minute. Makes a good living on the premium she charges, being in effect a 'mobile' mobile operator. I love these stories, how dramatically our industry can change the lives of those who never had connectivity before.

NO LAPTOP TO EVERY CHILD

I appreciate and applaud Nicholas Negroponte's (who also spoke at Picnic) initiative to promote one laptop for every child, but it is a futile attempt. Personal computers are a very inefficient way to provide connectivity and web access to the Developing World. First of all, a basic simple PC is not enough. We see how quickly our PC becomes obsolete. It is a horrible waste to consider the investment, even if it is 'only' one hundred dollars per laptop. The PC is pretty useless without software, so then the kids, especially as they grow up and should try to use those in their work - will need to purchase software and install that, and do that to what will be in effect an obsolete device. And then what good is a PC if you do not have internet connectivity. Broadband is very rare in most of the Developing World and expensive and unreliable. And even at a hundred dollars, such a laptop is far more expensive than a basic mobile phone.

No, the internet will not reach the rest of the world through cheap laptops, notebooks, netbooks and such devices. The internet to the next four billion will be almost exclusively on mobile. We just heard at Amsterdam from Vodacom in South Africa who reported that even in that very wealthy part of Africa, the regular users of the internet who access by phone outnumber those who access by any type of PC, by six to one, and outnumber those who access at internet cafe type of shared PCs, by five to one. These numbers skew even more to phones, the more poor the nation is.

The future of the internet, the next 1.4 billion users (currenltly there are about 1.4 billion total users of the internet), will be very strongly mobile phone based users.

That has important implications. If you want to build education services, to teach something for example, then the mobile is the natural platform, that most of your students will have access to. Basic phones, obviously, not iPhones and downloadable apps. Or if you want to deliver news services, or small business services like banking and credit and payment services, or say credit checking services, or whatever, then the phone is your platform, the only viable platform, not the PC.

It means the users will be accessing digital content on the three basic technologies that most phones today can support - SMS, WAP and MMS. Those are what you have to consider, not iPhone apps or 3G videos or bluetooth etc. SMS, WAP and MMS. The three standard methods to reach the next four billion. Very basic services but can be very compelling. Babajob of Bengaluru India won the Mobile Monday Jury award for best service in the world. A localized job-finder service, that runs on basic SMS and WAP in India.

If you want to deploy games, music, advertising, even social networking, and want it to be a success for the next four billion, then you build it on SMS, WAP and MMS. For all those who were dubious of my statement, please understand. The total internet user base is now 1.4 billion. Not all of those use email. But lets be generous and say 1.2 billion people have at least one active email account. So the active users base is 1.2 billion and the maximum reachable potential is 1.4 billion. All other internet services, like search or social networking or IM instant messaging are far smaller than these in total users.

Then compare, SMS has 3.1 billion active users, out of a total today of 4.3 billion mobile phone subscribers in September 2009. MMS has 1.4 billion active users with over 3 billion phones that can receive MMS messages, and WAP browsing on the phone, has 1.1 billion active users, out of an installed base of 3.4 billion phones that have a browser. All of these are growing their user bases at rates faster than 20% per annum! Internet user numbers are stagnant, barely 5% growth rates past few years. If you think that Google ad-words search is important or say advertising in Facebook, or indeed email as a digital communication platform for your business, understand the scale of mobile. And then remember, the next four billion will not own PCs, they will only be able to connect via SMS, WAP or MMS. Isn't it about time for you to get involved with these three globally giant communication methods? SMS text messaging, WAP basic browser services on phones, and MMS the multimedia messaging service often called picture messaging, which is a very potent advertising and media format. To reach the next four billion, these are your tools.


Ok, that is the written version of what I talked about in Amsterdam. If you want to quote any of the numbers in this blog, and need a source, except where explicitly mentioned, the source is Tomi Ahonen Almanac 2009. And if you do not know the size of the industry, I have a convenient 2 page summary of the major data, called a 'Thought Piece' about the mobile industry size. I am happy to email the free 2 page pdf file to you if you send me an email to tomi at tomiahonen dot com, asking for the Thought Piece on Mobile Industry Size.

Hockey News print mag grew print sales with mobile version

And at Toronto event, heard Toronto based Polar Mobile CEO Kunal Gupta speak. One of his examples was a long-term fave of mine among print publications, The Hockey News. Mr Gupta said that after they launched the mobile version of THN, they achieved 300,000 subscribers on mobile who did not cannibalize print sales or web sales. And where almos all print titles globally see a decline in circulation numbers, THN has achieved modest growth in circulation after the launch of the mobile version. One more tidbit - Polar Mobile have released four versions of the service since its launch. You have to adapt a lot and listen to your audience if you intend to remain successful in mobile.. 

Twittering Mayor of Toronto, David Miller

I spoke at the Mobile Media event as part of the Innovation Week in Toronto. The Mayor of Toronto, David Miller came to give the opening address to the event, and seems to have a good understanding of how important mobile can be for economic development, as well as for bringing consumer and citizen benefits. We had a little get-together with some of the speakers and the Mayor before his speech, and the cool part, he pulled out his Blackberry and sent out a tweet and uploaded a picture right from the spot. Real time m-politics in Canada.