For some time now, a dominant cultural meme – a word I use experimentally and won’t repeat, since it evoked a fierce gag reflex as I typed it – holds that there will be more of everything in the future, especially people, and that stuff will cost more, unless it’s digital hardware in which case it will cost less and there will be way more of it.
Real estate crashes and the more serious specter of deflation suggest that in fact stuff may not always cost more. And according to UN demographers, while global population will continue to rise for some time, there are places where population is shrinking.
This sounds like good news, considering global warming etc., but it may not be, if your business depends on selling more stuff next year than you did this year. Fewer customers just makes your job harder. And if that shrinking customer base already has a lot of your stuff, it’s harder still.
Consider the situation in the developing world, as shown in the chart below, which plots mobile subscription penetration against projected population growth for 135 countries. (I ran out of label space in the middle; email me if you’re curious and I’ll send you the whole list.)
Rapidly growing population and low mobile penetration (lower right of the chart) does not necessarily mean a country is a terrific opportunity. Afghanistan, for example, has some issues as a business environment. But the scenario of high mobile penetration and shrinking population (upper left) raises a unique set of challenges to growth.
Clearly, penetration on a user basis in these countries is lower than 100%; subscription penetration is particularly high in Russia and elsewhere because of multiple SIM and multiple device ownership. So it is not the case that everybody who wants a mobile phone already has one. But an awful lot of them do. And a shrinking population means fewer first time buyers are entering the market.
Clearly, the focus for an operator in a developing country with high penetration and low or negative population growth needs to be different than in the more usual case of emerging markets with rapid population growth and low penetration. Loyalty and churn reduction become critical, as does revenue enhancement through incremental service offerings, and in particular, cold-eyed and ruthless cost justification of network expansion. If you build it, they won’t come if they’re just not there.