Emerging Markets Communications Strategies

Analyzes the issues facing existing and new players who are looking for a share of growing mobile markets in over 30 developing countries, including the developing regions of Asia and Africa.

October 12, 2010 04:10 David Kerr

sa photo dk

At CTIA in San Francisco last week, away from the fanfare around LTE rollouts and the next dozen tablet devices (ok, I exaggerate a little), Sprint had an announcement which will have significantly higher impact on mobile broadband adoption and revenues: Sprint ID. 

Sprint ID promises to up the ante on personalization and ease current feature phone users into the smart phone ranks.

Sprint ID offers instant personalization along key themes/packs where the operator has done the heavy lifting of identifying and group related applications of interest to different persona from wallpaper to ringtones to apps. While the one click marketing line is not quite matched by reality given pesky little things like accepting terms and conditions etc, Sprint ID is a significant breakthrough in my opinion as:

  • it broadens the market appeal of Smart phones to current feature phones users with a simple to understand offer in a range of device price points including the critical $49 and $99 levels.
  • it tackles one of the biggest weakness of all app stores: discoverability of content and simple personalization.

Three handsets were featured at launch of Sprint ID: Sanyo Zio™, Samsung Transform™, LG Optimus S™. These three devices cover key price points in the Sprint portfolio and provide customers with a range of form factors, industrial design and brand to meet their tastes. Interesting to note that both LG and Sanyo retain the right to put their own packs on their handsets as well. This is a big win for LG as its Optimus S™ will be available for under $50 with contract giving the vendor a much needed boost in the smartphone space. Samsung meanwhile continues to shine at Sprint occupying the lucrative $149 spot with its Transform™. All three devices of course require a Sprint Everything Data plan.

However, for me the more significant impact is that operators and oems are finally realizing that customers don’t buy phones or services or apps… what they really want are positive experiences

… be that socially connected, sports, education, health and fitness, fashion etc. This is something that our User Experience team has been evangelizing for the last 7+ years. Whether its 80k apps on Android or 250k on Apple store or 10K on RIM, one common experience has been exasperation at the huge waste of time, energy and emotions in finding ANYTHING!!! Which happens first, eyes glazing over or fingers cramping with so much scrolling? Either way the net result is often a disappointing experience which the early smart phone coolaid drinkers have learned to live with.

Newbies to the smart phone arena, will certainly have less tolerance and spend less time to personalize their device and enable applications. Sprint ID is well tailored to the next wave who are taking tentative steps into the smart phone space


David Kerr


September 23, 2010 22:09 David Kerr

September 23, 2010

While there has understandably been a lot of attention given to consumer apps post iPhone and the plethora of application stores that have emerged, business mobility and enterprise mobility offer huge potential from horizontal to vertical applications and from smartphones to iPads and tablets to superphones.

In both NA and W. Europe, business customers account for under 30% of users but are the dominant streams of both revenue and profits for operators. On the device side, premium priced models from RIM, Nokia, and Microsoft Mobile licensees as well as the iPhone have long been key drivers of profits in a market where low single digit margins are the norm.  The explosion of smartphone choices has led to the battle ground moving beyond the corner office, to other executive and now increasingly the midlevel manager.

With a new range of devices competing for space in the corporate market, the issue of corporate versus individual liable has become an increasing priority for IT decision makers. Add on the complexity of managing an expanding list of OS (Android, iPhone, Windows Mobile, Symbian, Palm, MeeGo, Bada from Samsung) and the growing importance of mobile portable devices with access behind the firewall and one can already feel a corporate migraine forming…. And that’s before we even discuss device management, mobility policy, device retirement etc. etc.

I am looking forward to CTIA Fall (San Francisco October 5-7) and in particular to the Enterprise Mobility Boot Camp moderated by Philippe Winthrop of the Enterprise Mobility Foundation. The boot camp spread over two days will address many of the issue listed above with our own Andy Brown featured in an analyst roundtable on October 6th.  I look forward to meeting you there. Don’t hesitate to contact Philippe for passes to this the deep dive enterprise mobility event.

David Kerr

David Kerr
Snr. VP - Global Wireless Practice
Tel: +1 617 614 0720
Mob: +1 262 271 8974

September 21, 2010 02:09 telliott

The mobile market potential of the “bottom of the pyramid” has rightly aroused a lot of interest – including some from Strategy Analytics. The ability to profitably service the huge untapped market of the poor and rural will have a major effect on the long term emerging market prospects of operators like Orange, Vodafone, and Telenor, device manufacturers like Huawei and LG, and infrastructure vendors like NSN, Alcatel Lucent, and Ericsson.

But let’s not forget about the developing world’s middle class, which may number as many as 2.6 billion people. It is middle class consumers who, having some measure of economic security, are in a position to stretch just a little on their handset purchases, or sign up for that slightly frivolous entertainment service. The revenue from each of those stretches, times 2.6 billion, will help fund rural roll-outs and maybe, just maybe, add to the bottom line.

The 2.6 billion comes from Martin Revallion, an economist at the World Bank, who estimated the number of people in developing countries in 2005 whose daily consumption was between $2 and $13 a day, measured on a Purchasing Power Parity basis.

Now, if you are reading this in an industrialized Western nation you might be saying “$13 a day is my idea of poor, not middle class! And $2 a day is very poor.” And in your context you would be right, because that range does not describe the middle class where you live. (In fact, $13 a day was the US poverty line in 2005, which Revallion somewhat arbitrarily chose as his upper bound. $2 was the average officially reported poverty line in 70 developing countries he looked at.)  

The question is whether daily per capita consumption of $2-$13 supports a middle class life in the developing world. This in turn raises the question of what is “a middle class life,” which even those of us who live them find difficult to define. A Middle Class (Perhaps) Shopkeeper in Liberia A Middle Class (Perhaps) Shopkeeper in Liberia

Fortunately, sociological precision is not always required to gauge mobile demand. The key element for our purposes is whether in the local context there is enough of a middle class sense of security at $2 a day – or $3 or $7 or some other number – to free up discretionary spending for non-basic communications services. This is a course of research that we will be pursuing in the next year, and we would welcome comments and suggestions.

May 26, 2010 04:05 telliott
We recently did some interesting interviews with low-income mobile phone users in Manila. (See “Voices of the Next Billion: Initial Input from First Time Mobile Phone Owners in the Philippines.”) They were not the poorest of Manila’s poor, but they were poor enough, some with stories that were difficult to hear, like Edward, who took some architecture courses but has a part time job on a cleaning crew at a McDonald’s. He missed a call from a better job because nobody was home to answer the landline. He got a mobile phone after that, but the job won’t be calling him back – there’s too many others in line. Or Jennalyn, who makes $65 a month as a nanny, and whose husband had to go back to the family farm because he couldn’t get work in Manila. Obviously, we didn’t do the research to learn if being poor in Manila is a hard life – we pretty much knew that going in. (Although having names and faces and stories does take it out of the abstract a little.) A research goal we did have was to find out what people in constrained economic circumstances want in a mobile phone. There we did encounter unexpected things – not “rethink-your-entire-worldview” unexpected, but thought-provoking nonetheless. For example, not everybody wants a cameraphone, but for those who do, VGA resolution is not enough. Several people said a camera was a key factor in their next phone decision – but at least a megapixel. (This included non-cameraphone owners as well as those whose current phone has a VGA camera. Few respondents had digital cameras, so the cameraphone is their sole image recording device.)
  •  Edward, for example, wants to be able to take printable pictures of his 5 month old baby.
  • ­ Alvin, an unemployed 27 year old, has a used Nokia 3200 but would like to upgrade to a used E71, primarily for the camera. He wants to be able to upload pictures onto the Facebook account he maintains at Internet cafes.
I’m not arguing on the basis of a small sample that megapixel-plus cameras are the key to the low-income market. But I am suggesting that bare minimum functionality may be where planning offerings for the bottom of the pyramid should start – but it should definitely not be where it stops. 3G phones, while currently a bit of a stretch for this segment, ought to be within a reasonable planning horizon.

March 5, 2010 04:03 rgupta


Once bitten, twice shy.  Bharti chairman Sunil Bharti Mittal doesn’t believe in such clichés.  Unperturbed by the MTN debacle, Bharti is once again trying its luck in African with Zain, which undoubtedly is easier to grab than MTN. It’s actually imperative for Bharti to go for multi-country operators as domestic market has become overcrowded with 8-10 operators in each circle and more to come. We had in fact recommended in a recent report (http://www.strategyanalytics.com/default.aspx?mod=PressReleaseViewer&a0=4844) that Bharti should continue to look beyond India.  A couple of months back the government owned operator BSNL too showed its interest in Zain . At that time we said that the government owned operators should focus on domestic operations and warned that foreign acquisitions could turn out to be a disaster for them. (http://www.strategyanalytics.com/default.aspx?mod=ReportAbstractViewer&a0=5097) Well, I don’t want to claim that Bharti and BSNL have gone by our recommendations but I certainly believe that they are taking the right approach: Bharti, by going aggressively for Zain and BSNL for withdrawing from it. Bharti has entered into an exclusive talk with Zain till March 25, but this US$ 10.7 billion deal is not as lucrative as it looks. There are some obvious hurdles, which I guess Bharti was expecting. A minority shareholder has emerged from nowhere to claim that Nigerian operations are not covered under this sale. Strive Masiyiwa, the CEO of Econet Wireless, which has a 5% stake in the Nigerian operations of Zain said that Zain gave an undertaking last year that it would not sell its Nigerian assets and he hopes that Zain has disclosed this to Bharti. If this claim holds up it is unlcear what Bharti will get from this deal. Nigerian operations are actually the main contributor to Zain’s overall revenue including Middle-East operations. In 2008, Zain generated fifth of its EBTIDA margins and 22% of its total sales from Nigeria. The other major headache is Zain’s license in Niger. The Niger regulator has reduced the duration of Zain’s license by five years citing poor quality of service, which essentially means Zain will have to wind up its Niger operations this year (Niger license was issued in 2000 for 15 years)or convince the regulator to revoke the decision .

But I hope that this deal will see the light at the end of the tunnel and won’t turn out to be a disaster like MTN for Bharti.

Rahul Gupta

January 11, 2010 22:01 David Kerr
Afte the inevitable wave of irrational exuberance has come the equally inevitable correction and flow of negative comments regarding Google Nexus One.
  • We are now seeing a huge rebound of criticisms about customer service, implementation and execution, moaning and complaining for existing t-mobile customers who have to pay more than a new customer to get a cool device and strong complaints from developers about availability of SDK and support.
  •  Naturally, the questions about Google's ability to execute on direct sales are being raised but these shall pass very quickly in our view.
Within our wireless team we had divergent opinions from network centric, application focussed and device driven analysts but ultimatlely we arrived at the following key perspectives:
  • Consensus is that Nexus will be successful by high end tier Smartphone levels (single digit volumes in 2010 but upside potential when it rolls out beyond TMO in US and to more open markets in Europe). Nexus is likely to sell more through operator channels than direct overall. Handset volume though is not the metric by which Google will measure Nexus success nor should operators as Nexus sales are a means to an end.  If Google is successful and Nexus ends up driving usage and value for operators, they will support it with subsidies.  Otherwise, operators can passively watch Google evolve its own-branded offering with little to lose. Tier One handset vendors (SAM, LG) may have the most to lose as Google’s marketing muscle and brand coupled with compelling devices and experiences will be a strong competitor for Operator slots, subsidy dollars.
  • Handset revenues and profits are a nice to have for Google. Key to their success and long term ambition is too boost the mobile browsing ecosystem. More open devices capable of browsing/search/maps from Google or others is positive for Google.  Google needed to update and get close to parity in terms of an engaging, fun, easy browsing UI with competitive links to key apps like maps, media etc and this device achieves that goal. Google is great at creating a buzz and the media is ready to talk about something other than Apple.
  • Google Nexus and indeed the whole Android approach is not about controlling/owning the user (contrast this with Apple). Google’s key metric is advertising revenue. Google's vision is well publicized: the browser is how they will deliver services, even on mobile, and apps are a stop-gap measure as far as Google's strategic vision is concerned. Google is banking on HTML 5 as their solution to fragmentation but we believe they are drinking too much of their own coolaid here and underestimating the importance of apps. Google’s key goal is to increase eyeballs and advertising.
  • Some key elements that have not been addressed which we believe are key in Google’s future evolution and will be key to watch relate to Voice and what Google does its Gizmo5 acquisition to push Google Voice into a full VoIP proposition. This is where Telcos should be most worried and where we have yet to see all the pieces positioned on the battlefiled.