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
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.