The mobile market, the where's, what's and why's

by Johann Gevers

Billions of new consumers are exploding onto the market in emerging economies. While still poor relative to advanced economies, their sheer numbers (5.7 billion, 82% of the world’s population) add up to a huge and rapidly growing market. This phenomenon—that a lot of small dollars add up to a big dollar total—was popularized as The Long Tail by Chris Anderson in 2004. Companies from Amazon to Netflix to Google owe their success to the long tail business model. It has spawned new industries and strategies including micro-finance (Grameen Bank), crowdsourcing (InnoCentive), and viral marketing (Hotmail).

But in this age of connectivity, the gains to the bottom line do not merely grow linearly with population and income—they grow exponentially. Network effects cause the value of the network to grow exponentially with the number of connected users in the system (Metcalfe’s Law). Facebook draws its rapidly rising value (currently $50 billion) from the power of Metcalfe’s Law.

The Long Tail and Metcalfe’s Law are combining with accelerating technological advances and global demographic shifts to produce what Gerard Lyons, chief economist and group head of global research in London for Standard Chartered Bank, calls a generational super-cycle—only the third such cycle in history. Global gross domestic product will swell to $143 trillion by 2030 from $62 trillion in 2010, with the vast majority of that growth generated in Asia (China, India, and Indonesia).

First among industries, mobile communications are blazing the emerging market trail, drawing other industries in their wake.

These trends spell unprecedented opportunity for mobile communications operators in emerging markets—especially those companies targeting the large, underserved market segment of low-cost, branded devices.