Smartphones Are Changing Emerging Markets’ Business Landscape
Impact of mobile technologies
As the middle class expands and discretionary incomes rise, emerging markets are feeling more strongly the impact of the web and mobile technologies. The declining cost of smartphones, the prevalence of wireless broadband, and rising income have provided easy access to the Internet for many people living even in remote areas.
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While the Internet’s growth in developed markets is stagnating at around 80%, emerging markets are likely to see higher growth in the years to come. Emerging market companies have introduced cheaper smartphones, making smartphone ownership more affordable. Companies like Intex, Lava, and Micromax are selling smartphones under $60 while Chinese manufacturers like Xiaomi and LeEco are producing high-end phones at a much cheaper rate than Apple (AAPL), Microsoft (MSFT), and Sony. The smartphone revolution in emerging markets (EEM) (VWO) should lead to more widespread use of the Internet.
User base set to increase
In 2015, global sales of smartphones were up around 18%. Future growth is expected to be even higher. As per estimates, currently, there are around 2 billion smartphone users worldwide. The number is estimated to rise to 4 billion by 2020 or about 80% of all adults in the world. The growth will mainly be driven by emerging markets. We’re likely to see strong growth in countries like China (currently, 563 million users)(FXI), India (220 million users), Indonesia (65 million users), Russia (60 million users), and Brazil (58 million users). According to Alcatel-Lucent, out of the top 15 smartphone markets, 12 will be in emerging countries by 2020.
While mobile and web technologies challenge traditional business models, E-Commerce (EMQQ) in emerging markets is well positioned to leapfrog ahead. Read on to the next part of this series for further discussion.