Mobile Technology Boosts Ecomony


Mobile RevolutionMobile technologies have become the most rapidly adopted technology in the history. Mobile technologies are changing lives everywhere. Globally, the mobile technologies have become a main engine of economic growth. High R&D, declining costs and explosion in available applications is driving this growth.

“Mobile penetration is increasing, the costs of access and devices are coming down, and more and more people in both developed and developing economies are using the mobile Internet as their first—and often their only—means of going online.”

A recently published analysis by BCG estimates that mobile technologies have been responsible for over three trillion dollars of revenue. Mobiles’ contribution to the GDP of six countries (US, China, South Korea, India, Brazil and Germany) has been over $1.2 trillion in 2014. In South Korea, home of Samsung and LG, the contribution from mobile technologies was 11% of GDP.

Impact on Three Economies

South Korea – South Korea has quickly become the world’s most advanced mobile economy. They have been early adopters of the 3G and 4G technologies. Mobile technologies’ contributed $143 billion (11%) to their GDP. South Korea had a strong focus on R&D and has made bold investments in new technologies such as semi-conductors in the 80’s and CDMA in 2000’s. They are now leaders in design and manufacture of mobiles.

USA – US is contributing greatly to the mobile value chain. Qualcomm is innovating in core technologies, Apple is leading in mobile devices, Google has its widely used Android smartphone operating system while Facebook has its most popular global apps. The faster 4G technologies and newer apps are driving new business opportunities. Contribution by the mobile technologies to the US GDP is $548 billion dollars (3.2%).

China – China has led the way in emerging markets in embracing mobile technologies. In 2012 China become the world’s largest smart phone market. Mobile represents 3.7% of China’s fast growing GDP. China excels at component assembly and has a strong manufacturing base. Lenovo’s recent acquisition of Motorola has strengthened China’s capabilities in mobile innovation. China has more than a million app developers, more than twice that in the US.

Mobile Drives Success

6 of the 25 most valuable companies in the world today are participants in the mobile value chain – Apple, Google, China Mobile, Alibaba, Facebook and Verizon. These companies have grown their revenue 35% annually. Facebook grew 78% annually between 2009 and 2013. Mobile represents 88% of Facebook’s user base (66% are mobile only users) and accounts for 66% of its revenue.

Alipay Story

alipay-logoAlipay (a subsidiary of Alibaba) allows consumers to make mobile payments anytime, anywhere. It has 190 million active users up from 100 million in 2013. It is China’s number one mobile payments tool. It processed more than $500 billion in digital payments last year (80% of all online transactions). Many transactions are managed with Alipay wallet app. It allows users to do many activities traditionally associated with retail banking, such as funds withdrawal, paying bills and money transfers. Using an escrow model like PayPal it has built trust within its user base. Alipay is helping eliminate cash in China.

China has $295 billion in E/m-commerce revenues, greater than the US. By 2015 m-commerce in China will exceed $40 billion according to KPMG. This growth in the mobile payments is largely because of the success of Alipay.

Flipkart Bets on Mobile

Flipkart logoOnly 5% of Internet users in India have a desktop/ laptop. 34% of users access Internet only via their mobile. Indian mobile phone subscribers will 953 million by 2015. Due to the big gap between the desktop and mobile users in India, some companies like Flipkart have constructed business models that capitalise on the mobiles.

Flipkart is India’s version of Amazon Marketplace. It is India’s largest e-commerce marketplace. Consumers use Flipkart app to compare prices, search for products and shop from thousands of third-party vendors in more than 70 categories. More than 10 million people have installed Flipkart app. 50% of Flipkart’s traffic come through the app. Flipkart estimates that by 2016 75-80% of all user traffic will come through the app.

Mobile Leaders Outperform Laggards

BCG analysis found that the impact of mobile technologies is not just limited to large corporations. Small and Medium Enterprises (SME) who are ahead in mobile adoption have grown faster than the average SME. Leaders in adoption have used mobile technologies to improve productivity, operational efficiency, and customer service, and enter new markets. Both in the developed and emerging countries, these leaders have demonstrated a higher revenue growth and created more jobs.  The chart below shows that the leaders create 3 to 8 times more jobs compared to the mobile laggards. Job growth in developed countries is 5.1% for the leaders vs. just 0.6 for the laggards. In emerging markets the percentages are 6.3% vs. 1.9%.

Job Creation

In the emerging economies, mobile is truly transformational. It is allowing leaders to leapfrog a generation of technology. Since mobile is the only way a large percentage of the population can get access to internet, they are developing business models and working tools for the mobile platforms without the need to deal with complex legacy systems and integration issues.

Crowd-sourced Reviews

Yelp logoCrowd-sourced reviews using platforms such as Yelp and Trip Advisor are giving smaller businesses a chance to stand along big businesses and gain customer trust. In the US, 30% of businesses claim that a large proportion of their customers come from referral apps like Yelp. 50% of Yelp searches come from mobile devices.

Mobile Payments

Digital walletMobile payments have been a boon to micro businesses, small merchants and sole proprietors. Global mobile payments have increased from $170 billion in 2010 to $630 billion in 2014, according to Juniper Research. Mobile payments, such as Square, offer ease of use and are low-cost. In emerging markets with high mobile penetration but low percentage of bank accounts, online payment solutions enable new opportunities to small businesses. For taxi drivers in Brazil, mobile payments help avoid carrying change and cut the risk of being robbed.

Consumers Value Mobiles Highly

Global adoption rate of mobile technologies has been spectacular. Steady technology improvements and lower costs drive this growth. Today, nearly half of the world’s population subscribes to a mobile service. Some 60 percent of global mobile consumers use mobile devices as their primary or exclusive means of going online. Mobile technologies are creating enormous value for the consumers. Consumers worldwide value mobile technologies at 10 – 45% of their income.

In developed countries consumers use mobiles to stay connected on the move. GPS, mobile banking, social networking and crowd-sourced reviews make user’s lives easier. Mobile helps consumers save time and money. US consumers value mobile technology at $6000 per year.

In the emerging markets consumers value mobiles even more. In China, consumers value mobile at 45% of their income. It provides the chance to live healthier, earn a higher income and access educational resources. Consumers believe mobiles make them more productive at work and allow them to conduct entrepreneurial activities. Consumers are willing to sacrifice many other things before they would give up their mobile.

Changing Lives

Mobile technologies are changing lives in emerging countries. Mobile internet is bringing banking, education, health, travel, music and entertainment to millions of users. In India, an app called Fightback allows women to call for help by push of a button from friends and relatives when they feel threatened. Mobiles  deliver medical information to devices to enable offering health services to people who may go untreated. In India, an NGO is using tablets to educate pregnant women and new mothers on a range of health, pregnancy, birth control and other issues. Farmers receive market data on their mobiles, which allows them to get better prices.

More innovation needed

Mobile penetration is increasing. Despite the tremendous growth and the advances made in mobile technology and applications, consumers want more. They want advances far beyond what is now available. Core technology improvements and more reliable networks are needed to support increasingly data hungry applications.

Businesses too are just at the beginning of exploiting the opportunities and potential offered by the mobile technologies. This is an exciting time. It is time to start implementing strategies and join the mobile revolution.