MWC 2008: Emerging markets to lead mobile world

Emerging markets are not just leading growth for the mobile sector, they're also leaders in innovation, attendees of the Mobile World Congress in Barcelona were told this week.

With penetration rates in Europe and the West topping out over 100 per cent, operators clearly need to expand their markets to achieve growth, speakers from firms such as Vodafone, Cisco and China Mobile said.

Describing Vodafone's annual growth, chief executive Arun Sarin said the largest mobile firm in the world was seeing good results in India, which is adding 1.5 million customers a month.

"In developing world, the demand for internet and entertainment is growing very rapidly," said Sarin. "There are clearly things we can learn from emerging markets in developed economies," he added.

Sarin said low-cost handsets were necessary to help such growth continue. Ultra-low cost handsets, such as one produced by ZTE and sold for $25 (£12.50), has sold seven million units - half of which have gone to India.

Nokia's chief executive Olli-Pekka Kallasvuo said that given so many people live on less than a few dollars a day, it's important to take prices lower. "Affordable access should not be a priveleage for those of us in the developed world," he said. "Mobile companies must bring services within everyone's reach."

Operators need to consider the total cost of ownership for such devices - from the phone to the electricity to charge to the cost for service. Rob Conway, the head of the GSM Association, which runs MWC, agreed cheaper mobile devices were the key, and encouraged operators to create more devices for the Horizon line - low cost handsets designed to cover the globe.

But such devices need to be internet ready, because web-access will take precedence over voice. Sarin noted that the first time many in the developing world see the internet will be over a mobile device. "When this happens, demand will be explosive," he said.

"The first experience of connecting to the internet for the next billion will be very different than the first," predicted Kallasvuo.

Indeed, coming from an emerging economic powerhouse, China Mobile's chief executive and chairman Wang Jianzhou said his company has focused on getting coverage across the massive country. That firm offers coverage to 97 per cent of the population - and even has a base station on Mount Everest. Such coverage has helped that firm add five million customers a month.

Emerging markets aren't just using old phones and old technology, however. They're going to lead innovation; they already are. John Chambers, Cisco's chief executive, said: "It's no longer emerging markets following - it's going to lead and skip over one or two generations."

One example cited by Kallasvuo is mobile banking. Growth in that area has been spurred by the dearth of easy access to trustworthy and inexpensive wire services in Africa.

And as Vodafone's Sarin noted, any innovation - no matter where it comes from - will take the mobile sector further. "We're on the same journey to the same destination... let us leave no part of the world behind," he said.

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