Feb 28, 2010
Do you remember when cellular phones were bulky, grayscale and used solely for voice-based communication, less than a decade ago? Now fast forward ten years, and cellular phones have radically transformed into miniature computer terminals; able to access the Internet, download videos, transmit and store high quality pictures, and serve as a repository for leisurely activities like games and cooking guides. Indeed, we have witnessed a wide chasm form between mass-market phones and “smart phones”, which offer much more interaction through graphical and video interfaces. Although mass-market phones have been extremely useful tools in the developing world, the latest hardware and software development trends have been tailored for smart phones, which are mainly utilized in developed nations. In this regard, the next decade of development efforts and infrastructural improvements in the mobile world appear to be poised to correct this digital divide by providing smart phones at low cost to developing countries.
As Google CEO Eric Schmidt put it at the recently-concluded Mobile Word Congress in Barcelona:
"We understand that the new rule is mobile first… in everything. Mobile first in terms of applications. Mobile first in terms of the way people use things. And it means that we have a role now to inform, to educate through all these devices."1
Without a doubt, the most radical shift in the mobile industry enabling mass marketing of smart phone applications has been the disaggregation of software creation. The barriers to entry for new software solutions have been lowered dramatically, exemplified by the launch of Apple’s Developer Kit and the open-source Android platform. A shift from a previously oligopolistic industry structure to a more competitive environment has taken place, where independent developers with relatively little capital can leverage existing hardware platforms to produce their own niche. Indeed, independent entrepreneurs in various parts of the world can readily enhance the value of mobile hardware platforms by creating complementary applications and systems suited to their local populations. Rather than seek to address general consumer needs and the drive towards consolidation this brings, entrepreneurs can instead carve out niches for themselves in addressing specific needs and demands, ensuring product differentiation in a market where the barriers to entry are low and will continue to get lower.
For example, mobile developers have recently deployed mobile banking systems in Kenya and Malawi for populations that do not have access to bank branches. The phone provider Safaricom lets users deposit, transfer and withdraw funds via simple text messaging, bringing convenience to communities who lack the infrastructure and know-how to access financial services and systems. The popularity of the M-PESA system as a banking option has risen at an astonishing rate since its introduction in 2007; assistant professor Tavneet Suri at the MIT Sloan School of Management and Georgetown University economist William Jack found that 38 percent of Kenyan households have at least one M-PESA user in them2. In contrast, only 22 percent of adults have bank accounts. According to Suri and Jack, groups as diverse as farmers and children sending money back to their parents were utilizing M-PESA; a powerful demonstration of how mobile technology can effect social and economic changes in the developing world3.
Despite the favorable climate for deployment of mobile applications in the developing world, several challenges still exist. First, smart phone innovations – which often do not reach developing countries – make the headlines regularly, but they represent only a small fraction of the mobile market. According to a research report by Gartner, smart phones only comprise 12% of the mobile market, while the vast majority of phones are still mass-market models4. The primary reason why smart phones have not penetrated more of the world market (besides cost) is that the infrastructure required to make full use of their capabilities (e.g., high-speed mobile Internet connections, national-scale phone networks) are often non-existent or bare in the developing world. As the UNCTAD Information Economy Report notes, the staggering increase in mobile phone subscribers in the developing world has not been matched by infrastructural development, leading to poor service quality and consumer dissatisfaction5. In this regard, extending useful applications into the developing world must be mediated through the pipeline of mass-market hardware. Yet the less glamorous nature of the task should not hide its importance –simple applications can go a long way in developing countries, as seen above in the case of mobile banking.
To address the fundamental challenge in the mobile phone divide, MIT is pursuing new mobile telecommunications research programs for the developing world. Entrepreneurial Programming and Research on Mobiles (EPROM) aims to foster mobile phone-related research and entrepreneurship in developing countries to address relevant social and political problems. In partnership with Nokia, this program teaches computer science students from developing countries such as Kenya, Ethiopia, Uganda and Rwanda the fundamentals of mobile application development, hoping to provide them with the tools to develop mobile phone applications relevant to local needs and cultures. EPROM also runs "SMS Boot Camps" at the University of Nairobi, which couple education and entrepreneurship in an academic setting and teaches teams of students to launch and market their own SMS services to the millions of mobile phone users in Kenya. Thus by blending technological development and entrepreneurial leanings, EPROM hopes to contribute to the development of the social structure of the mobile market.
Moreover, MIT students and faculty have also contributed to advances in phone software technology. In May 2008, four MIT undergraduates shared a $25,000 prize as winners in Google's Android Developer Challenge with their project, Locale6. Locale enables Android Users to efficiently manage settings on their mobile device. At the MIT Media Lab, HealthMap's Outbreaks Near Me application is currently in development, allowing users to track and inform others in the community about the spread of infectious diseases. MIT’s NextLab class, with the tagline “Mobile Innovation for Global Challenges”, guides students in partnership with Mexican universities through the entire process of developing mobile phone software to tackle social challenges, turning the whole classroom itself into a cutting-edge research lab where ideas are generated and brought to market over the course of a semester.
At the cusp of the new decade, the mobile phone market has entered a period of dynamic change, in which rapid innovations are reshaping and redefining the reach and scope of both smart and mass-market phones. In this environment, potential opportunities for entrepreneurs exist in both the hardware and software fields – tomorrow’s phones are poised to be created by bold and decisive individuals today who not only produce exciting tools and applications but also leverage improved telecommunications infrastructures in order to reach under-served populations.
PC Magazine, 16 February 2010. ‘Google Focuses on Mobile First,’ Upcoming Applications at Mobile World Congress”http://blogs.pcmag.com/miller/2010/02/google_focuses_on_mobile_first.php. For the Mobile World Congress Website, seehttp://www.mobileworldcongress.com/conference/event_highlights.htm
MIT News Office, 23 February 2010 “Banking on Mobile Money” http://web.mit.edu/newsoffice/2010/mobile-money-0223.html
William Jack and Tavneet Suri “Mobile Money: The Economics of M-PESA” October 2009 http://www.mit.edu/~tavneet/M-PESA.pdf
Gartner Research Report "Market Share: Smart phones, Worldwide, 4Q08 and 2008"http://www.gartner.com/DisplayDocument?ref=g_search&id=908313&subref=simplesearch.
UNCTAD´s Information Economy Report 2009: Trends and Outlook in Turbulent Times “Africa catches up in mobile phones but is falling behind in broadband access” http://www.unctad.org/Templates/webflyer.asp?docid=12273&intItemID=1528&lang=1#endnote1
MIT News Office, August 29 2008 “MIT class project gets a gold star from Google” http://web.mit.edu/newsoffice/2008/android-prize-0829.html