Mobile Technology, Investing and Africa

The prediction: by the year 2020 the mobile phone will be the primary internet communication tool for most people in the world.

At this point the “bottom” three-quarters of the world’s population will account for at least 50% of all people with internet access – up from 30% in 2005.

In Africa, how realistic is this prediction and what sort of investments are we looking at?

The thing about predictions…

Popular Mechanics forecasting the relentless march of science, 1949:

Computers in the future may weigh no more than 1.5 tons

Thomas Watson, Chair of IBM 1943:

I think there’s a world market for maybe five computers

Ken Thompson, President, Chairman and Founder Digital Equipment Corporation

There’s no reason anyone would want a computer in their home

Moral of the story? Well, technology has a way of exceeding our expectations. Although, there are exceptions to the rule.

Thoughts of some of the Elon/Pew Research respondents:

90% of Internet access will be mobile; Differences between mobiles phones, smartphones, PDA, small PC like the EEE from Asus will have disappeared and we will carry with us “MID” (Mobile Internet Devices). –Louis Naugès, president, Revevol, an enterprise 2.0 company with offices in France, Spain, the UK and US; a founder of Microcost, an IT services and hardware company based in France

Web content is too complex / detailed for adequate display on the small cell phone screen. This will severely limit the usefulness of mobile telephony as an Internet connectivity tool. –Richard Fowler, auditor specialist, Northrop Grumman

Of course, by 2020 (or even 2010), the term “mobile phone” will be an anachronism, as mobile devices increasingly become all-purpose connection tools, using innovative interface techniques to broaden their uses. –Ivor Tossell, technology columnist/journalist for the Toronto Globe and Mail, known as “the blogging journalist” and a social observer

“Telephony” is an odd word, in this context. That would be like calling e-mail “textlephony.” The “phone” by 2020 will be as much computer as voice appliance, and the universal standards and protocols will be data-centric rather than voice-centric. –Clay Shirky, consultant and professor in the Interactive Telecommunications Program at New York University; an expert on the social and economic effects of Internet technologies

Read more perspectives at Imagining the Internet

A Dose of Realism: So Where Are We Now?

The number of internet users worldwide is growing, undoubtedly. Consider the the projected exhaustion of IPv4 addresses by April, 2012 as a technological bellwether. Majority of the positive global growth forecast is buoyed by the emerging markets – China, East Europe, Middle East, Africa, Latin America etc. So how does Africa as a continent fair in this regard? To inject a sense of pragmatism, some indicators are appropriate.

According to the 2008 ITU ICT Indicators report, Africa..

  • has some 280 million total telephone subscribers, of which some 260 million (over 85%) are mobile cellular subscribers, representing the continent with the highest ratio of mobile to total telephone subscribers of any region in the world.

  • is the region with the highest mobile cellular growth rate (worldwide). Growth over the past 5 years averages almost 65% year on year.

But besides these impressive growth rates, Africa..

  • accounts for 14% of the world’s population, but for only around 7% of all fixed and mobile subscribers worldwide.

  • has some 50 million Internet users, for an Internet penetration of just 5%. Europe’s Internet penetration is 8 times higher.

  • has a broadband penetration of more than 1% in only a few countries. Broadband penetration in OECD countries exceeds 18%.

africainternetpenetration2

So clearly it’s a mixed bag, but these challenges present unique growth opportunities because there’s a lot more potential for the market.

How do we know we can meet or even best this projection? (CliffsNotes)

1. Cost effectiveness

Handset costs have plummeted, business models tailored to low income earners and rural communities e.g. low denomination top-up prepaid vouchers, enhanced service offerings e.g. mobile banking, money transfer; more powerful “pc-like” phones

2. Capacity: Africa, we have Bandwidth

At least four undersea fiber optic cable projects are underway, projected capacity upwards of 13 terrabits per second; 3G networks in deployment, projected further decline in connectivity costs

africafibrenet1

3. Innovation: Out of Necessity  – Ushahidi, FrontlineSMS

The need to connect and communicate persists; for civic awareness, in crisis situations, for entrepreneurs. Consider the work done by Ushahidi, the application FrontlineSMS, SMS polling. The talent abounds.

How can you invest?

1. In application development

To fully take advantage of this mobile phone revolution, transform your ideas into products – build apps. Kiwanja has an excellent article with nuggets of advice for those looking to build apps for the mobile phone or even looking where to start.

2. In mobile technology firms

Well-managed, enterprising firms stand to benefit a great deal. Could be service providers, content providers or their support systems. Monitor, identify, then see your broker. The smartest firms are the ones that are investing in their infrastructure now for 3G GSM a.k.a UMTS, CDMA2000+EV-DO and WiMAX.

Take-aways

  • Africa’s mobile market is growing the fastest worldwide and will continue to do so because even now penetration levels are still quite low
  • Invest your time in developing viable, useful applications for mobile phones
  • Invest your money in financially-sound, forward-thinking mobile technology firms
  • The mobile phone will be the primary device for internet connectivity in the coming years (this is already the case in Japan)
  • The question of “to-what-extent” the mobile phone will be used for internet access remains an open one
  • How realistic is the projection in Africa? Quite. Probably more than other regions of the world