The Second Mobile Revolution

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Ben Lee, Business Analyst

ben.lee@redshiftsc.com


2nd smartphone rev graph

We have experienced an exponential growth in smartphone connections over the last decade, growing from under 100 million global connections in 2007, to over 3 billion connections today. This explosive growth has changed the way we go about our day to day lives, whether that be arranging transport, sharing photos and experiences with friends, communicating with colleagues or consuming content. We are now at a stage in many developed nations where smartphone ownership is fully integrated in personal lives and enterprise workflows. An easy conclusion to draw therefore is that the shift to mobile has reached maturity. The above exhibit, driven by GSMA data, shows that smartphone connections are projected to grow by a further 77% by 2020 which would imply otherwise. Given current levels of mobile penetration in developed nations, it is perhaps unsurprising that of these additional 2.5bn connections, 90% will be in developing countries. We have entered a second mobile revolution, and this will have significant implications for both established companies and start-ups alike.

The first shift to mobile has led to mobile first apps being created such as uber, Instagram, whatsapp and tinder which have become household names. The more significant result of the shift however was for the global leading web apps to build out their mobile offering and shift their users from the web to mobile. Looking at the top 50 apps in the UK, excluding games and the aforementioned examples of leading mobile first apps, the remainder are web first companies that existed in 2007. These companies have successfully transitioned to mobile, examples are Facebook, Youtube, Spotify, gmail, ebay, twitter, bbc weather – the list goes on. In this way, the mobile revolution has perhaps been less disruptive than the original dot com revolution of the late 90s and early 2000s, in that the focus has more been on how people access applications rather than what applications they are accessing.

The next chapter however is set to be considerably more disruptive and life changing, in my eyes unlocking the true potential of the internet through addressing a number of major issues facing those living in developing nations. The above graph shows the surge in smartphone connections in developing nations over recent years which is set to continue alongside a levelling of ownership in the developed economies. The second revolution is already underway and a range of players, including mobile operators, entrepreneurs, corporates, governments, investors and NGOs have spearheaded a surge in mobile enabled products and services that seek to address real issues ranging from disaster response and healthcare to education and employment. Examples include M-Pesa, the mobile money system developed by Safaricom, Kenya’s dominant telecommunications company. The company has empowered business creation with many small and large companies relying on the platform for nearly all transactions. An example of such a company using the platform is M-Kopa, whose 1,200 strong sales team sells 4,000 solar units per week to provide African households with affordable, reliable, solar powered electricity. The potential for these companies and the opportunity for any player targeting these markets will grow in line with the exponential growth in smartphone connections over the next five years and beyond.

I’m excited to watch this second phase unfold. The first phase has allowed us to book a cab at the tab of a finger, communicate through ephemeral picture messages and even plan a date with a simple right swipe. Whilst these developments are by no means insignificant, the next phase has the potential to use the scalable power of technology to truly transform billions of lives. The pertinent question which now remains for existing multinational companies, investors, startups and aspiring entrepreneurs is how they can address this second phase. They must consider how they will transition their existing products/ services and business models or create new ones to cater to this growing market which will soon be four times the size of the smartphone ecosystem in the developed world.

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