Tuesday, January 27, 2009

Leapfrogging ICT (Information and Communication Technology)

Leapfrogging ICT

(this will be a string of blog posts on this topic to prepare leading to a presentation at the Münchener Kreis on May 12th, 2009)

In various emerging countries we are observing a tremendous growth of mobile communications. In some African regions it is already more probable to have phone coverage than electricity; Nokia's growth in the past years has been fueled by cheap, but profitable devices for underdeveloped markets; conducting banking businesses when there is no bank can be done via mobile phones. These examples and data points show how a very modern technology - the mobile phone, connected to an IT backbone - can spread swiftly in places where previous technologies have not been seen.

For developed countries an evolutionary approach to technological innovation is the norm. In the example of Information and Communication Technology (ICT) phone calls were first made over fixed phone lines, then these lines were shared with slow Internet access, later separated electrically into analog phone and digital data connections (DSL) while in parallel mobile phones became widespread. Now voice calls are often still be made on the plain old telephone system, over data lines (VOIP), or the mobile phone. Internet is accessed over DSL, cable-TV lines, satellite, wireless LAN or, more and more so, the mobile network.

For emerging countries this development can look very different. When such a mature technology like mobile communications meets an environment that is highly compatible with some of its characteristics (here: long distances, low investment capabilities), the chance that the newer technology will strive is much higher than that the older - though usually cheaper - technology will be rolled-out at first. For a communications infrastructure with Internet access this means in emerging countries: no land lines and no desktops, except in the occasional Internet-cafe. Everything is connected via the mobile phone. A web site is visited via the mobile phone. A business is conducted using automated processes leveraging the mobile phone. At least one whole generation of ICT is being leapfrogged.

This has broad implications that I will discuss in further postings. Some of these topics will be:

  • Products: Emerging Markets consumers want simple, robust and cheap devices, but not old and scaled down "stuff"
  • Business Models: New markets require new business models. When a phone call is only initiated to signal the receiver, but not to actually have a chat, then no revenue is generated directly
  • Economy: As entrepreneurs in rural areas have an infrastructure in place to establish businesses, they start a local, formal economy that can self-propell itself

Earth 3.0 will be very connected. Less with cables. More with waves.

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