Ronnie05's Blog

Asia/Africa: The Internet penetration challenge

Posted in Internet and Search by Manas Ganguly on July 1, 2009

A recent release of Internetworldstats.com detailing the world internet usage and population statistics (Q1, 2009) points to a compelling opportunity for internet marketers and portal designers in Asia and Africa. With a weight-age of 70% of total population of the world and a lower-than-mean penetration, the internet revolution is waiting to happen here in the next decade. The good thing about Africa and Asia is that barring a few countries, most of these states are supportive of efforts to increase the telecom and internet infrastructure. However, the internet conquest here will have a completely different set of rules compared to North America, Western Europe and Australia. While the big and long term opportunities lie in Asia and Africa, one must not be unmindful of Latin America/Caribbean and the Mid East (or even Eastern Europe), which are the medium term opportunity spots. While N America, W Europe and Australia are the first wave internet states, L America, Mid East and Eastern Europe will be second wave internet states and Asia/ Africa will be the third wave internet states.

Internet Users Data

The rules of the internet conquest will have to change and will require some fundamental re-thinking of re-packaging the delivery. Here are a few pointers towards the new rules of the game:

1.English got Internet, where it is today, but going forward, English may be limiting. It is not hard to associate a higher penetration of internet with the English world (North America, Western Europe and Australia).

This thus places emphasis on language of internet delivery: Mandarin, Hindi, Malaya, Tamil, Urdu, Swahili and more. English literacy will not drive economic and human development in these states. The mode of deliverance will be the local language.

2.The spread of internet in N. America, W.Europe and Australia has largely been acknowledged to proliferation of personal computing devices

Penetration in the second and third wave states, will depend on Telecom penetration and hence the mobile phone/handheld devices will become the harbingers of the internet revolution. By handhelds, I do not mean the fancy up-market smart-phones but basic $40/60 phones.

3.Existing subscription or ad based models may not be useful for these emerging markets. Revenue, Profitability and Sustainability models find the internet business space to be extremely slippery even in English speaking regions where culture, usages and habits are somewhat contiguous.

For the second and third wave states, customization to language, habits, cultures, money usage, and payment mechanisms will pose a significant challenge to marketers.

4.The first wave states browse the internet on computers, laptops, net-books, tablets and smart-phones. There is a high per capita consumption of content, ads, minutes of usage, search for information etc. High Def Content including text, audio, video form a part of the delivery mechanism.

Device limitations will influence content delivery. Content focus has to be sharp and light. One will have to judiciously use the knowledge of the local markets, mix them up smartly with business objectives and keep the content sharp and focused. Content delivery will also be a critical variable. Keeping in mind the infrastructural shortcomings, content delivered may only be uni-dimensional in nature (only voice or only text).

5. The business transactions in the first wave states are credit/debit card based and have a narrow bandwidth of services. Booking airline tickets, buying books, music and flowers, accessing paid information or content is only a privilege of the top 5-7% in the second and third wave states.

The challenge is to cater to the basic needs of the population better. The delivery medium here has to be much broader and involve more public utilities, health services, department of posts, Agriculture and Labour ministries or groups, banking groups etc. This involves a re-defining of the eco-system of delivery.

6. The problem of platforms, browsers and OSs is a vexing one even in the age of computing devices. The adaptabilities and compatibilities will be another challenge when the medium of delivery shifts to a basic phone.

Thus the delivery medium needs to be platform agnostic and will sit on a server preceding the mobile phone in the value delivery chain. For eg. a server that processes a consumer request, links up to the relevant website/portal, accesses information, downloads it on itself and then plays it back to the user after customizing the content. (Eg. The server receives a weather update, visits the local meteorological department portal, downloads data, coverts it into local language text/voice and plays it back to the user.) 

7. The purchase mechanism and purchase price is primarily on credit card/internet banking basis. This is a high security risk situation but the most prevalent one because of the purchase habits of the consumer in the first wave countries.

The Second and third wave user is a very cautious spender and frugal as well. He does not own credit cards and the payment mechanism will have to involve the Telecom Operator. Such tie-ups would be critical in bringing internet enabled access to the user. There is a space for MVNEs and MVNAs playing a meaningful role here connecting the Solution provider, Telecom operator, Finance provider, Systems provider etc.

Internet Marketers are yet to meet the real challenge of deep penetration in the Asian and African markets, and the pointers given above would be critical for building sustainable depth.

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