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Friday, 7 March 2014

Technology for the bottom of the pyramid

The so-called bottom of the pyramid - mass India - is a contradiction in terms when we talk about technology. On the one hand, in a country with less than 10% home PC penetration and less than 3% home access to internet, marketers are justifiably keeping their sights trained on television as the medium of communication.

But on the other hand, the cellphone revolution has swept across India cutting class and income barriers in a way that internet could not. Now, internet equipped phones are available to almost everyone, whether they are feature phones or smart phones, 2G or 3G enabled. According to figures shared by the Telecom minster recently, 238 million Indians have access to the internet, and unsurprisingly, 7 out of 8 access the internet on their mobile phones. Cell phone penetration, as we know, is nearly 60%, and this figure is pulled down mainly by rural India. However, the rural mobile subscriber base is steadily rising, while urban growth has begun to slow down as markets approach saturation.

We know that more than affordability, literacy levels and absence of vernacular content has for a long time acted as a barrier to internet adoption. This is one of the reasons that streaming video, TV and YouTube have taken off in a big way. They create a relevance for the internet and make the delivery of vernacular content easier. 

Initially, marketers adopted VAS (Value Added Services) which are voice or SMS-based to deliver services. Nowadays, the internet can deliver these services, more cost effectively for consumers. Recognising this, telcos have also started promoting the adoption of mobile internet services - Aircel has stood out in this respect with innovative and affordable prepaid internet packages targeted at the youth. With more than 90% of mobile users in India preferring prepaid services, affordable and accessible data recharge schemes are going to be critical.

Feature phones still constitute 70-80% of the mobile market but in Q4 2013, we reached a crucial watershed - feature phone sales declined for the first time, while smartphone sales grew three fold. The reason is obvious - now smartphone prices have dipped low enough to start cannibalising feature phones. 

So what's in store for the next two years, where technology for the bottom of the pyramid is concerned?

We can expect more internet enabled smartphones in the hands of youth at the bottom of the pyramid, driving app downloads, music, gaming and even news consumption. These young and smart users will quickly learn their way around and will act as technology enablers in their family. 

Mobile money had a rocky start in India as pioneers bore the brunt of educating consumers to overcome their barriers. Now there is actually a way to reach out to the unbanked millions in India who have genuine needs - paying their electricity bills, sending money home to their parents, having a secure place to save money - and this is an initiative that the government will back. In the USA, a country which suprisingly has 68 million unbanked consumers, mobile operators are learning from African countries like Kenya - where mobile transactions equal 60% of GDP - and  launching mobile wallets which allow users to transact person to person, at point of sales, and to pay bills. Such a model is feasible for telcos in India because of the vast distribution and the concept of 'recharges' being familiar to consumers. It can even give them an extra benefit of reducing subscriber churn. Mobile wallet services could build consumer loyalty.

The mayor of San Fransisco recently launched a mobile app for the homeless called Link-SF. Developed in partnership with a non-profit and a tech startup, the app (which is actually a mobile optimised website accessible from desktop or mobile) offers information on job opportunities, access to free medical care, shelters, food etc. While the homeless in India may not have access to mobile phones yet, you can expect the bottom of the pyramid to be keen on news about jobs, giveaways and government notifications.

E-governance is an area where online access will benefit the bottom of the pyramid hugely. The tragedy of inefficiency in our country is that day workers crowd government offices to 'get their work done' foresaking a days leave or pay, only to be told to come back another day. Ability to process applications, access application status and download documents from online will be a huge help to users. We are already entitled to show our train and air tickets on mobile screens. Will the day come when our ID information will also be accepted in this form at government offices? 

For the bottom of the pyramid in India, the betting is on mobile, and early signs show that the bets are going to pay off.

Source : Fortune Tech, CNN Money