Vodafone: Mobile Devices for Emerging Markets

Over the weekend I discovered an online magazine called Vodafone Receiver. This publication recently released an issue focused on emerging markets that features several interesting perspectives about design and innovation.

Similar to Nokia, Vodafone positions emerging markets as places that offer business opportunities for local and global companies; that have large numbers of people with an entrepreneurial spirit; and where companies can make a positive impact on the development of local communities. The article Poor Markets Make Good Cents lays out this perspective with some interesting supporting evidence.

Phones, Finance and Innovation
First and foremost, during the past couple of years mobile phone adoption rates have skyrocketed in emerging markets throughout Asia, Africa and Latin America. A large demand for mobile technology exists in emerging markets. In many of these countries the landline infrastructure was never adequate to support poor communities. Therefore, this is the first time that many people have had the opportunity to own a phone of any type. The same goes for the computing functionality. A mobile phone tends to be the first information device that these people have experienced since computers are out of reach due to their much higher price tags.

On the supply side two important trends are driving the financing of information and communication technologies in emerging markets. First, the appearance of new institutions dedicated to linking financial markets to social entrepreneurs and ventures that use market forces to drive social change. Secondly, the fact that traditional venture capitalists, who had previously written off these markets, are taking a fresh look at them. These trends help create opportunities for local and foreign entrepreneurs to promote innovations that make a positive impact on local markets.

This article also features interesting examples of mobile services that are positively impacting communities in emerging markets. These examples highlight successful services that were developed to address the specific needs and context of emerging market residents.

• In 2007, Reuters launched a service called Market Light that provides weather and market information to farmers in India. This information enables farmers to better tend to their crops and to negotiate the fair prices with middlemen.
• In Bangladesh, a service called CellBazar provides an SMS-based craigslist of sorts. It includes listings for appliances, cars, apartments and even live animals. This service, a spin-off of MIT's Program in Developmental Entrepreneurship, is helping facilitate commerce for individuals and business, and providing both buyers and sellers with access to a much larger marketplace.

The second article of note from this issue of Receiver Magazine is titled Mobile Communication in the Developing World – A Design Challenge. It focuses on human factor insights to help designers create appropriate mobile devices for emerging markets.

Design of Mobile Communications
Development of mobile devices and services has always been, and continues to be, driven primarily by the needs of customers from advanced countries. “Mobile interface design has been aimed at literate, numerate users who follow text-based menus, sometimes read instruction books and have built mental models for how mobiles work based on previous technologies.”

People in emerging markets have significantly different needs, education background and social-cultural perspectives. Most existing mobile interfaces are not appropriate for these markets because they don’t adequately support users who have problems reading and writing, and many native languages. Mobile phones tend to feature functionality that is not relevant for these markets and lacks applications that support specific local needs. So let’s take a look at some important considerations for designing mobile products for the developing world.

The literacy rate is the an important design consideration that is specific to emerging markets. “There are 799 million illiterate people in the world.” Low literacy users are able to make and receive calls but are not able to read text-based menus or take advantage of text-based communication and organization tools. Features such as phone books and asynchronous messaging need to be redesigned for this population. Recently a carrier in India launched a low-cost mobile phone with a voice-based interface and no screen. Called Spice, this device also features a Braille keypad for blind users.

Gaining a deep understanding of social and cultural dynamics is the next important consideration. It is crucial for designers to be able to envision and create relevant products and services. The two services mentioned earlier, and phone banking services are examples of products that were designed with an understanding of local communities and context. They address relevant needs and leverage technologies and interfaces that that are appropriate.

Support for native languages is another consideration that is important, especially in Asia and Africa. Even literate users are unable to read menus written in a language they don’t know how to speak. Therefore, in order for mobile devices to reach their potential handset makers will need to consider development of devices with design hardware and software design features to support additional native languages.

The last, and most obvious, consideration that needs to be kept top-of-mind throughout the design and development process is affordability.

Nokia: Mobile Products for Emerging Markets

During my exploration of design for emerging markets I came across many articles associated to Nokia. These pieces were either written by researchers who had worked for Nokia, or written about projects supported by Nokia. It is obvious that Nokia is one of the technology companies that is most committed to developing solutions for the emerging market. Of course this is not an altruistic-only strategy as great riches await companies that can design products and services that profitably expand the reach of technology to poor communities.

Here is an overview of several interesting and innovative initiatives from Nokia that are related to the design of products and services for emerging market users, and supporting the spread of mobile technology in developing areas.

Nokia Life Tools
“Life Tools” is the first initiative from Nokia that piqued my interest. I learned about it through a post on PSFK in early November. This suite of tools will provide emerging market phone users with access to agriculture and education-related services, helping to connect and ‘empower’ them. Entertainment services will also be available. Soon, many basic Nokia handsets will come with these capabilities pre-loaded, assuming you live in a market where these services are supported. [view an overview about these services from the Nokia website]

This suite of services was designed on an SMS platform to overcome the technological challenges present in rural areas such as the absence of access to the mobile web. This is crucial considering that data services are not available in many of these areas. This solution also enables users to avoid the complexity and high-costs associated to billing of data based services.

It is interesting to see Nokia entering more fully into the services space with this new offering. This is a direction that we have seen some companies pursue on the high-end of the market. For example Apple with its extensive suite of services has for a long time stood for empowerment and freedom. It is interesting to see Nokia leveraging a similar strategy of empowerment that is appropriate for people from the opposite end of the economic continuum. The center of their digital universe is a cell phone rather than a MacBook, iPhone or Blackberry.

According to Ken Banks this initiative from Nokia is “a move that mirrors the company's "developed world" strategy -- a move from out-and-out hardware supplier to one of a more inclusive services-based outfit. As if (very) successfully designing and building low-cost handsets for emerging markets wasn't enough, Nokia will now start offering emerging-market specific data services through its low-cost phones.” [read the full article here]


Nokia Siemens Networks Village Connection
The Networks Village Connection is another interesting and innovative product from Nokia that is designed for emerging markets. This technology was developed to enable mobile networks to extend into rural areas beyond the reach of conventional networks. It uses modular and compact GSM Access Points that can be owned and managed by a local entrepreneur or by an existing mobile provider. [read more about this technology on the Nokia website]

Expanding Horizons
Nokia even publishes a magazine related to opportunities associated to consumer telecommunications in emerging markets, this magazine is called Expanding Horizons. Here is an overview about this magazine from its own site: "Expanding Horizons is a quarterly publication aimed at ICT decision-makers in the private and public sectors. It explores the socio-economic benefits that mobile technology offers as well as best practices from around the world in order to encourage affordable mobile communications and bring Internet to the next billion consumers. It also shows how to create a favorable environment for market growth." [read it online here]

More than anything this magazine demonstrates that Nokia’s focus on emerging markets is driven by business considerations. This is expected and I don’t think it is a bad thing. Nokia is helping to increase the reach of communication technology to a whole new group of people who were previously ignored due to profitability considerations. If they continue to design services that empower people, like Life Tools, then this relationship should benefit both parties: Nokia and other telecom companies, and more importantly, people from emerging markets.

The February issue from this custom publication features an interesting article about bringing the internet to the next billion users. This article demonstrates that Nokia has a solid understanding of business opportunities, economic challenges and social and cultural nuances that impact the design and adoption of technology in emerging markets. [read full article]

In this article they highlight two important aspects distinctions in the way that the internet will be adopted by the next billion people. These differences focus are related to “how” and “why” technology is adopted; both factors that have a large impact on design of appropriate services:

• Internet adoption will be driven via the mobile handset, as opposed to the desktop or laptop computer. “The sheer cost-effectiveness and convenience of mobile technologies will prove decisive. Mobile devices are pervasive, with penetration growing at a rapid pace.”
• The specific needs of people in emerging market will drive creation of new services, not available in advanced markets. “The internet for the next billion consumers will be very different to the services prevalent in advanced markets… The mass of consumers in emerging markets lives in semi-urban and rural areas. Villages are far apart. A trip to the city is a big event in many people’s lives. We need to understand that their context is highly local.”

Closing the Digital Divide
Ken Banks brought up an interesting dilemma related to these prophesies of internet adoption in emerging markets from Nokia and other handset makers. Ken questions the way these companies talk about the mobile phone helping close the digital divide. He points out that mobile phones are relatively cheap devices, provide instant voice communications and SMS functionality, and offer the potential to provide access to the internet. However, many of these functionalities are not available in the handsets available to low-income users in emerging markets. Internet specifically tends to not be accessible on the low-cost phones sold in developing nations.

This issue is caused by the fact that “many people make a huge assumption about the technologies available to users in developing countries.” According to Ken “if we’re serious about using mobile to help close the digital divide, how about diverting international development funding towards providing a subsidised, fully-internet ready handset for developing markets?” Interesting question indeed. [read his full article here]

Design and Adoption of Technology for Emerging Markets

For the past few months I have been thinking about the design and adoption of technologies by people in emerging markets and other under-served communities (a.k.a. Base of Pyramid, "BoP", markets). During this period I've come across several interesting ideas related to this topic. It is clear that many challenges and possibilities have been, and are being, created by technology's continued expansion into the lives of people who just a few years ago were "off the radar".

My interest lies in exploring the common features shared by products and services that have been successful in these markets, and understanding how the process of design can evolve to support innovation focused on creating products and services that are appropriate for these communities.

Perspectives from Emerging Markets
People in emerging markets have particular worldviews that are colored by the specific context in which they live. I am implying not only that numerous differences exist between developed and emerging markets, but also that an equal number of differences can be found between emerging markets alone.

Here I will focus primarily on key characteristics that differentiate most emerging markets from developed ones. First and foremost, consumers from emerging markets tend to be less confident when it comes to making purchases due to their tighter economic situation. According recent article from Interactions magazine written by a team from Human Factors International, consumers in these markets "are more cautious than their counterparts in the West; they would rather pay more for quality than risk product failure". Affordability is important to them but they are not willing to accept products that offer low-quality compromises as "every act of discretionary consumption is an act of sacrificing something essential." [read full article]

On Core77, interesting insights are offered by Niti Bhan about the behavior of people from low-income communities in emerging markets. "Buying behavior and decision-making criteria imply that those in the lower income strata—particularly in the developing world—are not 'consumers' but in fact extremely careful 'money managers' for whom an expense is often an investment whose return must be maximized... The BoP customer has not been bombarded by mainstream consumer culture and all the trappings of 'consumerism' that come with it." [read full article]

This is not to say that the choices of these consumers are not influenced by emotion - emotion plays an important part in determining the "return" that will be delivered from a given purchase. However, the role of emotion is somewhat tempered by the fact that most of their spending choices are focused primarily on meeting basic human needs such as clothing, food, shelter.

When approaching emerging markets most companies take the approach that the same basic value proposition can serve across all markets since people have the same basic needs. Pricing and cosmetics are often considered the only elements that truly need to change. This approach demonstrates a lack of understanding regarding the extent to which the needs of these audiences differ from more affluent markets. Santosh Desai sums up the point nicely: "the need is to develop products that are appropriate rather than merely cheap."

Adoption of Products and Services in Emerging Markets
There are many factors that influence a product's rate of adoption. According to the article from Interaction magazine, these factors include "infrastructure, culture, language and dialect, purchasing power, literacy, urbanism, and terain." Recently on PSFK Allison Mooney shared her perspective about the three fundamental forces that govern the adoption of new services and products. Though her post focused exclusively on the adoption of a clunky service in South East Asian emerging markets, these hold true for all markets. So here are the three fundamentals [read full article on PSFK]:

1. "Discovery: Is there an easy and reliable way for people to learn about it?" (Does their community use it? Can their teenager or friend explain it them? Is it something that people will feel comfortable sharing? If a device is required, is such a device common and easy to acquire and use?)
2. "Utility: Does it enable them to do something they need or want to do?" (Does it fulfill a real need or is it useful? The need can be practical, e.g. banking, entertainment, e.g. games, or something else - but it must offer some utility.)
3. "Motivation: How badly do they need or want to do this?" (How does the utility offered by this product compare to difficult required to learn how to use it, or the costs associated to its use - monetary, cultural and social costs? For hard to use or expensive products and services a lot of motivation is needed.)
   

To examine the value of this framework let's do a high-level analysis of successful products and services from emerging markets. First let's examine mobile-enabled financial services that have quickly gained adoption. In many developing markets, mobile phones have emerged as the communication standard because in large part due to the scarcity and expense of land lines. However. the role that these devices play has expanded far beyond calling; in the Phillipines and India they have evolved into important financial instruments and are often referred to as "wallet phones".

In these countries banks and phone companies have begun to support a wide range of phone-based financial transactions in ways not commonly available in the West. Services offered include checking balances, money transfers and even e-cash capabilities. According to the previously mentioned article from Interactions magazine, a "currency-free future is dawning in these 'developing countries... mobile phone providers like the Philippines' Globe Telecom have become a kind of shadow banking system."

In Mumbai, a start-up called Eko partnered with a local bank to offer these same types of services. Users carry out transactions using USSD messages that feature a complicated syntax consisting of long sequences of numbers, *'s and #'s (thanks to Anupam Varghese for pointing out that this service is provided using USSD as opposed to SMS). USSD enables a transaction to be just 'dialed' as if it were just a longish phone number. Here is an example of a transfer request for 100 rupees: "*543*190123456789*100*1133740274#" (I suspect the service from the Philippines has a similar interface). Despite the seeming "clunkiness" of the user interaciton these services have achieved wide adoption.

So how does it line up against the fundamentals we laid out above? To drive discovery of these services, the bank in Mumbai set-up a network of neighborhood service representatives that promote the service, and sign up and assist customers. The telecom company from Philippines is able to drive discovery via marketing and their existing network of representatives. From a utility perspective boths services are obviously useful, enabling mobile phone users to easily access money. Though the interface seems "clunky" it is easy to use because it leverages a known behavior (dialing numbers), a widely used feature (SMS) of a commonly available technology (cell phones). In Mumbai, neighborhood service reps also provide support so that it’s not necessary for people to know how to do everything themselves.

Design of Products and Services in Emerging Markets
I believe that good design delivers some form of usability, coupled with a pleasurable and meaningful experience. This perspective is based on the consumerist cultural and social context in which I live, my privileged economic situation, and my passion for design and aesthetics. In order to create products that are appropriate for emerging markets designers need be aware of cultural and social blind spots. Understanding the specific cultural, economic and social context is key to designing a successful product. Ken Banks of kiwanja.net recently wrote about what causes many products to fail: "lack of basic reality-checking and a tendency to make major assumptions are lead culprits, yet they are relatively easy to avoid."

The latest issue of Interaction magazine featured a study into the adoption of a mobile service. This piece highlights the importance of leveraging deep cultural and social understandings when designing services. The focus of this study was a project to leverage mobile phones to enhance education for school-age kids. In order to create a solution that was adopted by students the design and research team had to go through several prototypes. During this process they unearthed important social and cultural behaviors and beliefs that guided updates in the design of the user interactions and the way in which the education was developed and delivered. [read full article]

Niti Bhal outlined a human-centered framework for the creation of successful products and businesses for BoP markets. This framework, called 5-D, is comprised of 5 elements: development, design, distribution, demand, dignity. The first four elements roughly align to phases of a process, whereas the final element refers to the philosophy of the approach. Below is a brief outline of these 5 elements. [read the original post]

Development refers to the identification of opportunities for social or economic development that will serve as the basis for the design. Design refers to the creation of a product or service in response to the opportunity for development. Distribution refers to need for ability to make a product or service readily available for customers. Demand refers to the development of an appropriate value proposition that can communicate the benefits of your product or service. Lastly, Dignity refers to the need to create products and services that respect economic, social and cultural needs and with an intent to create a positive impact.