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Could the mobile phone market be stagnating? (The next billion is gonna be a stretch.)


The first billion was easy. So were the next few. But the next is going to take some doing, it seems.

That is the outlook for the cellphone industry, which has quickly grown from a nimble startup and, today, has nearly five billion users. Still, the industry resembles a frustrated teen in a hurry for further growth.

Ovum’s independent telecoms analyst Shiv Putcha says the next billion mobile connections will mainly come from “remote rural areas in emerging markets, with most users in these areas willing to invest in the right device and service combination.”

Device is key to further growth

However, the next base of users demands a “distinct hierarchy of expectations” that phonemakers and service providers may not be able to immediately meet.

Users want “durability, problem-solving features, versatility and connectivity,” says Putcha, lead author of the report titled, “Strategies for the Next Billion: Devices.”

“However, while connectivity is highly desirable, it is generally unaffordable, challenging to use and impractical for most users in rural and remote communities,” he adds.

The problem with the next billion derives from many factors. Potential users in remote areas and villages typically don’t have access to basic infrastructure or utilities. Consequently, even though they are aware of the transformative potential of mobile phones and are eager to invest in a convenient device.

It is almost clear that the wannabe users will primarily buy entry-level and feature phones. Yet they have high expectations of the device, especially when it comes to device charging solutions. This is because, even though mobile phone battery life has improved considerably in the last few years, access to electricity in remote and rural areas has not. So, users need to factor in the cost of recharging devices into their total cost of ownership or value.

“The business of charging devices is progressing, and several charging solutions are already available from device vendors, NGOs, and startups. These can be standalone accessories designed exclusively for mobile phones, or appliances that provide electricity for multiple functions such as lighting as well as charging a mobile phone,” says Putcha.

Ovum’s report also noted the sharply rising popularity of smartphones among existing cellphone, even in emerging markets. However, Ovum doesn’t expect average selling prices to fall quickly enough for smartphones to be a viable option for the majority of users in the next billion.