INSIGHTS AND

MASTERCLASSES

THE NEXT BILLION

MOBILE USERS

Which apps will matter?

CONTENTS

The next billion

mobile users
Which apps will matter?

The next billion: a massive opportunity

Hungry for apps
Apps that matter to the next billion
What are the next steps for developers?

03
04
05
11

THE NEXT
BILLION:
A MASSIVE
OPPORTUNITY
The mobile app markets in
industrialized countries are
becoming saturated, offering an
overwhelming array of apps and
services to users. As a result, the
opportunity to tap into these
markets is becoming increasingly
limited. So where can mobile
app developers find the next
big opportunity? The answer is
straightforward: the next billion
users in the emerging markets of
South and Central America, AsiaPacific and Africa.

The next
billion:
a definition
The next billion concerns
users in emerging or
developing markets. In this
report, we refer to the next
billion as the next one billion
people who will access the
internet for the first time
via their mobile1.

In these regions, people are

largely moving from having
no internet access at all to
accessing the web via the
mobile platform. The number of
mobile connections worldwide is
expected to increase by 1.6bn to
8.2bn in 2017. Of these, 61% will
be from the Asia-Pacific region
China, India and Indonesia will
be the driving forces behind this.
While this region will have the
most new connections, Africa will
see the steepest growth, with a
Compound Annual Growth Rate
(CAGR) of 6.5% between 2013
and 20162. In the Americas, Brazil
and Mexico have proved to be two
of the fastest growing markets in
terms of app revenue3.

China and India are often the

first countries we think of when
talking about the next billion.
And with good reason they
have a combined population of
more than 2.6bn4 with about 2bn
mobile phones5. However, the
next billion extend well beyond
China or India, including:

Brazil, Russia, India and China

Mexico, Indonesia, South Korea

and Turkey

Colombia, Indonesia, Vietnam,

Egypt, Turkey and South Africa

1. Ovum The Next Billion: Consumer

Services (2012)
2. Ovum Global Mobile Revenues To Reach
$1,084bn In 2016 (2012)
3. Distimo Emerging App Markets: Russia,
Brazil, Mexico and Turkey (2012)
4. Geohive Global Population Statistics
(2013)
5. Wikipedia List of Countries By Number
Of Mobile Phones In Use (2013)

03 The next billion mobile users

Hungry for apps

The next billion are hungry for
mobile apps that can improve
their daily lives. YouGov6 has
analyzed how many people plan
to use more apps in future, and
which countries they come from:

INDIA

The willingness to pay for apps

is also growing. Research7 shows
that 60% of users in Brazil,
India and Nigeria are prepared
to spend up to $5 every month
on mobile apps. In Brazil, one
of the fastest growing mobile
markets, 14% of users would
pay $10 or above every month.

The sale of smart devices in

emerging markets is also likely
to be critical to the success of
apps in these regions8. According
to IDC, developing markets are
expected to account for 64.8%
of all smartphones shipped
during 2013, up from 43.1% in
2010. As a result, the average
smartphone selling price is
falling from $443 in 2011 and
$407 in 2012 to $327 in 2013.

CHINA

App development for the next billion will go

hand in hand with the increased number of
smartphones bought by these customers.
INDONESIA Key areas will be communication (including
social networking), information (search and
education apps), business and finance, as well
as productivity and usage tracking apps.

MEXICO

Mana Vazhagan, Clerysys

All these factors mean that the next billion are impossible to ignore.

BRAZIL

5.5%

50%

TURKEY

GDP growth in emerging markets

(5.5%) is outstripping the world
overall (3.5%)9.

RUSSIA

64.8% 60%
Developing markets are expected
to account for 64.8% of all
smartphones shipped during
2013, up from 43.1% in 2010.

More than 50% of users in Brazil,

Mexico, Indonesia, China and
India are planning to use more
apps in future.

60% of users in Brazil, India and

Nigeria are prepared to spend
up to $5 every month on mobile
apps.

6. YouGov and Upstream Emerging

Markets Mobile Attitude Report (2013)
7. YouGov and Upstream Emerging
Markets Mobile Attitude Report (2013)
8. IDC IDC Predicts Smartphones Sales
In 2013 To Grow By 32.7% Over 2012
(2013)
9. IMF GDP Growth By Region (2013)

The next billion mobile users 04

Apps that matter

to the next billion

48.4%

These regions are very diverse,

and so are the needs of the
next generation of mobile users
within them. However, there are
two prominent groups on which
developers should focus:

Feature phone users:

They probably live in rural areas

or in urban outskirts with no
or unreliable internet access.
Electricity consumption may be
restricted, so charging a high-end
smartphone will be challenging
(let alone paying for one). They
are most likely to be using feature
phones and need apps that will
help them organise their daily
lives more efficiently.

53%

64%

67%

% of first-time smartphone owners within the smartphone population

69%

They are the new generation

fuelling smartphone shipments
globally. They are looking for
good value smartphones and
apps that can help them make the
most of their changing lifestyle,
driving their productivity,
efficiency and education, but
also helping them to socialise and
entertain.

Smartphones are growing in emerging markets for most, the

smartphone they currently own is their first11:

70%

New-to-smartphone
users:

80%

02

70%

01

In 2013, global smartphone

shipments overtook
those of feature phones
for the first time, fuelled
by increasing demand in
emerging markets. But a
lot are still being sold. In Q1
2013, shipments of feature
phones represented 48.4%
of total mobile shipments10.

10. IDC More Smartphones Were Shipped

in Q1 2013 Than Feature Phones, An
Industry First According to IDC (2013)
11. Think with Google Our Mobile Planet
(2011,2012)

05 The next billion mobile users

An app that matters:

12

No. of apps used in

the last 30 days

12

13

15

15
8

Creating an app that matters to

these users is therefore critical
to reaching the next billion. Only
apps that truly matter are likely
to stay on a users device long
enough to allow developers
to make money from them.

No. of apps currently

on smartphone

19

The hunger for apps in

emerging markets is clear, but
research shows that users
tend to have a higher number
of apps on their phone than
the ones they actually use.

PROVIDES
VALUE

SOLVES A
PROBLEM IN
A NEW AND
COMPELLING
WAY

Apps that matter provide deep

value for users. They range
from functional to emotional,
adding essential services to
improve peoples lives.

IS USED
REGULARLY

14

The apps that make them tick,

and the apps that last longest,
will be different, but will have
a common thread: they will
matter to their changing needs,
lifestyles and aspirations.

IS LOVED
AND TALKED
ABOUT

18

Even in the same country, the two

groups will have different needs,
lifestyles and priorities. They
will also have different attitudes
and behaviors regarding mobile
phones and apps. As a result
they will have different apps that
matter to them.

12. Think with Google Our Mobile Planet (2012)

The next billion mobile users 06

So, which apps really matter

to the next billion?

01

An analysis of the top free

and paid-for apps at the time
of writing13, combined with
data on user preferences,
shows some clear trends.
Excluding games, apps built
around messaging, location,
education, business/
productivity, and health
services are clearly in demand.

The young urban generations in

emerging markets are driving the
growth of instant messaging (IM)
apps. WhatsApp is among the
most downloaded apps in India,
Turkey, Brazil and Russia, while
WeChat tops the list in India and
China. The ability to easily include
videos and photos in the message
and to use the increasing
Wi-Fi penetration across these
countries helps the young urban
generation stay connected with
friends and family.

Messaging

Some key global players, like

WhatsApp, have emerged,
but the instant messaging
space is highly competitive
and local solutions are also
gaining ground. KakaoTalk for
instance is particularly popular
in Korea while Hike is challenging
WhatsApp in India. Hike already
has 5 million registered users14
and is planning to challenge more

At the end of it
all, it will all revolve
around social
networking apps.
At the moment this
trend is restricted to
urban areas, but with
increasing and better
internet access this
trend will escalate.
Susan Oguya, M-Farm

13. App Annie (June 2013)

14. Tech Crunch How Hike, Indias Fast
Growing Mobile Messaging App, Is
Banking On SMS & Local Diversity To
Beat The Big Boys (2013)

07 The next billion mobile users

established IM players through

a better understanding of the
complexities of the Indian market
including variations in device
type, network coverage and
operators. The company plans to
enable the exchange of messages
via a combination of data and
SMS so people in India can use the
service even where there is no
data coverage. This, in addition
to avoiding disruption to the
service, is likely to deliver a strong
and growing user base to drive
network effects further.
Instant messaging, social
networking and VoIP services
in emerging markets represent
growing opportunities
for developers to play an
instrumental role. Developers
can improve their chances of
success by making sure their
app seamlessly integrates with
the most popular IM and social
networking services in each
country.

VisiKard
VisiKard is a free social
networking app that lets the
user connect with people,
places and events around
them. These are represented
by virtual Kards which can be
traded in a Kard Exchange
to create a mobile social
community.
Users can customize their
Kard, upload photos, videos
and other information and
connect with local events,
businesses and other places
of interest. Taking into
account increased locationbased activity, users
interests and hobbies, the
app can generate relevant
rewards and special offers.
VisiKard recognized a growing
appetite within the next
generation of mobile users
for new and innovative social
media apps. This app was
designed to take conventional
social networking a step
further by allowing users
to share interests, favorite
places and brands. It also
gave small businesses the
chance to increase their
awareness by notifying
customers when they pass by
their store and can be added
to their network.

Apart from the

basic networking
features for
individual users,
it can also help
businesses expose
their identity to
more customers
through their
Kard connecting
to the users.
Abhishek Kumar,
VisiKard

This app combines benefits for both the

individual and businesses and thats what
makes it unique.
Abhishek Kumar, VisiKard

02

Location

Demand for location-based

apps, often focusing on traffic
information, is also strong;
in India in particular, where
49% of mobile phone owners
express interest in travel-related
information15, but also in Brazil,
where Waze is one of the most
downloaded apps.
In developed markets, successful
developers have used location
technology not just to create new
apps but also to create whole new
businesses like TaskRabbit, Hailo
and Airbnb. Similar opportunities
exist in emerging markets with
location technology becoming
a key enabler of complete new
services. For example, Mila allows
users to access a network of local
service providers which can help
them complete a variety of tasks
from home repairs to organizing
a party. The app provides a
marketplace for users and service
providers to meet while creating
new job opportunities. The Mila
service and app are placing a
strong focus on the next billion by
being made available not only in
Europe, but also in Shanghai and
Jakarta.

15. YouGov and Upstream Emerging Markets

Mobile Attitude Report (2013)

The next billion mobile users 08

03

Education

As the average level of education

in emerging markets increases,
the demand for education and
learning-based mobile apps and
services grows. These types of
apps are demanded by 34% of
users in Brazil, 50% in India and
74% in Nigeria for instance16.
In China, at the time of writing,
the LearnEnglish app is one of
the top five grossing apps for
Windows Phone. As literacy and
education levels improve, young
users are increasingly recognizing
the connection between formal
education and better work
opportunities. Careers and
ambitions are becoming key
focus areas while competition
for getting into better schools
increases, driving the demand for
better mobile learning tools.
PaGaLGuY, Indias largest MBA
forum has created the worlds
first crowd-sourced business
school rankings. To meet the
demands of its increasingly
mobile users, the service is now
also available as a Windows Phone
app. In China, the educational
apps market is expected to hit
US$320bn by 201517 and goes
far beyond high school and
university resources to include
apps targeting small children and
their families.

04

Productivity and utility

apps

Demand for business apps is also

growing among the young urban
professionals of developing
countries. To work efficiently and
on the go, they need to be able to
view and edit documents using
Word and PowerPoint readers,
organize meetings using contacts
and calendar tools as well as
access the internet. 80% of
Nigerians are demanding access
to these apps and content18, while
demand is also high in Brazil and
China. In China, Evernote has
already reached 4 million users19
and in 2012 it launched a service
specific to the Chinese market,
Yinxiang Biji, on a dedicated
platform.
But the meaning of productivity
for urban and rural users can
vary significantly. While young
urbanites may be interested in
apps that allow them to access
and edit content on the go, apps
built around rural and agricultural
services still matter heavily
to a significant proportion of
feature phone users. Apps in this
category are very much targeted
at rural areas and should be made
to run on basic mobile phones.
They can provide farmers with
information on market prices
as well as the weather and offer
tools to keep track of their
finances.

Developers must understand the difficulties

we face around education. Many classes
are sharing one textbook between 30
students, not in a classroom but under a
tree. The apps that are likely to succeed are
those that educate and entertain at the
same time. The demand for education is
definitely there, while the entertainment
component is required to ensure stickiness.
William Chui, Binu

09 The next billion mobile users

In the near future

people will be
asking for apps that
help them in their
day-to-day lives.
Theyll want apps
for finance, banking
and scheduling.
Kunal Ashar, NorthStar

CHINAS
EDUCATIONAL
APPS MARKET
IS EXPECTED
TO HIT

$320BN
BY 2015

16. YouGov and Upstream Emerging

Markets Mobile Attitude Report (2013)
17. WantChinaTimes Chinese Investors
Jump On The Educational Apps
Bandwagon (2013)
18. YouGov and Upstream Emerging
Markets Mobile Attitude Report (2013)
19. TechCrunch Evernote, Now With 4M
Users In China, Aims For Enterprises With
Yinxiang Biji Business (2013)

M-Farm
M-Farm began in 2010 as
a market tool for farmers.
The founders entered a
competition for web and
mobile-based start-ups
and were awarded capital
investment of 10,000.
The SMS-based app lets
farmers access information
about the retail price of their
produce, buy farm products
directly from manufacturers
and find buyers for their
own products. This gives
farmers more bargaining
power, helping them to
avoid unfavorable deals with
middlemen and connect
with other farmers to sell
collectively.
The company recognized the
need for farmers to increase
their productivity as well
as profits. By offering them
more information and access
to data on basic phones, they
made sure their app would
have a meaningful impact,
empowering a large group of
people to improve their lives.

05

As a developer
you should focus
on developing apps
that bring economic
benefit to your
users and does not
just put money in
your own pocket.
Susan Oguya, M-Farm

You have to be absolutely clear about

your target group. 70% of Kenyas
population lives in rural areas with
restricted access to internet and electricity.
So you have to find effective ways through
which they can access information.
Susan Oguya, M-Farm

20. PWC Emerging Market Trailblazers (2012)

Health

Demand for health-related

apps and content is a persistent
theme in emerging markets
and is considered key by 40%
of mobile users in India, 39% in
Brazil and 56% in Nigeria. The lack
of infrastructure, combined with
increasing mobile penetration is
actually leading to a higher usage
of m-health services in emerging
markets than in developing
ones20.
In rural areas, health apps do not
merely save patients a longdistance journey to the hospital
when it may not be needed, they
also provide an information
channel that may otherwise not
be available. In societies where
women, for example, cannot
openly talk about sensitive
topics such as contraception,
they can use mobile health apps
as an education forum and ask
questions anonymously. Apps
that allow better communication
with healthcare professionals,
provide health-related
information, or that allow
consultation via mobile phone
are particularly welcomed. On
the other hand, in urban settings,
mobile-health solutions are more
focused on allowing users to
access relevant information while
saving time, or on staying fit and
improving overall wellbeing.

The next billion mobile users 10

What are the next

steps for developers?
For developers hoping to reach out to the next
billion, here are a few points to bear in mind:

01

02

More than just smartphone

While the focus for apps in the developed world is on

smartphones, in emerging markets, feature phones
are equally relevant. Developers therefore need to
make a decision about the platform for which they
will develop and which will be most appropriate for
their app and their target market. The opportunities
for the simplest feature phone can be just as great
as those for the most advanced smartphone.

Explore different markets and decide

which ones to prioritize

The market potential index is one way of prioritizing

which markets developers should aim for.

02
03
04
05
06
07
08
09
10

S KOREA

ISRAEL

CZECH REP

POLAND

TURKEY

INDIA

CHILE

HUNGARY

MALAYSIA

Market
Consumption
Capacity

Commercial
Infrastructure

Economic
Freedom

Market
Receptivity

Country
Risk

Market
Growth Rate

Market
Size

100 100
CHINA

Market
Intensity

01

Country

Market
Potential
Index Rank

Market Potential Index21

70

39

54

40

56 100

87

82

18

65

39

65

79

70

78

22

66

11

45

95

88

88

16

71

33

55

82

72

81

63

73

65

79

52

53

49

37

74

28

78

22

52

42

40

48

35

60 100

15

79

58

88

77

78

20

37

60

29

58

63

52

21

61

The markets shown on the left

are 10 of the top 20 Emerging
Markets as identified by The
Economist22 and are ranked
in order of their potential.
Developers can use the table to
prioritize which markets can be
entered, as well as to determine
why each market represents
an opportunity. The other
figures largely demonstrate
the economic situation in each
country.
But while a particular country
may rank highly in terms of overall
potential, it does not necessarily
follow that trade in that
country will be easy. Therefore,
developers should look a little
more deeply into the different
dimensions of each. For example,
market receptivity is a measure
of per capita imports from the
US and trade as a percentage of
GDP. So, while Poland is number
five overall in this list, it has a
relatively low score of eight for
market receptivity. Therefore,
developers should interpret this
as a good opportunity overall, but
one that may be a little tougher
to crack if theyre based outside
the country.
21. Global Edge Market Potential Index (MPI)
for Emerging Markets - 2013 (2013)
22. The Economist World GDP (2013)

11 The next billion mobile users

03

Think about the

users needs

The challenges faced by the next

billion are very different from
those faced by users in developed
markets. Apps therefore need
to solve their problems, not the
problems that occur in Europe or
the US. Developers need to take
into account the infrastructure
challenges, the professions that
are most popular, the climate
and the aspirations of the people
in their target market. The
difference between the types of
users is substantial and those at
the top of society will have needs
that vary strongly from those
living in the countryside and have
crops to take care of.

Once a developer has defined

which countries to prioritize,
researching the needs and
pain-points of users in these
markets is critical to identifying
the app opportunities with
the best chance of success. As
many developers cannot invest
in detailed research, there
are other ways to build a good
understanding of the target user.
Secondary research using trend
and insight reports published on
the internet by third parties is
becoming more commonplace
as the commercial relevance of
these markets grows. Developers
should also take any opportunity
to talk to experts who work in
these markets or simply to people
living there. They can highlight
some of the more pressing
challenges and suggest ideas for
apps and services that will matter
to them.

The next billion mobile users 12

04

Be aware of usage
patterns

Developers need to keep in

mind that users will have varying
access to many of the services
and utilities that are taken for
granted in developed countries.
For instance, mobile broadband
and Wi-Fi are often essential
for apps to work smoothly. But
what happens when there is no
electricity to power the Wi-Fi
router or the telecoms mast? In
some cases, users may not even
have regular access to electricity
to charge their devices. A powerhungry app will struggle where
electricity access is scarce.
Developers should therefore
not assume that users will be
charging their phones every
night as most users in developed
markets do. Demonstrating that
these types of pain-points have
been taken into consideration
will certainly lead to improved
take-up.
The World Bank Database on
Infrastructure23 provides a useful
source for developers looking to
identify specific country trends
across variables including electric
power consumption, fixed
broadband subscribers, internet
users, mobile subscriptions and
number of vehicles. More data on
country-specific ICT (Information
and Communications Technology)
infrastructure can be found on
the website of the International
Telecommunications Union
(ITU)24, the specialized agency
of the United Nations for
information and communications
technologies. This includes
reports on the ICT Development
Index (IDI), which combines
indicators across access, use and
skills to compare developments in
ICT across countries.

05

Consider user
preferences

While users in developing markets

may be constrained by many
elements, they also have their
own preferences. For example,
many prefer the security of
operator billing to pay for apps
and services. Creating a loop
between the platform, the app
and the operator will simplify
things for the user while building
trust in the right places. As well as
conducting secondary research
and talking to users and experts
whenever possible, developers
can use app store rankings to
see which apps are popular in
each country. Keeping track of
the top downloaded and top
grossing apps across stores can
give developers an overview of
changes and trends in users
preferences for specific apps or
app categories.

For example in India,

data speeds are very
slow. So the apps
now are not very
data or bandwidth
hungry and this is
key. In the next five
years we will see apps
that use the existing
infrastructure and as
the data connections
get better we
will see more
diversified apps.
Kunal Ashar, North Star

The next billion opportunity is a substantial one.

Developers entering this space now will catch the market
at its most attractive point as it is finely poised. Provided
they can come to grips with their target users needs and
constraints, developers have the potential to create apps
that will solve their users problems one of the key factors
of apps that will matter to the next billion. Interestingly, the
opportunity is open not only to smartphone developers,
but also those involved in feature phone development.
Therefore, developers should enter this space with their
mind open, their sleeves rolled up and their thinking hat on.
The next billion is here.

23. The World Bank Data, Infrastructure

(2013)
24. ITU ICT Statistics (2013)

13 The next billion mobile users