Innovation and the rise of emerging markets
While emerging markets have traditionally been viewed as junior partner to more developed areas of the globe, Neotel CEO, Sunil Joshi, believes that relationship is becoming just as rich when running in the opposite direction.
“Many of the mature economies in the developed world are looking at emerging markets for growth and further expansion,” said Joshi.
At the heart of the relationship is innovation, and this reverse innovation is on the rise, the telecommunications lead believes.
In many cases, as markets saturate and companies expand their operations into emerging countries, they need to tailor the product to meet local needs, Joshi opines. They have now started moving from simply expanding into other countries to deploying the localised products and innovations on a global basis.
A reverse innovation is defined by Professor Vijay Govindrajan, of the Tuck School of Business, as: “Any innovation likely to be adopted first in the developing world. Increasingly we see companies developing products in countries like China and India and then distribute them globally.”
According to Neotel’s CEO, emerging countries often have more scope and need to innovate. Examples include M-Pesa, a mobile phone-based money transfer service in Kenya that allows micro-finance borrowers to receive and repay loans using the local telecom network.
Nokia has also incorporated new features in its devices meant for US customers, after observing phone-sharing in Ghana.
Microsoft is creating new phone app services for feature phones which allow users with existing, non-smartphone devices to access websites such as Twitter and Facebook. Built for markets in India and South Africa, there is surprising potential for these apps as a low-cost cloud computing platform, Joshi stressed.
Another characteristic of emerging markets, is their lack of installed base and consequent ability to leapfrog existing technologies. A classic example is colour TV: the first adopter being the USA which opted for NTSC (which offered poorer image quality than PAL – the European standard that came later), and whose developers learned from and improved on the earlier standard’s shortcomings.
LTE, the fourth generation telecommunications standard, is also an example. According to Joshi: “There are vast parts of the world that still do not have the LTE technology, but will become beneficiaries of the experience that the other markets will gain.”
Emerging markets typically do not have large fixed-line telecoms networks. Instead, they rely much more heavily on mobile technologies and are able to deploy new technologies such as LTE more rapidly.
As Joshi said: “LTE is an enabler. There are vast parts of the world that still do not have the LTE technology but will become beneficiaries of the experience that the other markets will gain.”
By Sunil Joshi, CEO Neotel.
Related articles
Neotel on target for 16% SA market share
Neotel: We have fibre to the home solution
Loading ...
