Here’s a market you’ll be likely to hear more of in tech: “The Next Billion.” It’s shorthand for the next billion people that will become online consumers, and that makes them the target of tech giants like Google, Facebook and Samsung.
The next billion live in emerging economies like China, India, Brazil and Africa. Jenna Burrell, a professor at UC Berkeley’s School of Information, has been studying one of these markets, namely Ghana, since the early 2000s. She says even back then, it was clear that people who wanted to get online weren’t going to use desktops.
“You know it’s a small number of people who were going to Internet cafés, but almost everyone was either using, or owning or getting possession of a mobile phone,” Burrell says.
While a growing number of people in Ghana have smartphones today, the market is very different from the U.S.
Burrell shows me a phone she bought there. It has an antenna for the built-in transistor radio, and it has a flashlight for when the electricity goes out.
Burrell cracked open the back of her cellphone and points: “Underneath the battery pack where most of us don’t really look, it’s got a slot for your SIM card.”
Like most of the next billion, the majority of people in Ghana don’t have pre-paid mobile plans. Instead, they use SIM cards, which are basically phone cards or prepaid time that you insert into your phone.
“This unit is worth about two minutes of airtime, and that gives you a sense of how it’s a very precious commodity,” she says.
Burrell says that on a continent where most people make about a dollar a day, even a few minutes of airtime is a big expense. That’s where Mozilla, a non-profit organization teaming up with local carriers to make affordable phones, comes in.
Andreas Gal, Mozilla’s chief technology officer, dumps a number of handsets onto a desk in his Silicon Valley office.
“I brought these $25 smart phones,” he says. “These are the devices that launched recently in India.”
Critics of these $25 phones say web pages take forever to load, and you can’t run more than one app at a time.
But forget the quality of the phone, said Rakesh Agrawal, the CEO of reDesign Mobile, which develops products for the next billion. He says in most emerging economies, it’s data that’s the problem—data plans are prohibitively expensive.
“You have to think about how much people can afford and what kind of services they can use over their smaller data pipes,” said Agrawal.
He says the next billion aren’t going to run apps mindlessly like we do. Which means, in part, tech companies can’t rely on advertising to make money off them.
“If you’re living on a dollar a day, Proctor and Gamble can’t afford to advertise to you, because you can’t afford their products,” Agrawal said.
Despite these odds, tech companies will continue to pursue the next billion. Smart phone ownership — and sales of apps — will inevitably slow in the developed world over the next decades. Tech companies need the next billion to keep growing. So, they’re getting ready.