Further comments on the Disruptive Technologies MGI paper. Today's focus is the impact of mobile technology/smart phones in the developing and developed worlds.
Some time ago, I listened to a podcast that had a panel of Silicon Valley venture capital investors. One of them made a passing comment that has stuck with me on smart phones. The comment was to the effect, "The impact of smart phones on the developing world is an order of magnitude difference than the impact on the developed world in people's day-to-day lives."
The MGI paper forecasts the breakdown of benefits for the developed and developing world (Exhibit E4, pg 17). The forecast for mobile internet going forward is 50% developed and 50% developing. Over time, I've come to appreciate more the venture capital investor solution and appreciate less those around me hyping the latest iPhone. Take a few examples,
- Price - In the developed world, the smart phone is like a computer in your pocket. However, computers are still relatively expensive, while smart phones (in the developing world) are not. Accordingly, the ever cheaper smart phone (see pg 33) is at a price point that can connect billions of the world's poorest to the internet for the very first time.
- Education: The developed world has apps to help memorize subjects to supplement current education opportunities. For many in the developing world, the smart phone is or can become the primary source of education because schools are too far from home or that instructors are absent, drunk, lack knowledge, or otherwise ineffective.
- Finance: In the developed world, we don't need to go to the bank to deposit a check. For many in the developing world, they now have access to modern banking for the first time.
- Purchasing: In the developed world, we can purchase more during previously idle time. In the developed world, large groups of vendors and customers are meeting together for the first time.
The proper comparison for the developing world is to benchmark the smart phone to limited or no access, while in the developed world we can generally benchmark to the computer or telephone. Uber makes car services more convenient, adds some suppliers, and upsets taxi regulation distortions. Airbnb does the same for its industry. However, on a marginal basis, are these companies that revolutionary? The solutions that these companies provide are solutions to what many would consider "first world problems." Unquestionably there is value created by these companies as they shake up the mobility and hotel industries, but the developed world shakeup is not comparable to cars taking the place of horse-drawn buggies. However, for the developing world, there is the potential to make this comparison.
MGI's own "the future could be" example (page 31) demonstrates this phenomenon of the difference between the developed and developing world. Compare the impacts in the two scenarios presented.
Developed world impact:
- Alarm to remember train's departure time
- Targeted advertising
- Product information accessed more quickly
- Account balances accessed more quickly
Developing world impact:
- Online instruction in irrigation techniques lead to increased farm productivity
- Purchasing of seed, fertilizer, and equipment.
- Pooling resources with other farms to minimize costs
- Optimized timing to sell agricultural products
- Bank payments and receipts
Mobile technology has the potential to make an order of magnitude impact in just one of these scenarios. As long as increases continue in processing power, the data pipe, and to some degree energy cost and storage, the potential for mobile technologies in the developing world is the most significant technological change listed in the report.
Some time ago, I listened to a podcast that had a panel of Silicon Valley venture capital investors. One of them made a passing comment that has stuck with me on smart phones. The comment was to the effect, "The impact of smart phones on the developing world is an order of magnitude difference than the impact on the developed world in people's day-to-day lives."
The MGI paper forecasts the breakdown of benefits for the developed and developing world (Exhibit E4, pg 17). The forecast for mobile internet going forward is 50% developed and 50% developing. Over time, I've come to appreciate more the venture capital investor solution and appreciate less those around me hyping the latest iPhone. Take a few examples,
- Price - In the developed world, the smart phone is like a computer in your pocket. However, computers are still relatively expensive, while smart phones (in the developing world) are not. Accordingly, the ever cheaper smart phone (see pg 33) is at a price point that can connect billions of the world's poorest to the internet for the very first time.
- Education: The developed world has apps to help memorize subjects to supplement current education opportunities. For many in the developing world, the smart phone is or can become the primary source of education because schools are too far from home or that instructors are absent, drunk, lack knowledge, or otherwise ineffective.
- Finance: In the developed world, we don't need to go to the bank to deposit a check. For many in the developing world, they now have access to modern banking for the first time.
- Purchasing: In the developed world, we can purchase more during previously idle time. In the developed world, large groups of vendors and customers are meeting together for the first time.
The proper comparison for the developing world is to benchmark the smart phone to limited or no access, while in the developed world we can generally benchmark to the computer or telephone. Uber makes car services more convenient, adds some suppliers, and upsets taxi regulation distortions. Airbnb does the same for its industry. However, on a marginal basis, are these companies that revolutionary? The solutions that these companies provide are solutions to what many would consider "first world problems." Unquestionably there is value created by these companies as they shake up the mobility and hotel industries, but the developed world shakeup is not comparable to cars taking the place of horse-drawn buggies. However, for the developing world, there is the potential to make this comparison.
MGI's own "the future could be" example (page 31) demonstrates this phenomenon of the difference between the developed and developing world. Compare the impacts in the two scenarios presented.
Developed world impact:
- Alarm to remember train's departure time
- Targeted advertising
- Product information accessed more quickly
- Account balances accessed more quickly
Developing world impact:
- Online instruction in irrigation techniques lead to increased farm productivity
- Purchasing of seed, fertilizer, and equipment.
- Pooling resources with other farms to minimize costs
- Optimized timing to sell agricultural products
- Bank payments and receipts
Mobile technology has the potential to make an order of magnitude impact in just one of these scenarios. As long as increases continue in processing power, the data pipe, and to some degree energy cost and storage, the potential for mobile technologies in the developing world is the most significant technological change listed in the report.
No comments:
Post a Comment