Emerging markets demand greater value from vendors

Developing countries in Asia offer great potential for PC makers, but companies must offer better value for users if they are to be successful in emerging markets...

Developing countries in Asia offer great potential for PC makers, but companies must offer better value for users if they are to be successful in emerging markets.

ICT equipment vendors are increasingly focussing their activities into developing and emerging markets. This is partly in response to the situation in more affluent countries where levels of access to mobile phones, computers and broadband are approaching saturation levels. But the trend is also being driven by an increasing awareness of the business opportunities in less affluent developing markets, where there is very real potential for future growth.

According to Bryan Ma, Director of Systems Research of IDC Asia-Pacific, current attempts to develop the growth of computer and communication equipment in emerging markets have tended to concentrate on lowering the price. Examples of this strategy, cited by Ma when speaking at the recent IDC Directions conference in Singapore, include projects such as the One Laptop Per Child (OLPC) program and Intel's low-cost Community PC, both covered extensively here at Developing Telecoms. Says Ma, "There's still a huge underserved portion of the global population that doesn't have that buying power".

While price is a very important consideration, users in emerging markets also want to see more value from equipment vendors. One example of this is the development of designs better able to tolerate the harsh environmental conditions existing in many developing countries. But vendors need to go further. Ma used the example of Nokia's 1100 handset, which has been a success in India because it includes a torch - a useful feature in a country that suffering from frequent power cuts.

But, Ma believes, "at the end of the day it's not the technology or the device, it's the application people are looking for..".  One application that has proved popular in many emerging markets is access to commodity prices, which lets farmers know when and where they can get the best prices for their goods. Other popular applications include VoIP video conferencing and access to government services. "Companies that can bring the right products to market in Asia's developing markets will be able to access fast-growing markets", said Ma.

PC markets in Southeast Asia and South Asia, excluding Singapore, will see a compound annual growth rate (CAGR) of 14 percent over the next five years. Growth will be even faster in markets such as India, where IDC predicts the CAGR will be 22 percent, and Indonesia, where growth will be in excess of 23 percent. In Vietnam, which has seen a flood of overseas interest and investment in recent months, IDC predicts the CAGR for the PC market will be 20 percent.

The companies that will profit most from this growth will be the ones that develop creative products, best adapted to the markets, Ma said, noting that the right products and applications could spur higher growth predictions for the region.

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