With exponential growth rates for smart phone penetration in Asia, the average marketer could be forgiven for thinking that the region is already awash with smart phones. While it’s true that the trajectory of smart phone growth in Asia has been astounding, it’s nothing compared to what’s still to come. Yes, Asia has over 1.6 billion unique active mobile users, according to We Are Social, but that figure includes the still popular, more affordable feature phone. In fact, the regional giants – China, India and Indonesia – are still in early days of their smart phone journey: Just a fifth of their collective 2.84 billion population has a smart phone.
This is important because a smart phone is often the first and possibly the only connection to the Internet for consumers in emerging markets. Once these consumers are connected, they enter a new world of digital-based social interactions, entertainment, utility and commerce. Imagine the impact on the marketplace as smart phones find their way to more of the hundreds of millions who don’t currently have one. Global and regional marketers should be preparing now for the impact to come, spurred by two powerful drivers: A growing middle class in Asia and falling costs for mobile devices.
First, the middle class in Asia – defined by Nielsen as consumers with $16 to $100 USD of disposable income per day – is on a strong growth path. In India and Southeast Asia, the middle class is predicted by Nielsen to double by 2020, reaching 39% and 28% of the total population respectively. Meanwhile, China’s middle class is forecast to reach 1 billion strong by 2020. Buoyed by a positive economic outlook, Nielsen found that Asian consumers are among the most confident in the world with six of the world’s top 10 most confident markets located in Asia: Indonesia, India, Philippines, China, Thailand and Hong Kong. The outcome is a growing appetite to spend additional cash on aspirational middle class offerings, including leisure and travel, fashion and out-of-home entertainment. And, of course, smart phones.
Now pair Asia’s greater spending power with the shrinking cost of smart phones. The Economist found that the demand for less expensive models of smart phones is booming, fueled by emerging markets. Consumers are unlikely to pay for expensive models when they can get a cheaper version loaded with all the usual features: camera, four-inch screen and a fast processor. Smart phones costing less than $99 USD already make up one-sixth of worldwide smart phone shipments and is forecast to grow to a quarter by 2018.
With cheaper mobile devices and more spending money among a population of 4.4 billion, it’s clear that the most significant smart phone explosion is yet to come. For a glimpse of the future once smart phone penetration has truly deepened, just take a look at advanced markets like Hong Kong and Singapore, where almost nine in ten consumers own a smart phone. These are societies of hyper-connected consumers where mobile and, by extension, social media have become part of the fabric of life, enmeshed in all activities. Conversations happen simultaneously over social and chat platforms, SMS and email. Commutes are an occasion for watching downloaded television shows and playing games. Every restaurant meal and night out is quickly captured and shared with friends. Taxis are summoned via app. Mobile wallets are making their way into the mainstream; shopping can be as easy as waving a phone. Smart phones also become a driver for the kaleidoscope of offerings that comprise the mobile economy: the entertainment and utility apps that spring up to serve consumers; the advertising technology services for brands.
Developing Asia is still many steps away from having a hyper-connected mass consumer base. Still, with the growth of its middle class and cheaper smart phones on the market, the distance is shrinking fast. Marketers should be planning now for a time in the near future when more of Asia’s 4.4 billion are ready to watch, connect and buy – all via an affordable smart phone.