NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, September 30, 2013

A few weeks ago, the technology press watched with bated breath as Apple unveiled the new iPhone 5S and 5C. They look like nice products. The 5S has a fingerprint sensor, improved imaging capabilities, and ships with Apple’s new iOS 7 operating system. The5C is a bit less expensive and doesn’t have quite as many bells and whistles.

But let’s face it: In the multi-decade effort to put what amounts to a fully capable computer in a pocket-sized device, most of the low-hanging fruit has already been picked. Over the next five years, smartphones will get better displays, improved cameras, faster Internet access, and run more innovative apps, but these changes will be largely evolutionary, not revolutionary. If you’re looking for a revolution involving smartphones, you’re unlikely to find one by staking out front row seats at the next new product announcement.

Instead, you should keep an eye on the developing world, where the transition from basic “feature” phones to smartphones is about to reshape how a large fraction of the world’s population engages with information.

Today, high costs have limited smartphone adoption by those at bottom of the economic pyramid. But rates of mobile phone ownership are very high across all income levels, in nearly all countries. And even though feature phones offer far more limited functionality than smartphones, for millions of the world’s unbanked—people who don’t have traditional bank accounts—they have become platforms for accessing an increasingly sophisticated array of financial services. In Kenya, there are now more than 17 million customers [PDF] of Safaricom’s M-Pesa mobile money service—a number equivalent to more than 70% of all adult Kenyans. Mobile money is also popular in Afghanistan, Tanzania, and Uganda, and is experiencing rapid adoption in India. There are now over 200 mobile money services in 80 countries.