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

In the past two weeks, Nokia dropped several new hardware and software products that we noted in passing in the Newsroom section – a new line of inexpensive phones, expansion of its Life Tools service from India to Indonesia, and the upcoming rollout of Nokia Money.

Not only should other multinationals be learning from Nokia’s success in emerging markets, I think the development community should be treating its product releases more like the wealthy public treats the release of a new iPhone – with excitement and attention to its details. Perhaps even sending some interns with sleeping bags to wait outside Nokia distribution outlets.

I say this because I’m pretty confident that these price drops in handsets alone – an almost 40% reduction from Nokia’s least expensive phones two years ago – will reach more people, faster, than any of the innovative approaches profiled elsewhere on NextBillion.net. For better or worse if I had to choose the single organization driving the most market development at the base of the pyramid globally, it wouldn’t be the Gates Foundation or Grameen, it would be Nokia. While the company is losing out in the smartphone market it’s shipping almost half a billion handsets a year, accounting for their 60% market share in India and 45% market share in China. They intend for Nokia Money to reach 300 million people by 2011. As a benchmark, the global microfinance industry has something shy of 150 million clients.

Nokia seems to be doing effectively what the Wall Street Journal highlighted this week as the challenge for multinationals hoping to tap emerging markets, “polycentric innovation” – developing the distributed intelligence to innovate based on the characteristics of developing and emerging markets, not taking developed market products and making them cheaper and flimsier for sale in poor countries. Nokia does the opposite. Speaking from experience its phones seem relatively indestructible.

The new “1280” mobile sells for $30 before taxes, and if you live in energy poverty without access to electricity, it’s got apps for that: standby battery life of 22 days, an FM radio receiver, and a flashlight. Also, recognizing that handsets are frequently shared, it’s got capacity for up to five separate address books.

A company paper for the Mobile Money Transfer summit in Dubai a few weeks ago notes that Total Cost of Ownership (TCO) per month for a handset is the metric the company uses to examine affordability of its products at the base of the pyramid. TCO currently averages $11 a month globally; Nokia estimates that with a TCO of $5/month, “the majority of world’s lower income consumers [could] join the world’s cellular-connected community.” If you spread the up-front cost of a Nokia 1280 over the two years it might conservatively last, that’s $1.25 a month, with the cost of taxes, airtime, and charging (which account for around 80% of TCO) varying by location and usage.

Life Tools and Nokia Money represent forays into software and services – Life Tools is a subscription SMS-based service that provides information on agricultural markets as well as educational and entertainment info that launched earlier this year in select markets in India. Its origins were detailed in Forbes a few days ago, while Nokia’s master plan to deliver content through its phones was covered in Fast Company a few months ago.

However, for the best creative thinking that they’ve got to offer and the kind of thing you actually want to be reading on a Friday afternoon or over the weekend, check out the dispatches from their lead anthropo-capitalist, Jan Chipchase, where he documents his team’s research on the use and impact of mobile phones in urban slums in India, migrant worker dormitories in China, and open-air markets in Kabul.

Chipchase has an enviable ability to intuit the motivations and proclivities of people living precariously but enthusiastically at the edge of global markets. Many people and organizations try to understand and make interventions in economies in development and transition by going to the places where they are simple, easiest to deconstruct, and perhaps even idiosyncratic. Chipchase appears to go to where they are most modern, in all the complexity that entails. Seeing inside the creative process of human-centered design – the origin of things like phones with multiple address books – is really inspiring.