Mobile Enterprise Services in Emerging Markets
A Survey of Innovation and Opportunities

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Description The enterprise market for mobile services is an attractive and growing opportunity. It offers high ARPS, low churn and stable growth. Furthermore, there are new growth areas, particularly in the machine-to-machine segment, and there are also underexploited ones — in particular the informal business market in emerging markets. When looking at the mobile enterprise market, perhaps one of the most important and often overlooked differences between developed and emerging markets is the scale of the informal economy, which refers not only to illegal activities, but also to those that just are not registered, a fact overlooked by governments in emerging markets, given the scale of such activities. Other, more obvious differences include lower levels of income, coverage and capacity limitations of fixed networks, lower adoption, the predominance of prepaid billing, lower PC adoption and lower affordability (and hence lower adoption) of sophisticated devices. Furthermore, when looking at the enterprise markets of telecom service providers in emerging markets there are additional differences such as the lesser importance of the services sector, the predominance of agriculture and extraction in the economy, and less use of sophisticated information and communications technology systems and applications. At the same time, targeting businesses in emerging markets differs from targeting consumers much as it does in mature economies, in aspects such as lower price sensitivity, a high portion of calls that are internal, stronger demand for international services and high peak-time usage. It is often useful when evaluating opportunities in emerging markets to benchmark and compare them with more mature markets, and therefore this report includes many references to operators in developed markets. Mobile Enterprise Services in Emerging Markets analyzes the prospects of mobile services targeting enterprises of all sizes in emerging markets. The report evaluates services and mobile network operators with an eye to the uniqueness of each market while continually referencing more mature markets. It assesses the prospects of various business-oriented services as well as specific initiatives, looking at the roles of applications such as SMS, email, m-commerce and digital signatures as well as M2M services — telematics and telemetry. Handsets, netbooks and laptops are also discussed. Seven case studies covering mobile operators, enterprises and a WiMAX operator examine Autotransportes de Carga Tres Guerras in Mexico, Zap in Kenya and Tanzania, Hospital Espanhol in Brazil, Vodacom Business in South Africa, Yota and MTS in Russia, and Vodafone in Romania.

BY JAN TEN SYTHOFF, ANALYST AT LARGE Highlights from the latest report "Mobile Enterprise Services in Emerging Markets" Watch the Preview

Key findings include:

• There is significant scope for greater adoption of mobile enterprise subscriptions in emerging markets. Whereas in developed markets 30-40% of employees have a mobile subscription, the penetration rate in emerging markets is 5-20%.
• In emerging economies, the informal business sector cannot be ignored and provides a useful way to segment the prepaid market. We believe the informal sector can contribute up to 50% of mobile revenue. This depends on a number of factors, including the portion of GDP that is informal, the structure of formal and informal employment, population penetration and the competitive landscape.
• As in mature economies, fixed-mobile convergence is an important trend in the enterprise market in emerging economies. By offering FMC services, operators can leverage their brands, channels, relationships and infrastructure to increase revenue from business clients, create a closer customer relationship, lower churn and create additional barriers to entry.
• The business market is very important to mobile broadband in emerging economies. Whereas about 25-35% of mobile broadband subscriptions in developed markets are business, the portion is much higher in emerging markets — typically over 50%. The lack of fixed Internet access is the key factor, and mobile networks surpass copper capabilities in many markets. Furthermore, some operators are positioning mobile broadband as a complete voice and data offering for small enterprises.
• Telemetry (remote monitoring and measuring) and telematics (automotive digital communications) are growth markets, particularly in Africa and individual countries such as China and Russia. Machine-to-machine (M2M) communications, however, remain comparatively minor in emerging markets, although adoption will pick up across the world in coming years.
• The characteristics of enterprise markets vary significantly between countries in terms of the scope of the market, its structure and its composition. Some are dominated by large corporations, while in others big opportunities can be found with small traders or street sellers. Such differences are key in terms of business planning and resource allocation.

Key Questions Answered

• What factors drive the mobile enterprise opportunity globally? In emerging markets?
• What makes the business market attractive to mobile operators?
• What is the role of the informal economy in the mobile enterprise market? How can informal enterprises best be targeted?
• How can the business market be segmented most advantageously?
• Is smartphone adoption a prerequisite for advanced enterprise services? What are the alternatives?
• Where do mobile broadband, feature phones and cloud computing fit in? How about data applications such as email, m-commerce and SMS?
• Are M2M services a viable opportunity in emerging markets?
• What approaches do service providers use in emerging markets to reach small businesses? Multinational corporations?
• What are the advantages of fixed-mobile convergence, including bundling and femtocells?
• Are operators finding success targeting businesses in emerging markets? Which operators? How?

Target audience

Mobile operators:
Evaluate the opportunity for targeting businesses in emerging markets. Learn from numerous examples of innovative and successful strategies. Analyze approaches to segmenting markets and identify profitable niches. Identify factors that help operators differentiate their offerings in the pursuit of business with businesses. This report is your guide to strategies for selling mobile services to enterprises in emerging markets, from ground-breaking applications in telematics and telemetry to creative uses of established technologies such as SMS.

Equipment vendors:
Assess the needs of mobile operators in various environments by understanding the mobile enterprise services market. Use our forecasts to develop sales plans and identify key market opportunities. Vendors will benefit from a clear understanding of what makes enterprise customers different from consumers and the likely direction that business services in emerging markets will take in the future.

Investors:
Locate opportunities in specific types of business environments. This report will help you evaluate and develop strategies that will position your portfolio investments to take advantage of one of the more lucrative growth areas of wireless communications networks in emerging markets.

Fixed operators:
Identify the competitive threat mobile players pose in the enterprise market. Learn how fixed-wireless services such as WiMAX are used by operators and enterprises to offer connectivity to enterprises in emerging markets.

Companies mentioned in this report:

Mobile Enterprise Services in Emerging Markets is part of Pyramid’s research report series. A blend of primary research and qualitative analysis, Pyramid’s research reports offer comprehensive coverage of the fixed and mobile communications space and enable those in the communications industry to stay ahead of changing market dynamics. For more information about this report, please contact us via email at info@pyr.com or telephone at (617) 871-1900

Author: Tim Kridel, Analyst at Large. Editor: Jan ten Sythoff, Analyst at Large

Publication Date: January 2010