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Consumers worldwide value mobile technologies at 11%-45% of their income, study reveals

UAE. The findings of a new study by The Boston Consulting Group (BCG), a global management consulting firm and the world’s leading advisor on business strategy, shows that mobile technologies are creating immense value for consumers – value that greatly exceeds the costs of owning a mobile device.

In fact, consumers worldwide value mobile technologies at 11 to 45 percent of their income – well above what they pay for the service.

The study, titled The Mobile Revolution: How Mobile Technologies Drive a Trillion-Dollar Impact, revealed that the ways that consumers use mobile technologies vary considerably in developed versus emerging economies.

The analysis, which was commissioned by Qualcomm Incorporated but produced independently by BCG, found that, in developed markets, the ubiquitous connectivity makes users’ lives easier through services such as mobile banking, GPS-based mapping, and crowdsourced recommendation apps. Interestingly, consumers in developed markets value mobile technologies at upward of $6,000 per year, or approximately 12 percent of their income.

In emerging markets, the numbers tell an even more powerful story. For many consumers, mobile phones are their only “connected” device. It provides the chance to live healthier lives, access educational resources, earn a higher income, and create better living conditions.

For this report, BCG examined the use and benefits of mobile technology in six countries: the U.S., Germany, South Korea, Brazil, China, and India. The firm surveyed approximately 7,500 consumers across the six countries to quantify the value consumers derive from mobile.

Among the findings were the following:
• The mobile technology industry generated revenues of almost $3.3 trillion worldwide in 2014 and is directly responsible for 11 million jobs.
• Mobile companies invested $1.8 trillion in capital expenditures and R&D from 2009 through 2013, relying almost exclusively on private-sector funding.
• The aggregate annual consumer surplus – that is, the benefit consumers receive from mobile technologies over and above what they pay – amounts to $6.4 trillion.
• The value consumers place on mobile technologies ranges from $700 to $6,000 per user.
• Mobile is especially valuable to emerging market consumers. In China and India, the consumer-reported value of mobile exceeds 40 percent of average income.
• Consumers expect that mobile will continue to improve and transform their lives, delivering a broader range of services that will connect them with everything, everywhere.
• Most respondents were willing to give up luxuries such as dining out (64 percent), having a pet (51 percent), and going on vacation (50 percent) – for an entire year – in order to keep their mobile phone.

As part of the report, BCG also surveyed 3,500 SMEs in the six countries and assessed their domestic economies in order to understand the company- and country-level impact of mobile technologies.

BCG’s study found that in both developed and emerging markets, SMEs that adopt advanced mobile technologies are the fastest-growing.

“Based on our findings, SMEs that are mobile leaders are winning,” said Hermann Riedl, Partner & Managing Director at BCG Middle East. “Typically, the 25 percent of SMEs that use mobile services more intensely see their revenues growing up to two times faster and add jobs up to eight times faster than their peers.

“In parallel, the mobile laggards among SMEs have revenue growth and job creation that substantially lag behind the leaders. With fewer plans to invest in mobile, these SMEs are at risk of being left further behind.”

Riedl added, “SME mobile leaders in emerging markets are leapfrogging older generations of technology still widely used in developed markets.”

According to BCG’s analysis, this “mobile divide” – the difference in growth between mobile leaders and laggards – is poised to increase. Closing the mobile divide among SMEs in the six countries surveyed, however, would add 7 million jobs over the next three years and increase GDP growth by 0.5 percentage points across the nations evaluated.

Consumer adoption of 3G and 4G standards has outpaced all other technologies, growing to nearly 3 billion connections in less than 15 years and projected to exceed 8 billion connections by 2020.

“In the GCC, for example, 4G technology has been embraced by the masses,” explained Riedl. “Today, the region boasts one of the highest LTE-capable smartphone penetration rates (more than 70%) in the world. And this trend shows no signs of abating: there is already momentum building around the imminent arrival of 5G.”

The fact is, dramatic performance improvements in mobile communications standards and decreasing costs have propelled mobile to become the fastest adopted technology of all time. While mobile data transmission speeds have soared – 4G networks offer 12,000 times faster data-transmission speeds than 2G networks – user costs have plummeted.

BCG’s report offers clear evidence that consumers seek advances above and beyond the currently available technology: 90 percent of 3G and 4G consumers reported they want even faster data speeds, more coverage, more battery life, and many other improvements. Many of these breakthroughs will require continuing up-front investments in R&D by the industry.

More importantly, the study showed that, to reap the economic benefit of fifth generation (5G) networks and beyond, mobile players will need to invest approximately $4 trillion in R&D and capital expenditures by 2020.

To foster an environment that will continue to support investment and innovation in mobile technologies, BCG recommends a number of actions that governments and policymakers should take. These include incentivizing technology innovators through strong patent protection and market-driven licensing; supporting collaborative, industry-driven standards-setting; and ensuring continuous allocation and availability of additional radio spectrum.

A copy of the report can be downloaded at www.bcgperspectives.com.

Photo Caption: Hermann Riedl, Partner & Managing Director at BCG Middle East.

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises.

Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 82 offices in 46 countries. For more information, please visit bcg.com.

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