The State Of Consumer Technology In Bangladesh At The End of 2017 (Part 01)

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Dec 31, 2017

The 90s was the most important decade for the consumer technology industry in Bangladesh, particularly concerning computer, connectivity, and mobile. We first experienced dial-up internet in the early 90s.

The Bangladesh Association of Software and Information Services (BASIS) was established in 1997 with 17 members.

Having said that, computer usage started much earlier, in the 70s. BUET opened its CSE department in 1979 in the form of a computer center that was later turned into the CSE department.

The first epochal event, however, to my understanding for consumer technology industry in Bangladesh was the launch of Grameenphone and then on 26 March 1996 Grameen Telecom in collaboration with Grameenphone launched the Village phone project with an ambition to “bridge the technological gap between urban and rural Bangladesh through affordable mobile technology”.

Unlike many developed markets, our consumer technology revolution has highly been reliant on mobile.

The mobile phone was a highly expensive technology in 1996 and was only accessible to a handful of upper-class people. Grameen Telecom unleashed a technological revolution by introducing the village phone and Phone Lady program. That was the first epoch of consumer technology in Bangladesh that enabled many other epochs to happen in the next few years.

Epoch Characteristics: A mobile-first world

It is important to note here that, we are not talking about computer technology here, as in PC or laptop. Mobile was of course enabled by computer technology but mobile is an entirely different platform and way more powerful than PC or laptop.

In the West and in many other developed markets, the consumer technology revolution started with the computer, starting from mainframe to mini to personal computer. While computer subsequently enabled mobile to happen, it is mobile where our consumer technology revolution really started in Bangladesh. In that sense, we are a truly mobile-first nation.

More importantly, this mobile thing has shaped many other consumer technology epochs that happened afterward. We will explore more of it in a moment.

Symphony, smartphone and the second Epoch

I would argue that the introduction of low-cost feature phones and then smartphones defined the second epoch.

While multinational companies like Samsung and Nokia led the initial growth of mobile phone technology in Bangladesh, it was a local player Symphony along with a few other players that pushed the penetration to the current level by introducing low-cost handset and establishing distribution networks in remote villages across the country.

I wrote in Symphony, Disruptive Innovation, Poor Man’s Phone and Symphony’s Future:

“Symphony is a brilliant company. I suspect part of it happened beyond conscious decisions. Symphony started with offering low-cost and higher quality feature phones when Nokia was still in the market. And it worked like magic. One reason of course Symphony targeted a group of people who did not have access to phones in the first place and most importantly it offered a phone with much less price than the available alternatives and of higher or at least equal value.

This is the classic example of disruptive innovation, a term first explained by Clayton Christensen of Harvard. According to Christensen, a disruptive innovation is not a breakthrough innovation that makes a good product massively better thus change the game. A disruptive innovation transforms a product that was historically so expensive and complicated that only a few people with a lot of money and a lot of skills had access to it and a disruptive innovation makes it affordable and accessible so that a much larger population have access to it.”

The most important point that I missed in that piece was about the real contribution of Symphony as a company. I believe Symphony deserves a lot more credit for unleashing mobile penetration in the country, even in remote villages where people had limited access to mobile phones before Symphony.

Symphony started in 2008. It has two major contributions to the development of the consumer technology industry in Bangladesh: 1) it made, in the early days, access to mobile phone easier for people by offering affordable feature phones 2) and then when Smartphone came along, the company also pioneered in that space, particularly for the low-end customers.

These two developments have helped to a few major events to take place later on. To my understanding, this was the second epoch of consumer technology industry and it was led by Symphony.

Unfortunately, Symphony has, so far, failed to take advantage of a mobile phone revolution that it has helped to happen, which many other vertical companies like Symphony, such as Apple, have managed to take advantage of through a string of innovations and strategic decisions.

I do understand that it does not make sense to compare Symphony with Apple, in fact, it is absurd. But if you look at the reality where millions of people use your device on a daily basis, it makes perfect sense. The only difference was Symphony did not have any of the leverage, unlike Apple.

Mobile phone penetration, bKash and the third Epoch

bKash started in 2011. In many ways, bKash was enabled by the previous two epochs. If there was no mobile phone network and then if Symphony did not help in mobile phone penetration, it is almost impossible to imagine bKash. This is one of the fundamental characteristics of the previous two epochs, both have enabled the followings to happen.

This also tells an interesting truth about our local technology companies and regulatory ecosystem - most of the companies are not imaginative enough and our overall business ecosystem does not encourage innovation. I would like to argue that at least a few companies from the previous two epochs, GP and Symphony at least, could have taken more advantage of the epochs that they helped to happen but they failed to do so. GP launched Gpay very recently and it does not make sense anymore given the reality that we have 19+ MFS services and the regulatory decision has been made, that MFS should be regulated by Bangladesh Bank which I think is a logical as well as right decision given the situation of both financial industry and BTRC in regulating mobile operators in the country.

Anyways, this part is about bKash. I would like to argue that bKash was the most important company in this epoch. In fact, bKash is one of the most important companies in the country. I think the company is just getting started and that it has huge potential going forward if the regulatory environment permits it to grow which I think regulators should allow as well its stakeholders are willing to go beyond.

Again, the bKash epoch that made P2P money transfer simple enabling a new wave of financial inclusion is greatly indebted to the first two epochs, mobile phone, and telecom.

From bKash’s Relentless Push To Get Into Digital Payments Market

“bKash has experienced tremendous growth over the past few years and has become synonymous with P2P money transfer in the country. As I mentioned earlier, some 22% of Bangladeshis use the service and 4.5 million transactions happen per day.

After its success in the P2P money transfer space, the company is now eyeing digital payments for further growth. Digital payment is a huge market, way bigger than the P2P money transfer market.

Since it already dominates P2P space, which means a large number of users already have bKash balance in their phone and they can effectively use that balance for all other purposes starting from grocery shopping to hotel booking to book purchasing to ticket purchasing.”

bKash has primarily done a few things 1) unleashed a new wave of economic activities 2) it has brought a huge population, in many instances, to the formal channel 3) it has managed to build an incredible scale that too in mobile 4) these three things will allow it to do many more things in the future

However, the most important contribution of bKash, as Muhammad A. (Rumee) Ali, former Deputy Governor of Bangladesh and former Chairman of bKash said in an interview with us, is:

“bKash has done a tremendous job, no doubt about it. But to me, the most important contribution of bKash is not the technology or the scale it has achieved today but the trust it has been able to create among people in technology.

At an individual level, people have not interacted with technology in a way that required financial trust. bKash for the first time as a technology wanted ‘trust’ from its users and in most cases, people responded positively. It has created the basic infrastructure for FinTech and that is ‘trust’. That is why I do not see bKash as a delivery channel rather it is something more. It has in a way changed the trust infrastructure of financial services and paved the path for fin-tech products.”

Now, payment is an important component without which you can’t grow your digital ecosystem. bKash in many ways has made it possible for the next epochs of consumer technology to happen in Bangladesh.

Missed opportunities

While we have seen a phenomenal growth of mobile penetration in the country, internet penetration remains a sad story. According to recent Google data, daily active internet users in Bangladesh is 14 million - a depressing number so to say. Internet quality is equally bad according to several studies. We could have done better.

However, this is not a miss. We are making progress, the pace does not matter. What makes me wonder is that we have managed to miss a host of major opportunities. There were valid reasons behind this. One is of course low PC and mobile penetration in the early days as well as low internet penetration. Despite this, I would argue that we lack ingenuity in our culture.

Let us count a few opportunities that we missed that previous epochs offered: 1) work and productivity 2) messaging - that falls within work and productivity 3) communication, again related to messaging.

G&R, which is one of the earliest tech companies in Dhaka, could have explored some of these opportunities which the company is now trying to do. We have a few companies that have done great works in the space for global markets, for instance, Reve Systems. But the number is quite slim.

Again, I would like to point out that as a market, we had almost no leverage in these areas since Microsoft, Google and other major giants started way ahead of us. Then and again, China has managed to carve its own place with innovative and original products conducive to its culture which we have failed to do.

What is next

In the last two years, we have been seeing another wave of epochs of consumer technology in Bangladesh.

Again, the common thread is that previous developments have enabled the later developments. Internet and mobile-enabled eCommerce and today’s ride-hailing and so on.

This is not unique to our market, but for us, mobile has played a significant role. I think we are seeing early days of a few more epochs and I suspect, a few of these will become more apparent in the next two years.

What follows is my guess about the next few important events that I believe will change consumer technology in Dhaka and a few companies that I think are best positioned to lead:

1) Payment, I don’t think this holds epochal importance but it is critical for us, is going to play a very important role in overall consumer tech in the coming days.

I would argue bKash is best positioned to lead this space given its scale. However, the company has also significant challenges ahead in terms of urban adaptation of its service and bridging an app with its existing product and infrastructure.

DBBL’s Rocket and SureCash are also there. Overall, I think most important payment companies in Dhaka have already started and we will see a few attempts from ride-hailing companies to get into payment as we go.

2) eCommerce, I would argue, is going to be one. This is no rocket science. eCommerce is an enabler and the market is huge. I think

Ajkerdeal is best positioned in this space given its strategy and ambition and consistent execution in line with that strategy. I wrote about it here.

Having said that, the company has to find a sustainable way to deal with customer experience - a challenge comes with its model - if it wants to succeed. At the end of the day, it is buyers who control the supply in an abundant environment which is the internet. I expect 2018 to be a defining year for eCommerce and we will see some consolidation in the market.

3) Ride-hailing is obviously a major trend. This is an interesting space. It connects both offline and online and does so very efficiently. On top of that, transportation is more like messaging in mobile, the ultimate deal in the physical world.

When you dominate the nodes of transportation, you can do a lot of other things. Moreover, Ride-hailing services are app-based which allow these service providers to have a dedicated space in users mobile phone. You can use that for many other reasons.

Ajkerdeal, among ecommerce companies, I think has realized this importance of mobile and is trying to turn itself into a platform.

Ride-hailing, I think, allows a service provider to become a platform on top of which you can put layers. Go-Jek is a good example. In Bangladesh, it is likely that a few ride-hailing companies will try to build layers the examples of which we have already seen.

While Pathao is in an extremely good position in this space, competition is likely to grow in the near future. Moreover, this is a complex space with a lot of overlap in terms of investments and all. For instance, Softbank has investments in Ola, Grab and now Uber as well as in Didi. There is a sign of strategic alignment.

Having said that, competition seldom kills a business. Pathao has built a brand, a good service and has scaled as well. The only challenge I think is the market.

These are a few major sectors that I think have huge potentials to go big in the coming days. There will be a few other major epochs around mobile and digital that I hope will unfold in the next few years as our smartphone penetration and urbanization grow further.
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Note - Our consumer technology industry is heavily reliant on technological developments in other parts of the world which makes it hard to develop a credible thesis around our own developments. This is also the limitation of this article. Since I tried to look at the developments purely from Bangladesh perspective, I intentionally talked about mostly local companies and local developments in the space which at times may sound half-ass. I hope that you will understand my limitations.

Cover photo: G&R One billion ads


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Ruhul Kader is a technology and business analyst based in Dhaka, Bangladesh. He is also the co-founder and CEO of Future Startup and author of Rethinking Failure: A short guide to living an entrepreneurial life. He writes about internet business, strategy, technology, technology policy, and society. He can be reached at ruhul@futurestartup.com

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