Christopher Mims reports in the Wall Street Journal:
As the global middle class continues to rise in emerging markets, browsers are popular because they compensate for wireless access in Southeast Asia, South Asia, South America, Mexico and Africa where the dominant browsers have the ability to compress data, by up to 90%, cutting down on data costs. (Thereby) getting another billion people online by making it more affordable to connect to cell towers that are already in range but whose cost is out of reach.
The number of internet users world-wide has roughly doubled in the past eight years to around 3.5 billion. The people who have come aboard in the past few years are spending their time in something that was overshadowed long ago in developed countries by apps: the mobile web browser.
Single-purpose apps like Facebook and Snapchat are the product of markets where monthly data plans and home Wi-Fi are abundant. App stores require email addresses and credit cards, two things many new phone owners just don’t have.
In places like India, Indonesia and Brazil, it’s easy to buy an Android phone for as little as $25—even less for older second-hand (or third-hand) refurbished phones. But there’s likely to be little onboard storage, and the pay-as-you-go data plan is too precious to waste on apps, especially those that send and receive data even when you aren’t using them. Browsers are popular again, not just because typing a URL has become simpler, but also because they work harder to compensate for the nature of wireless access in emerging markets. Southeast Asia, South Asia, South America, Mexico and Africa are all areas where the dominant browsers—Alibaba’s UC Browser, Opera Mini by Opera Software and Google Chrome from Alphabet Inc.—have the ability to compress browsing data, by up to 90% in some cases, so people burn up as little as possible. UC Browser and Opera Mini also have robust built-in ad blocking, further cutting down on data costs.
On Friday, Jana, a mobile-ad company, entered this browser market with another incentive: free daily data. By delivering 10 megabytes (or about 20 minutes) of free data a day through its mCent Browser, Jana hopes to build a following and pay for it by charging for conventional ads and sponsorship of the browser. It also intends to charge partners to be their browsers’ default search engine. In terms of the scale of the users they have accumulated—UC Browser had more than 400 million users as of last April—these browser businesses are making a virtue out of the constraints of mobile-telecom systems in rural areas and emerging markets, where infrastructure is generations behind what it might be in richer countries.
As the global middle class continues to rise in emerging markets, browser makers are racking up users nearly as fast as Facebook did in its highest-growth period. And they are figuring out how to keep their users occupied while monetizing them through mobile advertising.
Google, Facebook and other internet giants are well aware of these trends. Two-thirds of Facebook’s users are in emerging markets, and while the company’s Free Basics program—part of Internet.org —was banned in India for favoring some websites over others, it is available in many countries in Africa and South America. And Facebook says it has upward of 200 million users on Facebook Lite, an app for low-bandwidth users.
As for Google, it benefits inherently from rapid global internet adoption, which would be impossible without Android. And while Google’s mobile Chrome browser remains dominant in many emerging markets, it also pays Opera, among others, to direct search traffic to ad-supported Google services.
It’s logical that as people in emerging markets become wealthier and their mobile infrastructure becomes better, they’ll follow the same trends as their richer peers, and their internet consumption will shift to apps. India, with its 1.3 billion people, is projected to increase its per-capita income by 125% by 2025, according to Morgan Stanley.
But for the foreseeable future, Opera, UC Browser and Jana are all betting that the ranks of these “next billion” people coming onto the internet will continue to refresh themselves—and experience constraints that mobile browsers are uniquely capable of alleviating.
“In India, the raw growth numbers are just huge—it’s both a lot more people coming online but also usage, because data is getting cheaper,” says Nuno Sitima, an executive vice president and head of mobile business at Opera Software, founded in 1995 and based in Oslo, Norway; it was sold last year to a consortium of Chinese investors for $575 million. In terms of new downloads, Africa is growing fastest, Mr. Sitima says, while Southeast Asia, with more than 600 million people, is another huge market for these browsers.
For Alibaba, which acquired UCWeb in 2014 for north of $1.9 billion, UC Browser isn’t just a browser, but a beachhead. The company is rolling out ways to make its browser sticky, like a sprawling, aggregation-fueled news site in India, where it is the No. 1 browser.
While mCent Browser is just launching in beta, Nathan Eagle, Jana’s chief executive, says the prospect of free internet is extremely appealing to users in the developing world.
To date, Jana’s core product has been an ad-powered payment system, also called mCent, on which its new browser depends. Basically, mCent pays for the airtime of users who watch ads or redeem promotions. Through relationships with 311 mobile operators in 90 countries, Jana is connected to the billing back-end of more than 4 billion mobile accounts and has leveraged that access for 30 million mCent payment users so far.
Mr. Eagle says he wants to bring a billion more people online. Google and Facebook have been working on the same problem, in part by launching balloons and drones to create airborne communication networks. “The way we’re trying to go about solving the free internet problem is a lot less sexy,” says Mr. Eagle. But by leveraging existing mobile infrastructure, along with the desire of brands like Unilever, a client of Jana’s, to reach customers in emerging markets, he argues his solution is more viable.
After all, which is more likely—getting another billion people online by flying cellular radios over their heads, or by making it more affordable to connect to cell towers that are already in range but whose cost is out of reach?