The Next Billion Lives Technology Will Change

Devices are getting cheaper, which benefits companies like Google and Baidu. But what about the impact on global growth? How will the future of cheap smartphones affect the world?

Jan 17, 2014 at 8:49AM

By my estimate, at least 950 million smartphones were purchased across the world in 2013. In their 30-plus year history, PCs never crossed much beyond 350 million sold in a year.

As astonishing as those numbers are, the shock factor of huge smartphone numbers has worn off a bit. Walking around any major city, it takes seconds to spot someone holding one. We've watched in awe for years as smartphone growth exploded, but the emergence of smartphones is no longer a "new" story.

Yet, it's important to remember that in 2011, researcher IDC was predicting that the world wouldn't hit 1 billion smartphones sold until 2015. We almost hit that number last year -- in just half the time predicted. That's truly incredible.

Smartphones to even the poorest in the world
When you consider where smartphone growth is coming from -- Asia, Africa, etc. -- what has really been underestimated is not only the growth of smartphones, but also the number of lives forever changed.

Billionlives

These are areas that less than a decade ago were targeted by the One Laptop Per Child organization, a group that -- with much fanfare -- was trying to solve the riddle of how to provide cheap computers to poorer areas of the world. It was a noble cause, but as of late 2011, its computers still cost about $209 each.

The problem was "solved," but not by a charity organization. Relentless competition in the mobile industry drove prices down beyond what anyone could have imagined just six years ago.

Smartphones and tablets can be found plentifully across the world at less than $100. Earlier this month, I walked the floor at the world's largest technology convention, CES, and saw capable tablets being sold for $35. Some smartphones are starting to push below $20.

The world's greatest investing opportunity, if you think about it the right way
Consumers buying these cheap tablets and smartphones don't have a lot of money. There's certainly little to no money being made on the sale of the devices, either. 

If you're thinking about this as an investor, there are ways to "play" the trend of smartphones in even the poorest parts of the world. Google is dominant in almost every country across the globe and controls the Android platform that cheap phones are built on. Facebook crested above 1 billion users in 2012. In China, search engine Baidu is up 64% across the past six months as it starts making money off all these new mobile users. 

However, the trend of a world where most people are connected to the Internet is much larger than the direct money a few technology companies can make.

Billionlives

When you're investing in companies or the stock market, you're also investing in the belief that the world will continue getting better. Companies in America have seen tremendous growth in their profits thanks to selling to consumers in emerging countries like China, Indonesia, and Brazil. 

There are limits to the growth of the world if the majority of its population isn't connected to our shared learning, however. Today, only 39% of the world's population is connected to the Internet. Smartphones will improve the everyday lives of people in poor countries. In Kenya, a company named M-Pesa has created mobile-phone-based money transfers for small transactions. Herdsmen no longer carry cash to the market. 

However, the biggest effect technology will have is on education. The amount of free education available on the Internet is incredible, and it's being quickly translated across languages. Most poorer countries' populations skew younger; the thought that these children will have access to the world's learning on devices as cheap as $20 is awe-inspiring. The world moves incredibly fast, and that speed increases the more we level the playing field by providing better education across it.

With half the world's population under 25, the one area you don't want to underestimate is how quickly providing ubiquitous technology and learning to younger populations could change the world. If you're an investor, whether in Google or an index fund, that's an exciting proposition. Because a world where more people are educated leads to innovation and improvements, greater economic growth, and, in turn, better returns for investors across the world in coming decades.

A better tomorrow
Twenty-six years ago, the Internet as we know it -- the World Wide Web -- didn't exist. 

Twenty-one years ago, the Manhattan of China -- Shanghai's Pudong district -- was a mudflat. Today, it looks like this.

Pudong

Source: Wikipedia.

Sixteen years ago, the cost to stream a movie online would have been $270. Today, it costs less than $0.03.

Thirteen years ago, mobile data was still on the drawing boards at Verizon and AT&T. Today, we've moved past 3G and on to LTE; fast mobile wireless covers the country. 

Billionlives

Eight years ago, the iPhone was still just an idea in Steve Jobs' head. Today, there are nearly two billion smartphone subscriptions across the globe. 

In fifteen years, parts of our lives today will look positively quaint. 

Technology companies and Silicon Valley can often appear self-righteous and self-important. They constantly talk about "creating a better world" as if the world's other industries were helpless without them. 

Yet smartphones are one of those truly transcendent innovations that will help bring billions of more consumers up to the middle class. They will change the world.

That change won't all be driven by Silicon Valley alone. It'll be helped along by the makers of the cheapest smartphone components in China, who tirelessly compete against one another, making devices cheaper and cheaper each year. The change will be driven by companies helping to create education for the next billion smartphone owners. And yes, it'll be helped along by Silicon Valley as well. Advances in Android will help ensure that even the cheapest smartphones have a modern operating system that can access all the information across the Internet.

The best time in human history is this moment right now, whenever you're reading this. Absent brief stretches, the world has been moving in a positive direction for hundreds of years. I can't say for sure what the world will look like in 15 years -- no one can -- but looking at a world connected to information, I can only say it'll get better.

For a limited time only
The promise of a better tomorrow is something Fool co-founder David Gardner deeply believes in. For a limited time only, we've set up an exclusive investor hub that discusses some of the most important trends today across all of tech, as well as a handful of exclusive stock picks that stand to benefit the most from those trends. This free site is available for a limited time only, so click here to get started.

link

Eric Bleeker, CFA owns shares of Baidu and Facebook. The Motley Fool recommends Baidu, Facebook, and Google. The Motley Fool owns shares of Baidu, Facebook, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers