BCG: Mobile technology adds trillions to economy

23 March 2015 Consultancy.uk

Mobile technology boosts GDP by $1.2 trillion while creating $6.4 trillion in added value, a recently released report from The Boston Consulting Group finds. With a further rollout of 4G and the continued innovation of apps, mobile technology is expected to continue being a strong economic driver.

In a recently released report from the Boston Consulting Group (BCG) commissioned by Qualcomm, titled ‘Revolution how mobile technologies drive a trillion dollar impact’, the impact of mobile technology on the economy of six key countries, US, Germany, South Korea, Brazil, China, and India, is investigated. Among other things, the report looks at the economic impact of the technology and the value it adds to the lives of its consumers.

Mobile technological boom
The wider economy has seen a considerable increase in activity created by the introduction of mobile technology into the wider connectivity ecosystem. Mobile connectivity has grown massively over the past 15 years, with 3G and 4G standards now totalling 3 billion subscriptions. This is on the back of a massive decrease in costs for both consumers and infrastructure providers. Data costs per megabyte plummeted 95% from 2G to 3G, and 67% from 3G to 4G. The price of handsets has also fallen, with 30% of units sold for under $100.

Mobile Innovations Lower Costs and Improve Performance

With the continued convenience created by the devices and their mass adoption opened up by plummeting costs, revenue in the sector too has seen strong growth, up 13% per annum since 2009 – more than double the pace of the global economy. This rapid expansion has created some impressive totals, with the global mobile technology revenue at $3.3 trillion and mobile technologies delivering a $1.2 trillion impact to the GDP of the six countries surveyed. In terms of job creation in the value chain, 11 million jobs have been added, with the BCG report highlighting that two thirds of those jobs are “high-value”, involving technology R&D and app development.

As a result of the growth of mobile in the countries surveyed, the value to GDP offered by mobile technology now lies in the range between 2% - 4%, which is larger than industries such as entertainment, transportation, automobile, hospitality, and agriculture. While average GDP growth for the industry various between countries, the US and China particularly have seen healthy growth in 2014, averaging 3.2% and 3.7% respectively. The boom in handset exports saw South Korea pull in an impressive 11% growth in 2014.

mGDP Contributes More Than 1.2 trillion in Six Countries

Value added
The value created by the technology for consumers is massive, the consultants find. Consumers derive immense value from the technology – vastly exceeding the cost of the device and subscription – in the order of 11% to 45% their income. While in the US it represents a mere 11% of the average income in added value, especially for developing countries the value can be up to 45% for India and 43% for China.

Consumers Place a High Value on Mobile Technologies

To put the added value in a big total across the six countries, the development of mobile technologies has delivered $6.4 trillion. The vast majority of that value is added through 3G and 4G technologies, with the total significantly outnumbering the value chain itself and is greater than the GDP of every country in the world, with the exception of the U.S. and China. The rollout of 4G to existing consumers, according to the advisors, would add a further $1.4 trillion to the surplus, bringing the surplus to $7.8 trillion.

Mobile Generates 6.4 Trillion of Consumer Surplus

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