Horizons newsletter – Week 4 // 2018
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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The Experience Ladder
A recent McKinsey report shows the rapid growth of the experience economy in the U.S.: consumption of experiences – such as city trips, hotels, restaurants, movie theaters and live sports– have grown nearly four times faster than expenditures on goods and services. As the Dasym Experience Ladder depicts, consumers move from basic needs, to small pleasures, to experiences defining their lifestyle. Lower income resonates with a lower category of experiences, e.g. going to a fast food restaurant, and higher income experiences are shaped by a transformational aspect, such as live events and travel. While the experience economy is often lead by Western consumers, the emerging global middle class consumers will increasingly consume experiences affordable to them. Moreover, compared to their Western peers, emerging middle-class consumers are young. Bangladesh, Egypt, India, Iran, Pakistan, the Philippines, South Africa, and Vietnam are together called the ‘Millennial Majors’ for their economic potential that lies with this young generation. Certain experiences appeal specifically to young demographics (e.g. e-sports, nomadic travel) and these are likely to gain popularity in decades ahead.
Talking about CES
Consumer Electronics Show CES has served as the proving ground for innovators and breakthrough (consumer) technologies for 50 years. Even though some of the early-stage innovations didn’t work as planned – some of the robots were for instance painfully unresponsive during demonstrations – CES does showcase the potential for the further digitalization of consumer daily lives, which is the core of Dasym’s investment philosophy. Many of the developments on the CES are thus relevant for our themes, which cover areas such as media consumption, healthcare, ecommerce, finance and other smart world applications. CES gives us further inspiration to paint a picture of a digitized world. In this smart world, voice assistants are integrated into everything from TVs to robots to cars. Moreover, autonomous cars such as the Chevrolet Bolt have no steering wheel, pedals or other forms of manual control. In other sectors, almost human-like robots such as Sophia can work alongside humans in for instance healthcare, factories or call centers. We will keep on covering these and the many other innovations in our Horizons newsletter.
Engaging the next digital billions
Google Chrome is the most-used browser in the world (55.0% market share), although there are still billions of people ‘offline’. When they get connected for the first time they have different preferences for their digital products. For example, Alibaba’s UC Browser has a larger market share in many emerging markets, like Indonesia and India, because it uses little data and storage. And the popular app SHAREit allows its 1 billion worldwide users, mostly in emerging markets, to share music and video content from Wi-Fi compatible devices with each other. Emerging middle-income economies, where digitization is picking up fastest and are often dubbed as ‘mobile-first markets’, still have the largest addressable ‘offline markets’. In India, for example, only 30% of the population uses the internet, meaning over 900 million people are still offline, while only a quarter of the Philippine’s 100 million population owns a smartphone. As a result apps and other services that work with limited memory, computing power, internet access and data bundles, will open up digital markets for the next digital billions.