Voices From Emerging Markets: Innovative Electricity Generation in Rural India

By Rama Siva in India

I have been in rural Eastern India for the past few weeks in villages that have had no electricity for most of its history. Then about 2 years ago, Husk Power Systems(www.huskpowersystems.com) came on the scene with small scale power plants that create electricity from rice husk. The changes in the villages since the coming of electricity have been enormous.

The technology of gasification and power generation is many decades old. So why is it that these and thousands of other villages rich in agricultural waste are yet to be electrified? The answer may lie in the challenges of operating such a set up in a sustainable way in a rural setting. It is tough to find and train operators from the village level labor pool. The costs have to be kept well within the ability of the local consumers to pay for it. Even when the price is reasonable, it is a huge effort to get the consumers to pay regularly month after month.

Husk Power Systems is active on the field finding solutions to some of these challenges. Rich in venture capital funding and grants from the likes of Shell Foundation, they plan to set up 60 of these power plants in 2010 reaching a quarter of a million people in India. This is technology from early 20th century being harnessed on a large scale with 21st century management tools.

Landlines a viable competitor to mobile phones

by Karen Coppock
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With the incredible expansion of mobile phones in the developing world, it is easy to overlook the role of the simple landline phone. This is a mistake. Although landline phones are much less prevalent in emerging markets - ITU data shows a greater than 25:1 ratio of mobile phones to landlines in emerging markets - they are still a viable competitor to mobile phones, especially as you go further down the economic pyramid.

I was very surprised to see how many people were using public pay phones in the streets of Mexico last week. During a 20 minute coffee break in a cafe in the Zocalo (historic center of Mexico City), I saw a half dozen people use the public pay phone. This was true across the city - pay phones were very frequently used.

I should not have been surprised, however, as the use of landlines and pay phones were found to be a substitute for mobile phones in primary research Vital Wave Consulting conducted among low-income (and non-mobile phone owners) citizens in Mexico and six other emerging markets 18 months ago. From Ke in China to Siem in Cambodia and Mona in Egypt the people that we interviewed as a part of this research noted that "it was not an inconvenience" to seek out and use a public pay phone and that it was their primary mode of communication. Pay phones are an increasingly rare site in the US, yet they may continue to play an important role in emerging markets for the foreseeable future.

Rural India Provides a New Lab for mServices Scale

Entertainment may not be the first thing that springs to mind when people think about the basic human needs that mobile phones can help to fulfill. But for many it is a fundamental contributor to quality of life. This fact is illustrated in a recent Wall Street Journal article on the growth of entertainment in rural India provided via mobile phones. mEntertainment, as it is called, is one of many mServices growing rapidly in India, as customers pay to call and listen to the latest Bollywood tunes or receive text messages with the day's cricket scores. Other services, such as mAdvertising and mBanking, are also taking off. A full 31% of car-buying decisions in the country are now influenced by mobile phone advertisements, and increasing demand for mobile financial services has led Nokia to begin offering its new 'Nokia Money' service in India.

y developing countries are striving for scale in mServices. But India appears to be leading the pack with accelerated growth of offerings and adoption. This is, in part, due to the extremely low mobile voice and text prices that Indian mobile subscribers pay. Customers in India are paying less than a penny a minute for voice calling, a result of fierce competition among a large number of mobile operators. This dynamic is stimulating greater mobile phone adoption and use, but it is hard on mobile operators who are struggling to make a profit; average revenue per user (ARPU) has been declining while the market grows rapidly into lower-income customer groups. Operators are now responding by providing additional services - mServices - to stimulate incremental customer spending, over and above what is already spent on normal voice and texting capabilities.

Operators - and handset manufacturers - around the world are hoping mServices will address growth and margin requirements that traditional voice and texting services cannot. mServices provided through existing voice and texting capabilities can increase revenues through higher volume. And over time, the offering of more sophisticated services, like targeted customer profiling and web-based capabilities, will allow for premium pricing and increased profits. This also creates opportunity for other companies that either create or enable new mServices. Tools, components and turn-key solutions for mServices can all find customer demand and partnership opportunities, especially in emerging markets where service alternatives are few and operator pressures are mounting.

China's Innovation Breeds IP Respect?

The world's leading handset manufacturers, drawn to the explosive growth of the Chinese market, are facing a rising challenge there from indigenous manufacturers. China's rapidly expanding mobile subscriber base is supporting the expansion of local firms, who are using their knowledge of local tastes to cash in on Chinese consumers' insatiable appetite for the latest gadgets. Phones made and designed by Chinese firms will account for a third of the global handset market in 2009, and the increasing competition has caused the average price for a feature phone in China to drop from $220 to $90 in just five years. Native firms have grabbed market share by developing innovations, such as twin SIM card slots and phones that double as projectors, at a price and pace that foreign firms have difficulty matching.

These developments reflect the growing maturity of homegrown Chinese companies, which are starting to transform themselves from low-cost manufacturers into innovators in their own right. This evolving position gives Chinese firms, as well as the Chinese government, a greater stake in the protection of intellectual property (IP) rights, an issue which has long been a bone of contention between China and the West. China's regional and national governments are increasingly aware of the need for stronger IP protections and have begun to implement them.

These trends are a double-edged sword for Western firms. The rising innovation capacity of Chinese (and other developing-country) firms will make them stronger competitors in both developed and emerging markets. But greater protection for IP will make introducing products in emerging markets safer and potentially more profitable for foreign firms. Working with market experts can give firms a clearer picture of both the legal and sales landscape and help them to become more nimble contenders both at home and abroad.

Shifting Sands: Recent growth highlights the Middle East's technology potential

Jordan's budding IT industry got a big boost recently with the announcement of a new fund intended to help meet the financing needs of the country's growing crop of startup firms. Backers aim to launch the fund in 2010 with a combination of local enterprise and bank resources, along with support from the government and multinational investors in Jordan. The country's leader, King Abdullah, has made growing Jordan's $900 million technology industry a key part of his economic policy and is supporting the fund's creation. Initiatives like this are intended to give a further lift to indigenous firms and raise Jordan's status as a hub for the Arab technology industry, a position highlighted by Yahoo's recent acquisition of Amman-based Maktoob, the leading Arabic Internet portal.

These developments underscore the emergence of Middle Eastern countries as players in the global technology and communications industries as they try to diversify their economies. Abu Dhabi's Advanced Technology Investment Company (ATIC) made a big splash with its multi-billion dollar investment in AMD/GlobalFoundries and Chartered Semiconductor this year, while the brand new King Abdullah University of Science and Technology and its $10 billion endowment are attracting leading talent to Saudi Arabia. Mobile penetration has skyrocketed across the region and homegrown companies like Egypt's Orascom and Kuwait's Zain have become major operators both inside and outside of the Middle East.

The growth of Middle Eastern markets presents opportunities and challenges to multinationals. As noted above, companies based in the region are raising their profile both as acquirers and targets for foreign acquisition. Arab countries' populations are growing quickly and are disproportionately young, which makes them attractive markets for products and services in areas like education and entertainment. Despite recent liberalization, though, countries like Egypt, Morocco and Algeria remain heavily regulated in many aspects of their economy. The region is culturally diverse and politics remain a fault line. Learning the ins and outs of each national market may enable firms to better capitalize on this growing and multifaceted region.

Internet REALLY going global

by Karen Coppock
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ICANN voted to allow non-Latin-script web addresses this week, in a nod to the 800 or so million Internet users who read and write in Arabic, Chinese and other non-Latin-script languages.

This could fundamentally change the nature of the Internet. The billions of people that use non-Latin-script languages will soon be able to access sites without having to know the Latin-script suffix (e.g., .com)...but they will still have to type in the prefix, http://

Many people have voiced in on the pros and cons of this new policy. Regardless if you consider this a good or bad move, it is definitely a move toward the increased globalization of the Internet and has distinct ramifications for multi-national firms which were accustomed to managing their brands and customer-relations on a more uniform platform.

BOP not a market? I disagree...

by Karen Coppock
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An article in the Wall Street Journal yesterday, At the Base of the Pyramid, stated that "low-income people aren't actually a market."

While I agree with the fact that you need to create the market, I disagree with the basic premise that these individuals do not currently constitute a market. I bet that mobile phone companies and handset manufacturers would agree with me.

In research that Vital Wave Consulting conducted last year among individuals that earned as little as $1 a day, it became clear that there is a market for mobile phones and service. From maids to tamale street vendors to taxi cab drivers and doormen, almost all of the individuals we interviewed believed that a mobile phone would increase their income levels and standard of living. Since that survey, somewhere around half a billion more people have acquired mobile phones. Mobile phones are being purchased by some of the poorest people in the world because - as Iqbal Quadir has famously said - a phone can be an income-generating tool just like a cow.

Perhaps the key to creating new markets is empowering people to earn enough money to be able to purchase your goods and services. Poor people don't always have the luxury of purchasing gadgets that will save them time, but if you offer the opportunity of increased earnings, you just may create the market you are targeting.

Microsoft Takes a Deep Breath, Releases 7

by Brendan Smith

The long-heralded release of Microsoft's new operating system, Windows 7, at last dropped yesterday, and that whooshing sound you hear is likely a gentle sigh of relief washing over Redmond. Reviews for the new OS have been largely positive, helping Microsoft put some of the negative atmosphere caused by the Vista OS aside. Microsoft also announced better-than-expected financial results today, despite revenue and profit declines.

Competitors are not sitting still for the hoopla though. Apple has launched advertising aimed at getting users to buy a Mac rather than going through the upgrade process, which is easy for Vista users and not-so-easy for XP users, who must do a clean install and copy and replace all files they wish to keep. And IBM is also using the opportunity to introduce its own software suite, which it launched specifically for the African market, to consumers in North America too. IBM claims that its suite could save customers 50% off the cost of migrating to Windows 7. It's part of a "Microsoft-free" alliance with Canonical, Red Hat and Novell. The initial package was aimed at African government and education users, while the North American push is targeted towards business users.

Google has also recently stepped up efforts attempting to get computer users to do more in the cloud, where it in turn is being more aggressively pushed by Microsoft. Windows 7 may signal just the parting shot of a whole new war for users' affections.

From Drain to Gain: Emerging Markets Become Knowledge Hubs

Last week, PC giant HP and UNESCO announced a big expansion of their 'Brain Gain Initiative' in the Middle East and Africa. The program provides universities with equipment, training and support to foster collaboration with experts worldwide on innovative projects via grid and cloud computing. The program is expected to grow from five universities to 20 this year, with 100 higher-education institutions projected to be enrolled by 2011. The program's backers believe that extending advanced computing resources to university students will empower them to stay in their home countries.

This project highlights the way in which multinational corporations are taking a growing interest in the development of human capital in emerging markets. In recent months, executives from companies such as GE, IBM and Intel have discussed the 'internationalization' of their research and development strategies. Corporations are investing in research and innovation centers in emerging markets such as China, India and Brazil to capitalize on expanding local economies, qualified engineering and science graduates, and highly-skilled migrants returning home. Better protections for intellectual property globally and restrictions on immigration in many developed countries have added momentum to these trends.

These developments have major implications for both individual companies and entire nations. Developed nations will find their position as knowledge leaders challenged. And as emerging markets grow, companies can increasingly tap these nations' minds as well as their markets for competitive growth. Firms that find ways to partner with local research institutions and other incubators will be poised to capitalize on new sources of innovation potential.

In the coming months, Vital Wave Consulting will be conducting original research on the globalization of intellectual capital. Stay tuned for further insights.

China and India continue to outshine the world

by Brendan Smith

China and India continue to defy the global recession, and are even using the downturn to improve their trade and investment positions. The New York Times reports that China is profiting from the slowdown by gaining market share from its export competitors. The recession has battered global trade, with export-dependent economies like Japan, China and Germany taking a big hit. Recent evidence indicates that China is recovering more quickly than other countries. It vaulted into the position of world's largest exporter for the first time this year, displacing Germany and causing the U.S. to fall to third place. China also displaced Canada for the first time as the biggest source of imports to the American economy. The Chinese government has worked to vigorously support its exporters, offering tax breaks and low interest loans. China's growing trade surpluses are igniting trade tensions, however, as textile producers and others in both emerging and developed countries feel the pain of low-cost Chinese competition.

India, meanwhile, is benefiting from a surge in foreign investment as the world economy begins to recover and investors look for higher returns than the developed economy "safe havens" can provide. India attracted $15 billion in FDI in the second quarter, its second highest total ever. The Indian stock market is booming, as are sales of autos and low-end apartments. This growth will offset the poor monsoon rains and their impact on Indian agriculture. Inflation, though, is becoming a concern, and the rupee is appreciating, potentially harming Indian competitiveness. And the Indian government still needs to raise investment in infrastructure.

China and India's growth is a bright spot in the world economy for now. If it helps the rest of the world pull out of recession, then the temporary imbalances it is creating may be of fleeting importance. Just watch out for bubbles...

HIS Speaker Series highlights the intersection of health and information

Vital Wave Consulting's latest Speaker Series presentation on Friday, October 9 put the spotlight on health information systems in the developing world. Senior Consultant Brendan Smith walked through some of the key findings from Vital Wave's newly released study entitled Health Information Systems in Developing Countries: A Landscape Analysis, a research report sponsored by the Bill & Melinda Gates Foundation.

The paper seeks to analyze and characterize the developing-country landscape of national HIS ecosystems review some prominent individual examples of HIS implementations in the field to:

• identify the critical success factors
  
• determine the building blocks of scalable, sustainable projects that can strengthen health systems and improve health outcomes.

The report is the product of extensive field research around the globe and interviews with dozens of the world’s leading experts on national and regional health information systems.

Questions included the role of the private sector in developing country HIS and how the development community could take an active role in improving these systems.

Brendan also talked about a new forum called Insights on Health Information - A Global dialogue on the intersection of health and information technology. The website houses the report and also has forums that will allow for continued dialogue on the role of IT in health systems, as well as features that allow users to upload their own reports and information on HIS developments in different regions and in areas such as best practices and impact research. The site's library also contains links to papers and websites that will help users get better acquainted with the universe of resources available in the health information space.

The presentation and the audio file from the session will be posted on Vital Wave's website at www.vitalwaveconsulting.com later this week, so check back again to listen in.

The new website can be found at www.vitalwaveresearch.com/healthit

Insights on Health Information

Vital Wave Consulting is pleased to announce two exciting developments that address the growing interest around the use of information technology to improve global access to health care.

The first is the release of a new study entitled Health Information Systems in Developing Countries: A Landscape Analysis, a research report sponsored by the Bill & Melinda Gates Foundation. The paper seeks to analyze and characterize the developing-country landscape of national HIS ecosystems review some prominent individual examples of HIS implementations in the field to:

• identify the critical success factors
  
• determine the building blocks of scalable, sustainable projects that can strengthen health systems and improve health outcomes.

The report is the product of extensive field research around the globe and interviews with dozens of the world’s leading experts on national and regional health information systems.

The report will be housed on a new forum called Insights on Health Information - A Global dialogue on the intersection of health and information technology. The website also has forums that will allow for continued dialogue on the role of IT in health systems, as well as features that allow users to upload their own reports and information on HIS developments in different regions and in areas such as best practices and impact research. The site's library also contains links to papers and websites that will help users get better acquainted with the universe of resources available in the health information space.

We hope that both the report and the forum may serve to stimulate constructive conversations on how technology can play a role in improving access to quality health care for all. We welcome your participation and feedback.

The new website can be found at www.vitalwaveresearch.com/healthit

Gorillas and computers

by Karen Coppock
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Had the pleasure of having breakfast with Lawrence Zikusoka and his wife, Dr. Gladys Kalema-Zikusoka (and their two lovely children) this morning. Lawrence and Glady are the founders of Conservation Through Public Health in Uganda.

The couple was in town to present and exhibit their work at the Wildlife Conservation Network expo and to present at UC Davis.

CTPH leverages the expertise of their two founders - Lawrence is a telecommunications specialists and Gladys a veterinarian (both are conservationists) - to offer programs in wildlife health (primarily gorillas), human health and information, education and communication. Their innovative work in disease transmission control and increasing economic opportunities for people that live in protected areas in Africa has been recognized by a long list of awards including San Diego Zoo Conservation in Action Award, World Summit Award for Digital Inclusion, Conservation Fund Award from Skal International Kampala, Whitley Fund for Nature Gold Award and an Ashoka Fellowship.

Computers and gorillas seem like an odd mix, but CTPH recognizes the value of the wildlife and public health data they are collecting and technology can facilitate its widespread dissemination. Technology can also assist with providing economic opportunities for the people that live in or near remote wildlife parks to stem urban migration and hopefully poaching. Perhaps it is not such an odd combination.

First isiXhosa mNovel written in South Africa

by Karen Coppock
________________

Steve Vosloo let me know that the Shuttleworth Foundation has just launched the world's first mNovel written in both isiXhosa (an indigenous South African language) and English.

The first chapter of this teen mystery story set in Cape town (about a group of graffiti artists) is available at: http://kontax.mobi - you can read it on your WAP-enabled phone (or your PC).

Check back daily as a new chapter will be posted every day through October 19th.

According to the press release for this mNovel, the pro of mNovels is that it allows teens access books, which are largely unaffordable for them, using the most commonly available technology tool in Africa - the mobile phone. The con is that they many teens use "txtspk"when writing on a mobile phone, which hinders, rather than improves, literacy. The Shuttleworth Foundation is working with University of Cape Town researchers to determine the impact of these novels on teens.

What are your thoughts on mNovels and m4Lit?

Innovating to Increase Rural Reach

The Chinese government's economic stimulus program is giving a shot in the arm to PC sales in the vast but poor rural markets of China. The more than 700 million people that live in these areas have lacked access to the electronic and consumer goods that are now so pervasive in the country's big cities. But in August alone, more than 400,000 PCs were sold under a program that gives rural residents a 13% rebate for select products.

While such financial incentives have been crucial to increasing sales, PC makers like Lenovo and HP are also tapping into longstanding cultural practices and novel distribution methods to increase their market share in small towns and villages. Lenovo has begun a marketing campaign touting its PCs as betrothal gifts. PCs make appealing gifts in part because the large boxes they are packaged in create a buzz for families when they are delivered. HP, meanwhile, has expanded its reach in rural China by sponsoring entertainment events and sending buses with glitzy product displays to small towns, along with vans that sell PCs and other products. This has allowed the company to overcome the relatively large distances of many villages from electronics stores and helped boost its market share in China from 5% to 14% in just four years. PC makers have also increased their sales to consumers in rural China, where per capita income is only about $700, by offering lower-priced models.

All of these tactics demonstrate how important a tailored approach that considers the local cultural, logistical and economic realities is to successfully penetrating new markets. Many consumers in rural markets are hungry for modern conveniences but may still be attached to tradition, live far from traditional distributions channels and have limited purchasing power. Finding innovative ways to make products culturally relevant, affordable and available to rural consumers can be a recipe for success.

The Economist highlights the promise of mobile money

by Brendan Smith

The growing buzz over the use of mobile phones to bring access to financial services to the world's poor got a boost this week when The Economist featured the trend on its cover. The issue's survey on telecoms in emerging markets puts a spotlight on the well-known success of ventures such as Safaricom's mPesa, as well as the efforts by MTN to extend a mobile money service it has launched in Uganda to other markets in Africa. The efforts of organizations such as the Grameen Foundation, FrontlineSMS and Google are also discussed, while the mHealth for Development report authored by Vital Wave Consulting is cited as proof of innovation in the health space.

While mobile money and other mobile services (in areas like health, education and agriculture) show tremendous potential to transform the lives of the world's poor, serious obstacles remain. Regulatory concerns, particularly for trans-border transactions, have to be overcome, while the objections of banks and other traditional providers of financial services may slow the momentum for mobile money in many countries. Each successful demonstration of mobiles' power to transform lives, however, increases the likelihood that mobiles will be the tool to lift millions out of poverty.

mHealth Initiative West Coast Seminar

by Karen Coppock
_____________

The mHealth Initiative hosted a very interesting West Coast Seminar on How New Communication Patterns Will Change Healthcare in San Francisco last Friday.

Interesting tidbits from the various speakers throughout the day:

• EMTs in San Diego spearheaded the introduction of a mobile health application that would allow them to begin to administer treatment and access patient records (i.e., allergies to medications, etc.) on the way to the emergency room.

• The European Unions ultra-strict privacy and medical-oriented regulations make mHealth almost impossible in Europe....shame as Europe is so much more advanced than the US in terms of adopting text messaging.
  

• Walmart and CVS are not competing (successfully) for primary care physicians. One doctor mentioned that if hospitals alienate primary care doctors by requiring that they work after hours to answer patient emails and SMS queries, that they may jump to Walmart and CVS - reasonable working hours, decent pay...new competitive threat.
  

• Doctors categorically DO NOT want patients to send them SMS or email them directly - the doctors fear that they may not receive the message until it is too late and the patient has experienced a "negative event" (e.g., landed in the ER room or died). Doctors prefer for these communications to occur at the practice/group-level where a timely response can be better assured. Not so much a legal liability issue as a ethical one for them. They DO want to communicate amongst themselves, using any and all communication modes possible (e.g., voice, email, IM, video)

• One mega provider's virtual care data (2008): 24 million eVisits, 6 million secure emails, 6 million electronic prescription refills and 17 million electronic transmissions of lab results. In their SMS trials they found that after stating their name (~20 characters) and a mandatory opt out statement (~25 characters), they only had ~120 characters left in their SMS message - not much to work with

Was a great event - slides for the speakers - including the Vital Wave Consulting slides I presented on SMS-based mHealth applications in emerging markets - will be posted on their website soon - look for them here.

Challenges Chinese and Russian firms face with global expansion...

by Karen Coppock
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Moscow’s SKOLKOVO Institute for Emerging Market Studies (SIEMS), a think tank that focuses on emerging markets with offices in Beijing, Moscow and India, recently released a report on Operational Challenges Facing Emerging Multinationals from Russia and China. Is definitely worth reading, but for those pressed for time, below is a short summary.

SKOLKOVO analyzed 92 Chinese and 55 Russian multinational firms and identified six main obstacles - and methods of overcoming them - to international expansion (in order of importance):

Challenge #1: Low brand recognition

• potential solution: build your brand, focus on consumers in less-loyal, more price-sensitive emerging markets
• examples (not from the report): from Bharti's (India) interest in MTN (Africa), Telmex/America Movil's (Mexico) expansion across Latin America and Huawei's (China) success in emerging markets across the globe are all examples of emerging-market firms' exploration of other emerging markets. With different perceptions of risk and cost structures than their developed-world peers, these firms may also be better positioned for success in these markets as well.
  

Challenge #2: Talent shortage

• potential solution: hire locals
• example: "VympelCom has made it a policy to gradually involve local talent in management, replacing Russian expatriates – despite the fact that successful local staffs often see the job in a multinational as a chance to leave the country. Such policies are not very characteristic of young multinationals."

Challenge #3: Unsatisfactory knowledge transfer

• potential solution: make tactic knowledge explicit and foster organizational learning
  
• example: "According to Erik Eberhardson, who had led GAZ through the integration of LDV, two of his main takeaways from the LDV integration were that “one must ‘mix’ people more actively” and that “one should pay more attention to internal communication.”

Challenge #4: Inappropriate organizational structure

• potential solution: Start with scale in mind and empower local subsidiaries while maintaining central control
• example: "managers in remote subsidiaries should have enough decision-making power to adapt to the various environments, and be accountable for results. At the same time, the corporate center should have sufficient authority to harness potential synergies, failing of which would not create additional value."

Challenge #5: Political and regulatory risks

• potential solution: be informed and prepared...the authors offer little guidance in this area aside from saying to rely on local connections, but not too heavily on one group as they may lose favor as government administrations and preferences shift..
  

Challenge #6: Complex labor costs / relations

• potential solution: Tailor HR strategies to local, cultural norms

Having it all in Emerging Markets

Qualcomm CEO Paul Jacobs recently pointed to the opportunity at both the high and low end in emerging markets, citing the need for mobile handset manufacturers to sell inexpensive devices in tandem with high-end smartphones. The existence of a stratified market is an important feature of developing countries. On the one hand, there is a small, but wealthy and influential, upper class in fast-growing cities. On the other hand, there is also a very large, and increasingly addressable, lower-income group living above the subsistence level in urban and rural areas.

Indeed many multinationals are pursuing both sets of emerging-market customers. Nokia has penetrated the low end with affordable entry-level phones while maintaining a foothold at the high end. Its new Comes With Music service will initially provide high-end customers in markets such as Brazil, India and Mexico with unlimited music downloads. Meanwhile, the company has unveiled initiatives aimed at lower-income consumers such as installment plans, agricultural services and mobile payments. Microsoft has also adjusted its products to capture a larger segment of the lower-end market. It previously launched the Windows Starter Edition with reduced functionality and price compared to its standard operating system. More recently, Microsoft launched the new OneApp platform, which enables low-bandwidth versions of social networking and other applications to run on lower-end phones common in emerging markets. Adobe is also catering to both market segments. It decreased the features and price of its flagship Photoshop software to create Photoshop Elements, which is usable and affordable to a wider customer segment. The entire Netbook product category was initially geared to lower-income, first-time purchasers in developing countries, but found another market as a second PC in the developed world.

Targeting consumers at both ends of the market can run the risk of confusing a company’s brand identity, but there are also some clear benefits. High-end sales yield attractive margins which can help offset the smaller margins garnered at the low-end of the market. Entry-level products and services can build customer brand loyalty that may extend to a future purchase of a more advanced product. This also speaks to the benefits of targeting the growing middle-tier markets of the developing world. Addressing all levels of the market does not necessarily require a completely new offering. Through relatively small changes in functionality and pricing of core products, implementing new business models (e.g., services), or finding alternate usage scenarios, a company’s current offering becomes relevant to groups of consumers with entirely different needs, income levels and purchase behaviors. Multinational corporations may want to consider how their products, services and business models might be adapted (or repositioned) to have it all in emerging markets.

World Bank workshop provides strong signal for mobile momentum

by Brendan Smith

The momentum for using mobiles to promote development built further as the World Bank hosted a workshop on the use of mobiles for social and economic transformation on Wednesday at its headquarters in Washington. Speakers throughout the day used the opportunity to remind Bank employees, as well as observers watching the live webcast, that while mobiles present a great opportunity to boost development, a lot more needs to be done before the world of mServices reaches critical mass.

Vital Wave Consulting CEO Brooke Partridge kicked the day off with a presentation that laid out the scale of the opportunity provided by the global explosion in mobile and talked about the ways in which the World Bank and others in the development community could support efforts to scale mobile applications, including research that supports the business case for mServices. Senior Consultant Brendan Smith followed later with a talk on the landscape for mobile health applications, and pointed to some of the success factors that could allow the many pilots out in the field reach a level of sustainability that might be a game changer for those without access to quality health care.

Other presenters, from organizations like CGAP, Grameen Foundation, MobileActive and Voxiva, covered areas such as mobiles in education, rural development, governance and banking/payments. The common refrain was one of cautious enthusiasm: mobiles now reach further into the developing world than any other infrastructure and hold huge potential to change lives, but a great deal more coordination on the part of players in the government, NGO and private sector will be required before that potential is realized.

The main event page is at http://go.worldbank.org/7ZD6MGXWF0. You can watch the recorded webcast at mms://wbmswebcast1.worldbank.org/CITPO/2009-09-16/Mobile_Applications.asf.

IKEA's latest difficulties illustrate Russia's corruption issue

by Brendan Smith

Two weeks ago, we posted about Russia's economic travails and the perception of it as a tough place to do business, and we included a link to an article about Swedish furniture giant IKEA's recent decision several months back to halt new investment in the country until the country's massive corruption problem improves. One of the biggest obstacles cited by the retailer and other foreign investors is the demand for bribes by Russian officials in order to secure approval for hookups to utilities such as electricity and gas.

The plot thickened late last week, when IKEA revealed to the New York Times that it had recently lost a court decision in Russia after it canceled the contract of the company providing generator rentals (IKEA's way of avoiding bribes was to install its own generators). It did this after learning that the executive managing the generator rental company relationship had taken kickbacks to inflate the price of the generators, costing IKEA $196 million over two years.

IKEA thought it could recoup some of the lost money in Russian civil court, but instead the court ruled in the rental company's favor and ordered IKEA to pay it $7.1 million, to be held in escrow until an appeal was heard. But a lower court ordered the judgment money be withdrawn from IKEA's Citibank account. IKEA officials and lawyers suspect corruption in the courts too, as opposing lawyers seemed to know the decision in advance.

IKEA released details of the case in order to use publicity to embarrass Russian authorities into action. But graft seems to be so pervasive in Russia (the country ranked 147th out of 180 in Transparency International's rankings of clean government) that the countries authorities may be incapable of embarrassment. The losers (other than IKEA) in all of this? The average Russian, who pays higher prices and gets less choice when companies, both foreign and domestic, have to pay a bribe in order to do business.

World Bank hosting Mobile Innovations workshop with Vital Wave trainers- follow it live!

The World Bank is hosting a workshop on mobile applications and their use in development, and you are invited to participate via live webcast/social media in this e-Development Thematic Group Workshop. Vital Wave Consulting CEO Brooke Partridge and Senior Consultant Brendan Smith will be presenting on the development of mobile services and the potential of mobile health applications to improve health outcomes around the developing world. Listen in to their trainings live or after the event.

"Mobile Innovations for Social and Economic Transformation. From Pilots to Scaled-up Implementation"
Time: September 16, 2009, 9:00 am - 5:15 p.m (All times Washington DC)

Event Web page: http://go.worldbank.org/7ZD6MGXWF0

You can watch live and recorded webcast at: www.worldbank.org/edevelopment/live

Click here to register for live webcast: http://go.worldbank.org/BGZ8XU3KF0

Follow the event on Twitter at hashtag #Mobile09

Description:

'Explosive' is the only way to describe mobile phone growth. Over half of the world's 6.5 billion people now use a mobile and over 60 percent of mobile phone users live in developing countries. Mobile-based innovations are quickly emerging as the new frontier in transforming government, health, banking, education and many other sectors due to fast growing penetration of mobile phones even in the poorest and remotest areas of the globe. Many services can be now made available on a 24x7x365 basis at any place in the world covered by mobile networks, which today means almost everywhere. Through mobiles, for the first time ever, many public and private services have now reached poor households and communities. The demand for mobile applications is fast picking up developing countries. The multitude of highly innovative applications have been developed for mobile banking and payments, phone based information services for farmers and fishermen, locations based medical services and monitoring and data collection in the health sector, to name a few. However, the enormous potential of mobile devices for transforming delivery of public and financial services is still largely untapped.

This workshop aims to raise awareness of World Bank Group staff of the transformational role mobile technologies can play in improving service delivery, efficiency and transparency by show-casing mobile-enabled innovations in a number of sectors and identifying emerging lessons learned and ways to scale up for achieving operational efficiencies and development impact.

Agenda:

9:00 -10:15 am Overview of Mobile Innovations Space and Enabling Environment
10:15 -10:30 am Coffee Break
10:30 -11:45 am Mobile Innovations in Financial Services
11:45 - 1:00 pm Mobile Innovations in Health
1:00 - 2:30 pm Working Lunch & Session: Mobile Innovations in Education
2:30 - 3:45 pm Mobile Applications in Agriculture and Rural Development
3:45 - 4:00 pm Coffee Break
4:00 - 5:15 pm Mobile Innovations in Governance

Should you have any questions, please contact us at edevelopment@worldbank.org

e-Development Thematic Group, World Bank
http://www.worldbank.org/edevelopment