Thursday, February 26, 2009

Success for Alternative PC Form Factor in Brazil

Though it hasn’t been officially confirmed by the Brazilian government, the Canadian company Userful announced last week that they and their Brazilian partners had won a contract to supply computing access to 360,000 students in all 5,560 local municipalities. Userful offers a software solution that allows up to 10 people independent use of one desktop PC. The solution, which runs only on a Linux platform, reduces the initial per-seat cost of computing to less than $100.

The Brazilian project was prefaced by a similar mega-deal in Macedonia in 2007; that 180,000-seat contract was awarded to Userful’s main rival, NComputing. PC companies probably feel the sting of losing a Brazilian tender a little more than a Macedonian tender because of the comparative size and prominence of the markets. But both deals demonstrate a critical aspect of the emerging-market business environment that may alarm traditional market leaders – that is, some emerging-market governments (and officials in key segments like education) are becoming more open-minded to alternative platforms and form-factors. The primary concern for public sector officials in emerging markets is getting the most from a limited budget. They may also be less concerned with legacy systems, particularly for greenfield and rural deployments, and some harbor an overt bias against leading mature-market companies.

The shifting decision-making environment creates opportunities for smaller hardware and software companies, training and service providers, and software developers. Companies like Userful and NComputing overcome resistance to abandoning the 1:1 computer-to-user model by offering a compelling price advantage. They may also win points by partnering with local hardware providers, a common concern among local officials who want to see a direct benefit to the local computer industry. The increasing willingness of emerging-market buyers to adopt alternative form factors and business models increases the importance of strong local relationships (among potential buyers and partners). It also means that traditional market leaders must broaden their list of possible competitors in an environment where cost savings are paramount to decision-makers in both mature and emerging markets.

1 comment:

Anonymous said...

A smartly written and thought out story with a good angle. I'd agree the local partnering is a key element of success in making this type of broad "country-wide" technology introduction palatable. You can imagine how made-in brazil hardware + a made in brazil operating system is much more likely to create resonance. And that is why this deployment is going ahead whereas the 1M desktops sun announced into China a few years back went nowhere.