Mingling of ideas and individuals...

by Karen Coppock
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The United Nations Foundation along with Stanford University's Woods Institute for the Environment and Precourt Institute for Energy held a reception at Stanford last night.

Appears that the UN Foundation holds it board meetings in different locations and takes advantage of these meetings to host receptions in which executives, non-profit leaders and academics mingle and network. Last night was one such event.

Many familiar faces were in the crowd including members of Cisco's Emerging Market team and the New American Foundation, executives from TechSoup Global and InSTEDD, and prominent UN Foundation Board members and staff (Ted Turner, former Senator Timothy Wirth and Dr. Nafis Sadik).

Greatly enjoyed speaking with Craig Criddle a Professor of Environmental Engineering & Science and Senior Fellow, Woods Institute for the Environment. He and his team are doing some very interesting work on using methane to create biodegradable plastic bottles - will save money and decrease carbon emissions - a win/win proposition that is not being lost on the private sector.

All is all was an excellent event. Thank you UN Foundation for hosting these receptions in conjunction with your board meetings, think the mixing of diverse people and ideas can only lead to positive results and enjoyable conversations.

NComputing Gets a Leg Up in Low-cost PC Space

Recent articles praised NComputing, a company specializing in multi-user PC solutions, for its deal to provide every k-12 Macedonian student with one-to-one computer access. Prior to this, NComputing’'s customers were mostly suburban, developed-world school districts and government offices. The company has sold over 500,000 seats in less than two years. The Macedonia deal demonstrated that developing-country ministries of education may be a receptive market. This is the second foray into challenging the computer industry for NComputing’'s CEO, Stephen Dukker, who founded and led eMachines,– often credited with driving down the price of personal computers (PCs) worldwide.

NComputing’'s success shows that perhaps the needs of a suburban school in Dallas are not that different than those of a Macedonian school district. Both customers were looking for a solution that could stretch their existing technology budgets to accommodate more students. Capitalizing on existing PCs in under-equipped computer labs, NComputing’'s technology turns one CPU into individual computer access for up to seven students. NComputing built upon existing technology and previously-tested solutions to address a fundamental need to increase one-to-one computer access in emerging economies. Like many emerging-market solutions, the beauty is in the simplicity. The education market agrees. In a recent roundtable discussion with Vital Wave Consulting, Dukker explained that NComputing’'s biggest limiting factor is not demand but rather a robust enough channel to distribute the technology.

Research by Vital Wave Consulting suggests that NComputing'’s approach of adapting current technology for emerging-market needs has merit. (Indeed, the company has had more success to date than other high-profile, low-cost PC initiatives.) Vital Wave Consulting favors this approach as one of the key strategies for success in emerging markets. With straightforward technology adaptations like NComputing'’s multi-user solution, corporations could penetrate developing-country markets without undue disruption to current industry and technology processes.

Also in the news:

• 3Com Goes After Cisco in Emerging Markets
• Cheap Laptops are Still Missing in Action
• Ericsson’'s Approach to Low-End Markets is More of Same

Addressing the Value of WiMax to Emerging Market Consumers

Late last week, Motorola announced an agreement with Vietnam Data Communications to launch WiMax testing in Vietnam later this year. This announcement came just days after Ericsson spoke publicly about their refusal to put their weight behind WiMax, claiming it lacks a business model. While Ericsson continues to remain focused on cellular broadband, building upon existing infrastructure instead of transferring over capabilities to WiMax, others like Motorola and Intel believe that WiMax is a cost-efficient way to boost broadband adoption in developing countries. Motorola, Intel, Samsung, and others are clear about their interest in this emerging technology. Yet, widespread WiMax adoption in developing countries is not guaranteed.

Investors bear the risk that governments may choose not to support WiMax in their spectrum allocation policies favoring homegrown technologies. In addition to spectrum policy issues, WiMax success or failure rests on its true addressable market and its value proposition against available options in developing countries. Once established as a viable technology, the addressable market for WiMax will depend on customers’ eagerness to have and ability to afford broadband access and devices. With price-sensitive consumers, the value (or net utility) of broadband has to be carefully weighed, and recent studies show that, for new users, access to high-speed connections is not necessarily a priority.

The opportunity for corporations banking on WiMax is to focus on the value proposition of the technology in this market. The technology alone will not automatically induce adoption. Essential to WiMax success are service offerings, devices and go-to-market plans that maximize the net utility offered by the technology to the price-sensitive customers of emerging economies. This can be done, in part, through the introduction of services and applications via strategic relationships. Key partnership areas will include financial institutions to facilitate electronic payments and remittances, health professionals for delivering and collecting health-related information, and advertisers who are willing to supplement WiMax service costs in return for access to these new markets. With a great value proposition for the customer and reliable market data about where to focus their efforts, MNCs will be better equipped to benefit from the potential of the WiMax market.

Also in the news:

• Cisco shows link between economic development and broadband penetration
• Laptop industry eyes emerging markets
• MNC business execs know little about business in emerging markets

Quantifiable Business Value required for Social Development in Emerging Markets

Increasingly, multinational corporations are required to justify business investments in developing countries as having benefits for local populations, and likewise, philanthropy departments are asked to demonstrate the business rationale for philanthropic programs. IDG news recently discussed how some corporations are managing to achieve this delicate balance better than others. Recognizing and quantifying a blended value for these types of investments is necessary as technology companies search for near- and long-term growth opportunities in lower-income markets around the world where infrastructure is weak and educational programs are limited. For years, technology companies have addressed these issues through philanthropic or corporate social responsibility projects. As developing countries become increasingly attractive consumer markets, however, social development initiatives married to the company’s core products and services are proving to be sound strategic business investments.

The shift from philanthropy to sustainable business investments, or “social innovation,” may be here to stay, according to Unilever’s Chief Executive Patrick Cescau. Recently, Cescau even suggests that corporate social responsibility (CSR) may, in fact, be dying out. By addressing socio-economic conditions with their products and services, companies are both identifying next-generation consumers and discovering novel, low-cost ways of using technology.

Business managers sometimes find resistance to focusing company resources on emerging-market business growth due to the challenge of quantifying the opportunities and benefits. Managers responsible for growth in emerging markets will gain greater traction internally by demonstrating the business value of social development initiatives. These investments must be measured on the basis of market size, financial opportunity and alignment with current business systems and goals. By applying business rigor to social development initiatives, companies can ensure their sustainability and ultimately maximize the benefit to the target markets.

Also in the News:

• Kenya registers 1000 users daily on mobile money transfer system
• Intel launches consumer-focused low-cost laptop, Eee PC
• World to see two billion PCs by 2015

Cisco Invests in Designing for Local Markets

In today’s business climate, it is common for technology companies to be bullish on India, but Cisco is taking action by hunting for acquisition targets among Indian companies that design new technologies specifically for developing countries. Vital Wave Consulting closely follows the evolution of multinational corporate activity in developing countries. After decades of outsourcing to reduce labor costs, companies are now adding the creation of learning and innovation centers to their emerging-market strategies.

Outsourcing research and development (R&D) is not new to corporations; around 300 multinationals, including the majority of leading IT and telecommunications companies, have R&D centers in China. But creating innovation centers in developing countries for the purpose of designing products explicitly for those markets is still an anomaly. HP led the way with its i-Community initiative in South Africa and India in 2000. Intel followed with its Platform Definition Centers, and now Cisco is following a similar strategy through acquisition.

Cisco and its predecessors have realized that a growing consumer base in rapidly-developing economies is evolving into a profitable market with distinct technology needs and preferences. Companies can no longer recycle developed-world technology in emerging markets and hope to win a leadership position. To be successful, products must be developed with the needs of these markets in mind. And to truly understand these needs, it benefits companies to invest in on-the-ground learning laboratories in the heart of these emerging mass markets.

Also in the news:

• HP launches computer lab at Chinese University
• Hugo Chavez puts his personal stamp on the emerging-market PC race
• Vodafone and other mobile operators focus on emerging markets

Google Looking for Traction with Online Apps

March 28, 2007

Google Looking for Traction with Online Apps

At the ICT for Sub-Saharan Africa Conference in San Francisco last week, Google’s Internet strategist Vint Cerf announced that the company will offer free Google Apps to universities in Kenya and Rwanda. Over 200,000 students and government employees will have free access to online applications such as G-mail, Google Docs and Spreadsheets, Talk, Calendar and Page Creator.

Google would clearly like to break Microsoft’s hold on desktop applications by making them web-based services. In Africa, they are searching for globally-viable marketing, pricing and distribution models. They’re also testing the acceptance of new models in a key demographic – university students. Vital Wave Consulting research confirms that that education is a high-growth segment for ICT in developing countries. And its connection to other market segments makes this a strategic play for Google.

Microsoft is not asleep at the wheel. The company hosted the “Under the Radar” conference last week, at which several start-ups demonstrated online applications that would complement or rival MS Office. If Google and/or Microsoft change the desktop software business model to web-based services, there will be an excellent opportunity for smaller developers to offer emerging-market buyers online applications with a competitive price, locally relevant uses, and the right mix of services.

Also in the news this week

• Cisco Capital extends its “Easy Lease” program to Turkey to spur SMB sales and increase the capacity of channel partners.
• SmartMoney and BusinessWeek discuss how HP and Dell are cutting into the Chinese PC market.
• Peripherals in India see remarkable incremental growth in ‘06.

Low-cost Laptop Competition Good for the IT Industry

March 7, 2007

Low-cost Laptop Competition Good for the IT Industry

Respected tech writer Michael Kanellos offers up this week’s nugget with his discussion of which approach to emerging-market computing will prevail – Intel’s full-service Classmate PC, or One Laptop Per Child’s less-expensive XO machine.

Kanellos points out that the battle boils down to the OLPC’s centralized assembly (and the resulting cost savings) and Intel’s partnership with local manufacturers and suppliers to provide support, maintenance and locally-relevant content.

OLPC has clearly succeeded in driving innovation and competition in the IT industry, and four million orders for the XO demonstrate demand and the willingness of governments to spend on IT for education.

As the leaders of each initiative, Nicholas Negroponte at OLPC and Craig Barrett of Intel, define their distinct approach to product and market development, buyers will have clearer choices and the IT industry will learn valuable lessons about how to expand near-term growth markets in developing countries.

Also in the news this week

• UN-GAID conference coverage in Forbes and InformationWeek
• Cisco’s high margins in emerging markets