Finally! Relief for Hungry Farm Dogs

Last summer, Google introduced its developmental drone delivery system, "Project Wing," with a video showing a dog food air drop to a farmer in the Australian outback. This was at the height of the Ebola outbreak in West Africa, and just a few weeks after deadly mudslides in Afghanistan and India, and a severe earthquake in Ludian, China. Instead of highlighting the disaster relief potential for drone delivery, or demonstrating that drones have uses beyond spying and launching missiles, Google's marketing department promised help for rural dog owners hoping to avoid a long drive into town. And this spectacular marketing miss has since been repeated by other leading tech innovators. The slick videos, launch parties, and press releases for Tesla's home battery, Apple's HealthKit, and Microsoft's HoloLens all suggest there is no world beyond North American and Europe.

These innovations would be a slight convenience or a cool new gadget for developed-country users, but a valuable necessity in developing countries, where systems of house numbering, street naming, postal delivery, grid power, data collection, job training, and healthcare are all lacking. Few will blame tech giants for focusing mainly on lucrative consumer, gaming, and medical markets in developed countries; that's where their marketing and distribution channels exist. And of course there are considerable challenges to launching and scaling in developing countries. But the principle of user-centered design begins with the idea that users really need what you're building. Do doctors in a remote relief center in Nepal need antibiotics delivered by drone? Yes, they do - much more than an Aussie farmer needs a bag of kibble. They also need to report and track cholera outbreaks. And they might also have to walk a scared, inexperienced health worker in another town through an amputation - both wearing a HoloLens connected to a Tesla Powerwall.

The use cases for these innovations in emerging markets are plentiful, and the utility is far more convincing than it is in most mature-market contexts. Tech innovators would certainly claim that developing-country consumers are free to buy and use their new products and services, but they are being priced too high for most people, and there has been no appreciable effort to market or distribute them in developing countries. (Elon Musk claims the Powerwall would be great for "people in remote parts of the world," but China is the only developing country for which Tesla's website has been adapted.) Tech companies that ignore emerging markets are leaving the doors of opportunity open to low-cost imitators and counterfeiters. Instead, they should be developing tailored, affordable versions of these solutions for specific geographies and use cases. They could also pair these new products (through partnership or acquisition) with enabling innovations in payment and delivery so they can market, sell, and distribute them anywhere in the world. Apple will make a quarter of their income - more than $60 billion - in China this year, up from less than $1 billion in 2009. Are tech companies doing what it takes to realize this kind of growth in emerging markets when today's innovations are as common as a second-hand iPhone?

Car Talk

First came machines, then came machines that talk. Up next, machines that talk to each other. Consider the automobile, which started out as a fairly simple machine, then acquired more computer components and systems, and will soon be equipped with dozens, perhaps hundreds, of sensors integrating with drivers and passengers, the environment, and other cars.

The next wave of car technology is coming just as millions of new drivers in Asia, Africa, and Latin America get their first cars, and the role and function of cars is expanding beyond a simple people mover. More and more, cars are being seen as data generators, and the data they yield can populate an ever-wider range of databases (mapping, traffic, civil services, planning, insurance, consumer trends, health, and more). Given the amount of time people spend in their cars, there is already jockeying for position among data-hungry tech companies to integrate portable handheld devices with car systems - or better yet, to build sensors, chips, antennae, and software right into the cars. Tech industry giants, including Google, Apple, Microsoft, Qualcomm, and Intel, have been making sizeable investments in car-based technologies for several years.

These companies are sensing opportunities, and rightly so. Global sales of passenger cars will top 70 million in 2014, led by China (at 18 million units, or more than double the sales in the US). Among drivers - even in lower-income countries - there is a clear interest in avoiding traffic and collisions, and optimizing the driving environment with safety, comfort, entertainment, and information. The companies behind these technologies also understand that driving somewhere is evidence of consumer habits and intent. In emerging markets, having capable and reliable broadband networks, the right business models, the ability to connect multiple device types, and tailored solutions for different demographic segments are some of the more obvious challenges. As these challenges are better understood, there will be openings for hardware and software companies, mobile operators, service providers, programmers, and many others. One day soon, you may have to squeeze your Google Roadster between an Apple iCar and an AlibabaVan on the crowded streets of Bangkok.

Is China Changing its Tune on Foreign Technology Companies?

China's very public spat with Google on Internet censorship has been making the news for months, but recently there have been a few developments which indicate that China is slowly becoming a friendlier environment for foreign technology firms. Microsoft, which like other companies has struggled to operate in a market where software piracy is rampant, won a major victory in a Shanghai district court against a Chinese insurance company found to be using illegal copies of its software. The court ordered the company to pay Microsoft over $300,000 in damages. The judgment comes on the heels of the Chinese government's decision to relax procurement rules that forced the government to choose Chinese technology for public tenders, a rule China's trading partners charged was a protectionist measure.

These developments are critical for several reasons. The Business Software Alliance says that piracy in China cost its members $6.7 billion in lost revenue in 2008, so firms have a strong financial interest in seeing China strengthen its enforcement of intellectual property (IP) protection. But there are other reasons why these stories matter to foreign technology firms. In the wake of China's unwillingness to back down in its confrontation with Google, many firms may have feared that they have little leverage in disputes that directly affect their ability to profitably operate in China. The sheer size and growth rate of the Chinese market means that companies wanting to do business there would have to bend to the Chinese government's decisions, for fear of being locked out. These latest developments provide hope that the Chinese government has a stake in enforcing IP laws and opening procurement rules, perhaps because Chinese firms are moving up the value chain and want reciprocal access to foreign markets.

Doing business in China still poses challenges for even large firms experienced in emerging markets, but these recent developments indicate new opportunity. For companies ready to seize it, a robust but respectful government relations effort can pay off in the long term, as Microsoft's high-level engagement with the Chinese leadership demonstrates. But persistence in lobbying home country governments to enforce trade rules and act as an advocate is also crucial, because it can magnify firms' influence and increase their leverage. Developing patient but proactive government engagement efforts on issues vital to a firm's success can yield positive results over the long term.

Features, Functionality AND Services, Oh My!

Both Microsoft and Nokia announced "social" phones designed specifically for optimal performance as social networking tools, according to the GSMA's Mobile Business Briefing this week. These announcements came on the heels of news from Ericsson that data surpassed voice traffic on mobile networks worldwide for the first time in December of 2009. Ericsson also noted that social networking is a significant source of this data traffic with more than 100 million subscribers accessing Facebook via their mobile devices.

The transformation to data-centric mobile networks is introducing a new set of variables into the handset design process. Instead of just including additional features or functionality, designers now are considering the types of services users want to use on their phone. In this new paradigm, designers must determine what combination of features is required and which features and functionalities optimize the device for a specific service. For instance, both the new Microsoft and Nokia devices have high-quality cameras, as sharing pictures is a key component of social networking.

Market segmentation and conjoint analysis are just two of the tools firms may consider to inform the design of service-specific mobile communications devices. Market segmentation will enable the identification of the specific services - and users - that warrant specialized design. Conjoint analysis can be used to measure the relative value of the different features and functionality as well as to determine the trade-offs required for affordability and sleek design. As the industry matures and reaches saturation, users will require more sophisticated devices. Fortunately, designers have a wide range of tools they can draw upon to satisfy these needs.

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.

China is not singing Bing's praises

by Brendan Smith

Microsoft's big investment in its new Bing 'decision engine' is paying some early dividends in the form of glowing reviews and renewed credibility in the search market (even if early share gains are modest). But it is already running up against the 800-pound gorilla that has long bedeviled market leader Google: China's government. The government recently decided to block Bing because of a feature called smart motion preview that allows users to see a preview of videos produced by searches by navigating over them. China (as well as child advocacy groups in the U.S.) says that the feature exposes children to pornographic or violent materials. The move is the latest in a series of moves by the government to install mandatory software filters on PCs sold in China, all steps the government says are aimed at protecting children.

Other foreign websites, such as Google-owned YouTube, Facebook, and Flickr, have also been blocked as a result of China's stepped-up efforts to regulate Internet content access. Though protecting children is the stated aim of the policy, these moves come at a time when the Chinese government is concerned about commemorations of the twentieth anniversary of the Tiananmen Square crackdown and nervous about the explosion of ethnic violence in its restive Xinjiang region. Many observers, therefore, think the more stringent regulations are more about asserting political control than shielding young eyes.

Western Internet sites are caught between a rock and a hard place with China's latest regulations. Failure to comply shuts them out of the huge and growing Chinese market, but appearing to bend to what many view as censorship opens them to criticism that they are complicit with China's authoritarian government, and that may hurt them in Western markets.

The implications of these moves are considerable for foreign companies trying to wrest market share from Beijing-based leader Baidu. Google has recently lost further share to Baidu, and Bing will have to overcome this latest hurdle if it wants to make a splash in China. Western technology companies need to consider how their products and services may be affected by government policies on content, and whether gains they may make by complying with Chinese rules are worth the cost they may incur elsewhere.

Cloud Computing – No Borders but Different Rules

Vital Wave Consulting provides services to large technology companies, capital investors, and foundations, but we have a typical Silicon Valley soft spot for hopeful start-ups. Earlier this week came the news of an Australian couple, John and Jeanne Nicholls, who emerged from their garage with a $100 palm-sized device that relies on “cloud computing” for processing and storage. Their company, ThinLinX, will soon launch several models of the Hot-E, a solid-state thin client aimed at “cost- and power-conscious small and medium businesses, schools and developing countries where fully-fledged PCs are prohibitively expensive, impractical or draw too much power.” The Nicholls claim to be partnering with a large but unnamed software company to develop the device.

Much of the value proposition cited by ThinLinX (e.g., affordability and low power consumption) is reminiscent of previous ill-fated devices such as AMD’s Personal Internet Communicator (PIC). Success in this category of device depends almost entirely on availability of broadband and the viability of cloud computing. Cloud computing, or remote software delivery and data storage, is the subject of intense interest (and investment) by Sun, Google, IBM, Microsoft, Amazon, and others. Merrill Lynch estimates the cloud computing market will grow to $95 billion by 2013, and IBM will spend $360 million for a new cloud computing data center in North Carolina (their ninth such center worldwide). So far, however, enterprise has been reluctant to relegate their storage and processing to server farms due to security concerns, and consumers seem resistant because of a lack of broadband access or unfamiliarity with the model.

New devices like the Hot-E, along with a growing host of cloud-based applications and online operating systems (e.g., OpenOffice, GoogleApps, Glide) may not be enough to draw the masses into the clouds. But additional efforts by Microsoft or top global PC manufacturers could tip the scales for broader adoption. Whatever serves as the catalyst for mass adoption of cloud computing, there will be dazzling opportunities for many companies, from garage-dwelling entrepreneurs to small software developers to multinational IT companies. Success in emerging markets will likely come to those who understand that, while cloud computing services are technically available anywhere there's a broadband connection, adoption and use will not not necessarily follow the pattern of mature markets. Successful cloud computing companies will do their homework on local issues like broadband availability and reliability, business model appeal, user preferences and price sensitivity, while carefully choosing partners who contribute toward a strong and financially viable value chain.

Also in the news:

• Asustek anticipates healthy ‘09
• IBM sees continued strong growth in emerging markets
• Yahoo! struggling with low ad revenues

Will Bridging Common Devices Be a Bridge to New Users?

Has Microsoft shifted its thinking on how to win the hearts, minds and wallets of the world’s low-income consumers? Dan Nystedt, a sharp-eyed tech writer at IDG News Service, suggested last week that new management in the company’s Unlimited Potential Group may favor mobile devices over low-cost PCs and shared computing in the effort to increase technology access in emerging markets. Though details are few and a release date is not on the calendar, Microsoft has been working on a low-to-mid range smart phone that connects to a TV docking station, so data on the handset can be displayed on a TV screen, essentially lowering the cost of computing for the poor.

Vital Wave Consulting likes the simple logic of bridging two common and accessible pieces of technology in developing-country homes – the TV and the mobile phone. There are over 850 million households with TVs in the developing world, and mobile penetration is extending to the most remote corners of the globe. The learning curve for each device is relatively flat and global ownership is an indication of affordability. But in one-TV homes there may be stiff competition between PC-time and regular television programming.

Microsoft is the right company to make such a technology work. It’s primarily a software issue, and the company’s experience with Windows Mobile could speed innovation and acceptance in the market. Adding applications and functions to a handset and turning the TV into a monitor could alter the fundamental perception of each device’s utility. It could also convert the handset into a family tool, rather than a private device. By partnering with Microsoft, mobile operators have two ways to increase ARPU – offer more services and increase the number of users on a single handset. Broadening the utility of existing technology devices is a good strategy for all technology companies. Emerging-market consumers are able to justify spending precious resources on technology that solves more problems for more people in the household.

Also in the news:

• IBM's developing-country service corps ramps up
• Microsoft defines requirements for XP on low-cost PCs
• Apple signs non-exclusive deal to get into emerging markets

New Software for New Solutions

As low-cost laptop sales in developing countries heat up, the discussion of appropriate operating system software has gotten louder. Some recent press reports say Linux may not be the answer because users find it hard to use and Asus, the segment leader, believes that Eee PCs with Windows XP preloaded will account for 2/3 of all sales worldwide. Others argue that using Linux operating systems enables manufacturers to offer a full software suite at a dramatically reduced purchase price and that Windows Vista won’t work on the stripped-down hardware configurations of the low-cost laptops. Microsoft, which has opted to continue to make Windows XP available to hardware vendors beyond its original retirement date, has so far stuck to its revised June 2008 deadline to end all Windows XP sales - making this a critical issue for low-cost laptop manufacturers.

Most industry watchers would agree that the emerging low-cost laptop segment is gaining traction because of its "purpose-built" approach. Rather than creating lower-performing versions of existing models, manufacturers, which many say were inspired by the One Laptop Per Child Initiative, created entirely new solutions. This disruptive technology was not over-loaded with bells and whistles – as many engineering achievements are – but instead focused on a few core requirements and delivered “just enough” functionality. To date, the software industry has focused less on a purpose-built approach for emerging markets and more on identifying which existing software suites fit the hardware requirements.

Business leaders developing strategies for low-cost laptops in emerging markets would do well to put aside the debate over Open Source versus proprietary software and instead focus on the modifications that suit both the platform and the target markets. The recent success of new laptop characteristics such as low-cost, low-power, ruggedized laptops demonstrates that solutions designed specifically for the unique requirements of rapidly expanding emerging markets are needed and valued by users. The opportunity for the software industry is to build or modify operating systems that both address the features and functionality desired by developing-country users and operate efficiently on low-cost laptops.

Also in the news:

• Desktop Eee PC may hit the market
• Reuters offers mobile data downloads for Indian farmers
• Low-cost handsets drive mobile market

Measuring Gates' Creative Capitalism

Last month’s World Economic Forum provided a good setting for one of Bill Gates’ parting speeches as a Microsoft employee and his personal reflections on the role of capitalism in the modern world. Speaking to global industry and political leaders, Gates urged his audience to find a way to ensure that capitalism serves the world’s poor. Labeling this vision “Creative Capitalism,” Gates advocated a twin mission for corporations: make profits and improve the lives of those who do not currently benefit from market forces. As Gates shifts to management of his $39 billion foundation, he will encourage the world’s largest businesses to design products and services that address the needs of the poor. He suggested that, when profit is not feasible, corporations should be motivated by the recognition that comes with serving the poor.

While “Creative Capitalism” may gain currency as a new buzz word, the concept is not new. Many large multinational corporations (MNCs) have tried to find the right mix of pure philanthropy, market development and business development in poor countries. HP’s e-Inclusion program, AMD’s 50x15 initiative and Cisco’s Networking Academies are (or were) pioneering programs that merge self-interest with service. With a new spotlight on this type of business approach, it is worth noting the most common reason for failure – the challenge of measuring results. While Gates stressed the value of recognition, he did not explain how business managers can measure it. To garner the support of shareholders and ensure long-term company commitment, all forms of value should be quantifiable.

Gates’ spotlight on business in new markets will surely increase public pressure on MNCs to demonstrate efforts in this area. This presents an opportunity for MNCs to apply rigorous business practices to their emerging-market effort. MNCs that are committed to becoming recognizable leaders in the developing world will ensure that programs designed to capitalize on new markets are fully incorporated into the company’s main lines of business, rather than lumped into a soft basket of corporate social responsibility (CSR) initiatives. By developing new methods for quantifying abstract values, business managers can see both the immediate and long-term value of investments in new markets. If companies react to Gates’ call by beefing up their CSR programs, they will be missing out on the lessons learned long before “Creative Capitalism” showed up at Davos.

Also in the news:

• MSI plans to launch low-cost laptop
• China gaining in tech sector while Latin America lags
• Crime fears spread as cheap PCs head to Africa

Google's Phone Keeps Everybody Talking

Google is characteristically silent, but rumors about the "Gphone" have people talking. According to Forbes Magazine, Google plans to enter the smart-phone market with a high-end handset subsidized by targeted advertising. Brian Caulfield, the article’s author, suggests that Google’s ad-supported mobile phones may best fit consumers in emerging economies. An effective advertising model could reduce the price of the handset and/or service, appealing to this price-sensitive market. Caulfield points out that a mass-market approach fits Google’s business model, and suggests China Mobile and Orange are possible partners.

Google certainly knows how to monetize advertising volume, but a foray into hardware would put the company well outside its comfort zone. While Google has entered partnerships in the past, it has never been as dependent on those partners as it would be with telecommunications partners in this new scenario. A phone with a great user interface and cool applications may get the market’s attention, but the ability to scale will be largely in the hands of Google’s partners. Google’s strength is its ability to abandon traditional business models. A mobile phone that makes money on something other than voice or data transmission may fundamentally disrupt the market, but is Google in the best position to capitalize on the opportunity?

An ad-based revenue model presents an opportunity for a host of other technology players. Yahoo! and AOL are also chasing emerging-market eyeballs through acquisitions and partnerships that integrate their services with newer handsets. Larger phone manufacturers and operators are exploring an ad-based interface, trying to secure revenues without giving too much away to content providers. Microsoft software is available on 140 mobile phone models, so it has well-established ties in the telecommunications industry. Perhaps a (long-rumored) partnership between Yahoo! and Microsoft would pave the way for an ad-based mobile OS. Ultimately, the winner in this race will be the company that offers the most compelling deal to developing-country operators without losing focus on the real opportunity - access to two billion eyeballs.

Also in the news:

• Quanta denies that OLPC shipments are delayed
• India mulls open standards
• Cisco chooses WiMax

From Design to Market: Commercializing Innovations for Emerging Markets

Sometimes, the most elegant solutions to a problem are also the simplest. Last week, Tapan Parikh from the University of Washington was named Innovator of the Year by MIT’s Technology Review for his small-business software applications designed for mobile phones. Parikh's solutions help farmers and women's self-help groups capture and store information, manage their finances and communicate with lenders.

Parikh's simple, easy-to-use applications buck the trend of faster, more powerful technology for an increasingly sophisticated world. Many leading multinational companies have invested heavily to establish research and development centers in emerging markets, but then question whether the investment is paying off. But perhaps the problem is closer to home than in far-off R&D labs. Advance word from the researchers and developers attending this week's Home-Oriented IT (HOIT) conference in Chennai, India is that developing technology for local markets is sometimes easier than convincing corporate business managers to commercialize them.

Overseas labs frequently produce solutions that, like Parikh’s, receive positive press coverage, awards, and broad recognition for their relevance and quality. Nevertheless, they are often released only regionally and reach a fraction of their potential market. Why? In part, because emerging-market solutions are often simpler and cheaper – giving mature-market business managers visions of declining margins and cannibalization of existing products.

Companies like Microsoft, Intel and Nokia (among others) have developed various strategies for ensuring that emerging-market solutions do not cannibalize existing product lines. And the fact is, many products conceived in overseas labs, or by entrepreneurs, would not find a ready market in North America or Europe anyway. Researchers who assess and articulate the financial and operational opportunities posed by their innovations are better equipped to validate or dissipate the fears of business managers. With accurate assessment of the market opportunity and a realistic view of threats to their existing products, companies will better capitalize on emerging-market trends that are essential to maintaining global market share.

Also in the news:

• The iPhone in developing markets?
• Nokia uses anthropologists to design low-end handsets
• Nigeria replacing South Africa as Africa's economic engine

Are Mobile Phones Going the Way of Refrigerators?

A recent study by Enterprise Africa! on emerging-market technology trends examines the poverty-alleviating aspects of mobile phones in Africa. The organization looked closely at the small, Southern African nation of Botswana, where cell phone subscribers jumped from zero in 1998 to 823,070 by March 2006. With mobile technology now reaching roughly half the population, Botswana is a model for other developing economies striving to impact development through access to technology. Most notable about the study is the utilitarian rationale provided for cell phone ownership - safety and business expansion.

As handsets penetrate ever-lower rungs of the economic ladder, new buyers are more concerned that the purchase can be justified as an essential utility. Mobile phone companies in developing countries are competing for a share of the wallet with non-traditional competitors such as household appliance retailers. Vital Wave Consulting research found that many low-income residents of developing countries consider a stove, TV and refrigerator to be “essentials” and all other electronic and durable goods, including mobile phones, “luxuries.” In one study of prospective phone buyers in six emerging-market countries, TVs were preferred over both landline and mobile phones by two-thirds of respondents.

In order to capture growth opportunities in these rapidly-expanding markets, mobile phone service providers and manufacturers would do well to convey the safety and business benefits of cell phones to potential customers who live on little more than $1 per day. Low-income consumers are required by virtue of their limited resources to conduct a careful cost-benefit analysis for all purchases. With refined value-proposition messaging that includes the utilitarian functionality of cell phones, the mobile industry may accelerate the growth of their market opportunity among lower-income segments in developing countries.

Also in the news:

• The XO Computer may hit US retail markets by Christmas
• Microsoft Expands Pay-As-You-Go Model for Office ’07
• World Bank and Google Mash Development and Business

Raising the Bar on the PC Price Debate

Microsoft and AMD teamed up last week to launch the IQ PC, a desktop computer targeting the education market in India. Using local partners such as Zenith Computers to produce and distribute the hardware, the PC is being piloted in select Indian cities with plans for a national rollout later this year. The computer comes equipped with a basic version of the Windows Vista operating system, an assortment of educational software such as Encarta and Student 2007, and an online content repository. The PC appears to be a well-designed education solution, but with a $513 price tag, Microsoft’s latest effort to join the low-cost PC race is being criticized by bloggers and the press for being too costly for developing countries.

Increasingly, media and online coverage of PC initiatives for education in developing countries have focused disproportionately on the price tag of the computing device. Dell’s EC280 sells for $336; Intel’s Classmate PC is coming in at $249; and the One Laptop per Child program’s XO computer (formerly called the $100 laptop) costs $175. Attention on the price of the PC, however, may ultimately be misleading buyers. The total cost of PC ownership (TCO) also includes standard costs such as support, training and installation as well as often-overlooked expenses such as electricity consumption and insurance which can be significant in an emerging-market setting.

For price-conscious customers in emerging markets, understanding the real price tag of technology purchases requires an assessment of costs over the life span of the product. With more comprehensive TCO analyses, buyers are better equipped to make informed decisions. Corporations seeking to combat apples-to-oranges comparisons between education computing solutions will deepen the discussion to one of total cost of ownership. It is only then that the public discourse will address the true cost of computing devices for the classrooms of developing countries.

Also in the news:

• AMD Builds Ultra-Mobile PC with Chinese Company
• Financial Services See New Markets in the Developing World
• Intel Inside the Third World

Microsoft’s Gambit Strengthens Intel’s Hand

April 25, 2007

Microsoft’s Gambit Strengthens Intel’s Hand

Bill Gates’ splashy announcement last week in Beijing that Microsoft will begin to offer a $3 software package called the “Student Innovation Suite” to emerging market schools put the low-cost PC ball in the manufacturers’ court.

The terms of the deal – governments can only get it by providing free computers to students – suggest Microsoft is trying to compete with One-Laptop-per-Child’s $100 laptop, which runs on a version of Linux. Vital Wave Consulting notes, however, that Mr. Gates wasn’t sharing the stage with PC manufacturers, so Microsoft’s strategy may not be to compete directly with OLPC, but to stunt its growth by removing Windows as a barrier to offering low-cost PCs.
Microsoft’s announcement, together with a production delay for OLPC’s first shipment, presents an opportunity for local manufacturers and global PC companies. Chinese or Indian PC makers are working hard to market ultra low-cost PCs, but they will have trouble scaling outside their own countries. HP, Dell, Toshiba or Acer may eventually capture this market, but the real near-term beneficiary is Intel, whose Classmate PC can run on Windows or Linux. How long will it be before Intel announces the marriage (and resulting cost savings) of their Classmate PC and Microsoft’s Student Innovation Suite?

Also in the news this week

• How will mobile search business models differ from PC Search?
• Motorola stumbles with low-cost handset strategy
• Free mobile directory assistance launched by MS and Google

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.

Think Global, Partner Local

March 14, 2007

Think Global, Partner Local

Professor Pankaj Ghemawat of Harvard Business School poked a hole in the world-is-flat version of globalization in the current edition of Foreign Policy magazine. Ghemawat points out that “more than 90 percent of all phone calls, Web traffic, and investment is local,” and that most Web users chat with local friends or e-mail family rather than connect with someone overseas. “We’re more wired, but no more global.”

The preference for local, relevant content may account for the struggles US-based companies like Google, Yahoo, and eBay have faced in transplanting their success to emerging markets like Russia and China.

To win these markets, multinational tech companies are wisely experimenting with different business models – partnering with local competitors, surrendering overseas operations to local players, or signing up proven consumer champs like Pepsi and Procter and Gamble to find new advertising revenues.

There is a clear opportunity for SMB’s in developing countries to partner with multinational search and e-commerce companies to collect and deliver locally relevant content. Soon, it will be possible to identify a user’s location as soon as she logs on. The company with the strongest roster of local content providers will achieve the most business growth in that environment.

Also in the news this week

• MobiTV sees demand for service in developing countries
• Apple developing flash-memory notebooks – more rugged, less expensive could give Apple an emerging-market play
• Microsoft moves into enterprise VoIP – enabling more cost-effective operations in MNCs with overseas offices