Western Union Joins Mobile Remittance Market

Western Union has been so slow to respond to the market impact of mobile-phone based remittances, the company risks losing decades of market leadership in the money transfer business. The recent announcement of a partnership with the GSM Association (GSMA) may be an attempt to catch MasterCard, which announced a similar initiative at the 3GSM conference in February. According to Reuters, Western Union and GSMA will help operators let customers transfer funds from a mobile phone to a Western Union location and vice versa, and enable mobile-to-mobile transfers. A pilot program of the service will be available by mid-2008 and Western Union expects to see a material contribution to revenues in 3-5 years.

Western Union’s slow rollout of a mobile remittance program opened the door for companies like Visa, MasterCard, banks, and local service providers. Mobile-to-mobile money transfer programs are already generating revenue for more nimble players like Smart in the Philippines and Safaricom in Kenya, among others. By 2012, the number of recipients of international remittances could reach 1.5 billion and the size of the remittances market could total US$1 trillion, according to GSMA.

Non-technology companies like Western Union are being drawn into the telecommunications market by the increasing utility of mobile phones. The GSMA, its members and other mobile technology companies will benefit from new partnerships with global non-technology companies like Western Union. They provide valuable assets such as global brand and new services that can now be delivered via mobile technology. Association with a strong brand like Western Union can allay customer fears associated with accessing services and executing transactions via mobile phones. And, the added services present opportunities for additional revenue sources for all involved partners.

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• Mitec plans to enter low-cost PC space
• Eee PC makes a hot debut
• Norhtec thin client surfaces again

Bare-bones PC Finds Customers Outside Emerging Markets

Almost unnoticed in the low-cost PC craze is the MicroClient Jr., a small, limited-function personal computer (PC) produced by Norhtec, based in Thailand. Designed for environments with limited space or extreme temperatures, the device retails for $85 without a monitor, mouse or keyboard. Norhtec has no flashy marketing campaign and has steered clear of the OLPC (AMD) versus Classmate PC (Intel) battle. And the company is treating the low-cost PC market strictly as a business endeavor rather than a philanthropy project.

Due to their fear of cannibalizing mature-market product lines, multinational PC and chip manufacturers have aimed their low-cost computing solutions at emerging-market consumers. Norhtec, however, has recognized a demand – even among mature-market commercial customers – for inexpensive PCs that reliably perform only a few basic functions. And they’re selling thousands of units. Customers include a Canadian diamond-mining company and McDonald’s franchises.

Norhtec’s strategy supports Clayton Christensen’s theory, widely publicized in The Innovator's Dilemma, that technology innovation will originate from the low-end of the marketplace and eventually evolve to displace high-end technology. While multinational giants are fighting to sell higher-margin products and protect existing product lines from cannibalization, scrappy start-ups in emerging markets are innovating with the low-end customer in mind and finding high-end mature-market demand, as well. Multinational technology companies that overcome their resistance to low-end offerings will be better prepared for the Norhtecs of the world, who will inevitably enter mature markets through the back door.

Also in the news
• Analysts push Motorola to gain momentum in India
• Developing countries strengthen their hand in the global economy
• Intel and AMD battle over low-end laptops