IBM Lowers Internal Barriers with Overseas Service Program

In a recent report, Vital Wave Consulting named internal company barriers as a key inhibitor to emerging market business growth. Some large ICT companies have recognized this weakness and found novel ways to address it internally. IBM recently initiated a program that, if executed well, will give up-and-coming executives valuable experience in the developing world. The company's new Corporate Service Corps will allow 600 employees to apply their business skills to economic development and information technology projects run by non-governmental organizations over the next three years. The first 100 managers will travel to Romania, Turkey, Vietnam, the Philippines, Ghana, and Tanzania later this year.

Emerging markets claim the highest growth rates in the world for IT and communications services. Mature-market companies are working to understand these new markets to remain competitive, so it’s no coincidence the launch of IBM’s program follows their recently announced focus on emerging markets. Technology managers also realize that emerging-market experience is becoming a requirement in a globalized world. IBM’s Corporate Service Corps program is clearly capitalizing on the desire for developing-world business experience (more than 5,000 employees applied for the first 100 positions).

Basic business fundamentals teach ‘know your market.’ While IBM’s Service Corps provides top-notch business support to recipient organizations, sending eager ladder-climbers to developing countries gives IBM real-world training for employees. The business benefits are clear for IBM and other corporations who consider this path. Employees gain a deep understanding of IBM’s growth markets, employees’ job satisfaction may increase (boosting retention and attracting new talent), and IBM gets a street view of emerging-market business problems – the very problems its future customers may be calling on them to solve.

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• Software piracy on the rise in developing countries
• Big pharma gets into emerging markets
• Microsoft releases low-cost laptop requirements for XP

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

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