Marketing to the Masses: Bringing Low-cost PCs to the General Public

Dominating the technology and emerging markets news again this week is the race to capture the low-cost PC market in developing countries. Via joined its competitors last week with the release of a low-cost education PC in South Africa. Intel also announced that they are joining forces with the One-Laptop-per-Child initiative, adding the tech giant’s heft to the project, and two weeks ago we discussed Microsoft’s recent launch of the IQ PC for India. The solutions all share a focus on the education market and have limited distribution.

PC and software companies aim for the education segment in emerging markets because government buyers, even in poor countries, can have relatively large budgets. Vital Wave Consulting research shows the 10 largest emerging-market countries spent an estimated $4.7 billion (USD) on IT in education last year. A well-designed computer with relevant content can help meet a country’s education goals, and affirm the PC manufacturer’s commitment to social and economic development, blunting any criticism that they are capitalizing on the world’s poor.

Targeting the education segment is strategically sound, but the fast-growing consumer segment also presents a significant opportunity for multinational companies (MNCs) looking to increase revenues in developing countries. Original research by Vital Wave Consulting identifies a noticeable discrepancy between consumers’ perception of PC prices and the actual price offered in the retail channel. In-depth interviews of likely near-term PC buyers in seven emerging markets showed that the prices most consumers are willing to pay for a PC actually exceed the current price of a basic computer. MNCs can increase their total addressable market (TAM) by educating potential buyers about the “true price” of a starter PC. This is one strategy that can help MNCs capture near-term incremental market opportunities with minimal disruption to existing business processes.

Also in the news:

* Michael Dell and OLPC execs spar over recycled PCs
* Developing countries as leaders in innovation
* iPhone as a computer of the future with developing world applications

Translating the "Huge" Opportunity into Actionable Forecasts

Market research firms and the business media have finally caught the emerging market bug and are yelling from the hilltops that the opportunity is “huge.” Forrester’s recent study received considerable media attention by stating that by 2015 most PC growth will occur in Brazil, Russia, India and China and the world will have 1 billion PCs in use by the end of 2008. The research says that in order to capitalize on this growth, hardware and software manufacturers will need to make a fundamental shift in their businesses and it gives nods to some of the heavily-marketed multinational initiatives.

With such compelling numbers and media attention, it is no wonder that technology companies are investing in programs targeting developing countries. Indeed, there has never been a more compelling time to invest. Senior executives no longer need convincing and emerging-market consumers are prioritizing technology spending. However, many large-scale emerging-market initiatives have failed in spite of the overwhelming opportunity, and business managers are advised to proceed thoughtfully.

Emerging markets are different and less intuitive, even for experienced business managers. Corporations that insist upon actionable analyses, sound data, and scenario forecasting will gain a competitive advantage in navigating the gauntlet of emerging-market opportunities. Business managers are well advised to apply the same sound strategic analyses to emerging-market endeavors as they would other business opportunities. Using new dynamic tools and broad sources of data, corporations can mitigate the risks associated with emerging markets and secure their share of the “huge” opportunity.

Also in the news:

• Ericsson edges ahead of rivals in emerging markets
• Migrant works could pave the way for SMS money transfers
• Sun sees networked computers as the key to bridging the digital divide