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TECH TALK: Envisioning the Future: Emerging Markets (Part 2)

May 2nd, 2001 · No Comments

Four components are required to create a mass market Internet in the world’s emerging markets, and make the Internet a utility in the lives of people and enterprises: low-cost access devices, Internet community centres, pre-paid payment solutions, and applications that make a difference to the lives of the people.

Computers at prices of USD 700 are simply too expensive and unaffordable. What is needed is a low-cost Internet access device at a price point of about USD 70-100 (Rs 3,000-Rs 5,000), which can be rented for 5-7% of the cost each month to end-users. This device needs to be able to support voice input and output, and text in the local language. There is a lot of incentive to support the creation of such devices: a potential market of 4 billion users. Perhaps, with some adjustments, the cellphone could be such a device. What is needed is the ability to connect to the Net.

There is room for computers in emerging markets: as part of Internet community centres. Just like the telephone booths which are spread all over India and now ensure telecom access to nearly the entire population (even though the total number of telephone lines in the country are 25 million for its 1 billion people), there is a need for shared computing resources – with its processing power, storage, big screen, and the works. The need for computing is perhaps a few minutes for most of the people: the shared resources of the community centre will do just fine.

The ability to make and receive payments is critical since commerce is at the heart of everything. The solution lies not in credit cards, but pre-paid cash cards or smart cards. The billing hassle needs to be eliminated. Money needs to be collected in small amounts in advance. This will also create the currency for micro-transactions, since the world’s poor have much smaller amounts of money to spend.

The key to making the Internet work is the basket of applications, which remove pain and make a difference to the lives of the people. Typical pain points are ticketing, bill payments and interactions with the government – the common factor in all cases being long queues! The starting point is to ensure that everyone gets a mailbox (for email and voice mail). This will ensure a communications platform from which to build on. Technology and the Internet need to be put to work in what can perhaps be the biggest market of all times: the 4 billion people spread across the world, who have aspirations for a better life.

To end, here is a view from CK Prahalad:

The bottom of the pyramid poses fundamentally a new question. How do we marry low cost, good quality, sustainability and profitability at the same time? But you can’t do that unless you can visualise an active market when all that exists is abject poverty. How do you imagine a theme park when you see a swamp? That’s how Disney imagined. How do you see active consumers when you see poverty? That I think is the challenge.

So I am asking you to imagine active consumers out of the poorest of poor. Not just in India, but around the world. The primary task therefore for management is to create a consumer market not to serve the one that exists but to create the consumer market out of the poor. One that is conceived and structured very differently from the way we thought about the markets in developed countries or for the rich and well-to-do in developing markets.

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Tags: Tech Talk

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