Emergic: Rajesh Jain's Blog

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TECH TALK: Technology’s Next Markets: The Gulf of Money

October 16th, 2002 · No Comments

Think of where we are today as the end of the first phase of the technology boom. The past two decades have seen relentless technology spending and adoption but most of this has been in the developed markets of the world. This is the boom that has ended. The industry will continue to grow, but it will do so now as a mature industry with growth in the single-digits (perhaps, even countable on the fingers of one hand). Technology has overshot the needs of the consumers in these markets. It is like the automobile industry in the developed markets people continue to buy cars, but there are very few new customers. In other words, it is an upgrade or trade-up market.

Yet, at the same time, there is a whole new world waiting to be discovered. These are the users in the worlds emerging markets. 4 billion people and 20 million enterprises, spread across Asia, Eastern Europe, Africa and Latin America. They are the bottom of the pyramid. They too would like to get their hands on technology. They are the next frontier in technologys march. But the problem is that they are separated by the Gulf of Money.

Existing technology solutions are simply too expensive for most of them. Though these markets want solutions like the ones deployed in the developed markets, they can only pay a fraction for the same. The result: low penetration of computers and high levels of software piracy. Even the Internet, with all its concomitant benefits, has only made a limited difference because connectivity is still slow and intermittent in most emerging markets. Money is at the root of it all.

What these markets need are solutions that cost a small percentage of what they do in the developed markets. To make this happen, there are two possible approaches. The first approach is to create technologies from scratch which can meet the price points that consumers are prepared to way. The problem with this is that the R&D costs and the time that this development can take is counter-productive. Emerging markets cannot afford huge research costs for developing new technologies. Besides, they need the solutions now, not a few years into the future.

There is a second approach: to learn from and leverage what has already been created in the developed markets. The emerging markets dont need the latest and greatest of technologies, especially since many of these technologies are more than good enough for even the developed markets who needs the next 10 features in Windows XP or Office XP, or for that matter, the additional hundreds of megahertz added to a 2.8 Ghz CPU? The emerging markets can do with a generation or two older technologies which can be available at very low price-points.

In addition, they dont need an Ocean of Features. By focusing on a subset of what is needed (especially on the software side), it is possible to think of putting together solutions which are affordable for the masses in the emerging markets. One of the biggest advantages that enterprises have is that there is very little legacy of technology (or even electronic information). This eases the path for adoption of good enough new technologies which are smaller, cheaper, and simpler.

Building out these solutions will create technologys next markets and the next set of entrepreneurial opportunities.

Tomorrow: The Deviant Entrepreneur

Tags: Tech Talk

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