Emergic: Rajesh Jain's Blog

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Tech’s Thinking Problem

October 20th, 2002 · No Comments

From an interview with Steve Ballmer: “If businesses think there’s a return and they’re interesting, and the users think they’re interesting, they’ll absolutely spend some money. The fact of the matter is, if you take someone whom you pay $40,000 a year or more, and you say, I’ve got to spend a few thousand dollars a year to make that person 30% more productive, it’s not a hard payback equation. Relative to the number of hours you work, if you can get a little bit more productive because information technology is helping you every hour, that’s a pretty good value. This isn’t just a value proposition from Microsoft. This is what the whole IT industry has as its opportunity. ”

This is at the heart of why tech is reaching a stagnation point. Tech companies are assuming they need to provide value to the workers earnings USD 40K per annum, so they can charge hundreds of dollars per person. That market is quite nearly saturated with technology and competition.

The next market is not at USD 40K price-points, but at USD 4K salary levels. How do you convince companies to buy hundreds of dollars worth of software and hardware for an employee whose annual salary may be USD 4K? The return on investment is now not so obvious.

What technology companies need to do to target these next markets is to dramatically rethink what they are providing and the pricing of their products. Computing needs to be sold at 10% of what it is today. To do this requires disruptive thinking and the desire to look for new markets.

Tags: General

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