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TECH TALK: Disruptive Bridges: The Digital Divide

November 27th, 2002 · No Comments

The technological divide in the world runs deep. Even as the developed markets are awash, even satiated with computers, the worlds developing markets have very low penetrations. China has an installed base of less than 30 million computers, India about 8 million. Both have populations in excess of 1 billion. (On the other hand, Chinas 180 million cellphones dwarf Indias 10 million.)

The hard truth about computing technology is that it has not made itself affordable to the developing world. Pricing continues to be dollar-denominated, creating a market only at the top of the pyramid. Take for example, Microsoft Windows and Office. Together, they cost in excess of USD 500 (Rs 25,000) which may be small amount in the US but is definitely not an insignificant sum for most users (and even enterprises) in the developing countries.

So, even as the developed nations have adopted computing and raced ahead in terms of productivity, the developing countries are faced with a Hobsons choice: spend a lot of money in dollars to make computing part of their DNA, or stay away and risk being left behind. For the most part, consumers and enterprises have chosen the second option.

The obvious solution a reduction in the cost of computing to affordable levels has not happened, because it does not benefit the primary players Intel and Microsoft. Intel spends a lot on its fabs and needs to keep getting users to upgrade every few years to its faster chips. Microsoft runs margins of 85% for its Windows software division, and that is not a gravy train it would like to see slowing anytime soon because it uses profits from this and its information worker division (MS-Office and other applications) to plough into new markets.

Other computer companies like IBM and Dell can do little if the cost of components does not fall. IBM has set up a super services organization, but its focus is on the worlds large enterprises and reducing their complexity of computing. Dell sells what Intel and Microsoft make. Nokia leads on the cellphone front, but the new generation of pricey smartphones are targeted at the current generation of computer users, and not the have-nots.

Developing countries have very limited resources to undertake R&D for developing their own computing solutions. And so, the digital divide persists. Even as the next generation of computing and communications devices takes shape, there is little solace for the non-consumers of computing in the worlds emerging markets. If anything, the digital divide seems set to multiply.

Tomorrow: India 3.0

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