One approach to the distribution challenge to reaching Small and Medium Enterprises (SMEs) is to build a franchise network of “7-11” type kirana (neigbourhood) “eStores”. These serve two purposes: the last link in the distribution chain, and also locating the Enterprise Servers in case they cannot be bought by the very small enterprises (in this case, the SMEs will have the Enterprise Clients; the last-feet connectivity will be via wireless through 802.11b). These eStores also serve as “showcase” points for the enterprise technology infrastructure that we are proposing. The aim should be to make computing like a utility service for SMEs. (It is also worthwhile noting here that people rarely change utilities!)
The Enterprise Client-Software mix is akin to a “razor-blade” combo. The Enterprise Clients are needed to multiply the number of users in the enterprise, and work like the razors. The blades are the monthly charges for the use of the Enterprise Software. Even at USD 5-10 per person month for the Enterprise Software, the rewards can be large in targeting the “world’s corporate poor”.
There is also a potential for two extensions to the SME market – one which builds on the SME market, and the other which extends the Enterprise Clients to the Consumer market.
Deepen Relationship with SMEs via Outsourced Services: Services offer the advantage of locking in the SMEs by understanding their business processes. These services must make it easy for SMEs to start and manage businesses by taking care of the “non-value-adding” services as far as the SME is concerned. Business Process Outsourcing is going to increase going ahead, and this can also leverage India’s skillsets well.
Extend Devices to build the Mass Market Consumer Market: The Enterprise Client can be extended to the Consumer market, to build out a mass-market vision of offering low-cost computing to the world. The consumer market volumes for the devices can also help in bringing down the unit cost dramatically. Seeding first in the Enterprise market helps build out some volumes, along with word-of-sight (i.e., people start seeing these devices). This will create the pull from the mass market. The eStores can also serve as 802.11b wireless hubs, thus creating a near-ubiquitous wireless network. Today, there are cybercafes in India. The problem is that one has to go inside the cybercafe to use the computing resource. Since the Enterprise Clients will be 802.11b, users could be standing 100 feet outside the cybercafe and still use the connectivity from the cybercafe. This can dramatically multiply usage.
Targeting SMEs in a range of diverse Emerging Markets with a bouquet of custom-built hardware and software is undoubtedly the counter-intuitive business strategy. The risks and odds against success are high. But, then, with a potential market of tens of millions of SMEs across the world, so are the rewards.