TECH TALK: Digital Divide: Cellphones

5. Cellphones

The number of mobile-telephone subscribers will overtake that of fixed subscribers this year, according to new figures from the International Telecommunications Union, says the Economist (April 6, 2002). It continues: “The boom in mobile telephony has helped the world’s least developed countries above the important threshold of one telephone subscriber per 100 inhabitants.” This compares with 120 fixed lines and mobile users per 100 inhabitants in advanced countries and 20 in emerging countries.

Phones (fixed and mobile) are a great way to bridge the digital divide. A phone cuts away the isolation of the individual. It becomes a window to the world (just like television) – the difference being that the phone can be used much more as business tool. The cost of a GSM phone has fallen dramatically and is available for less than USD 100 (Rs 5,000). Prepaid phone cards are helping the bottom of the pyramid adopt a mobile phone as the primary mode of communications.

In many places, a cellphone helps provide connectivity to a community. Writes Kumar Venkat: “[In each village in Bangladesh], an entrepreneur purchases cellphone service from a subsidiary of Grameen Bank, and operates a pay-per-call service that in effect connects the whole village to the telephone network.”

The cellphone can also open up better business opportunities. In Kerala, for example, fishermen use their cellphones to check prices of fish with different seafood markets. Writes Saritha Rai in The New York Times (August 4, 2001):

In the seas southwest of Bangalore off the coast of southern India, the steady drone of motorized fishing boats is often interrupted by the ringing of mobile phones. Even as they land their catch in the boats, fishermen are already in touch with the dozen-odd seafood markets around here, checking prices at different ports.

One fisherman, Ratish Karthikeyan, says that since he acquired his BPL mobile service over a year ago, his profit on each eight-day fishing run in his trawler has doubled. Two months ago, for instance, Mr. Karthikeyan, 35, netted an extra $1,000 by using his phone to compare prices at Cochin with those at Quilon, a port 85 miles away.

The 5,000 fishermen who work off the coast of Kerala state are not alone in embracing wireless technology. From garment exporters in Tiruppur in the south to farmers in Punjab in the north, rural India has discovered the convenience of doing business on mobile phones. Many areas have never had conventional fixed-line service.

“As farmers and small-business men realize the impact of mobile communications on the pace and efficiency of their lives, usage is shooting up rapidly,” said Sandip Das, the chief executive of Fascel.

“Life without a mobile phone,” said Mr. Karthikeyan, the Cochin fisherman, “is unthinkable.”

TECH TALK: The Digital Divide: Statistics

Before we continue with our ideas to bridge the digital divide, a couple quotes to start this week to help put the digital divide in perspective. The first is from an email sent by a friend (not clear where it originated, but the point made is striking):

If we could shrink the earth’s population to a village of precisely 100 people, with all the existing human ratios remaining the same, it would look something like the following:

There would be:

57 Asians
21 Europeans
14 from the Western Hemisphere, both north and south
8 Africans

52 would be female
48 would be male

70 would be nonwhite

30 would be white

70 would be non-Christian
30 would be Christian

80 would live in substandard housing
70 would be unable to read
50 would suffer from malnutrition

1 would be near death

1 would be near birth

1 (yes, only 1) would have a college education
1 would own a computer

An article by Kumar Venkat in IEEE Spectrum (February 2002) adds additional perspective:

More than 96 percent of computers connected to the Internet are in the wealthiest nations, home to 15 percent of the world’s population. Nearly 60 percent of the US population has some access to the Internet, a distribution that is highly correlated to with household income.

In India, less than 0.5 percent of the population has Internet access – which translates to about 5 million with high enough income levels, education, and computer skills in a country of one billion people.

A Deutsche Bank research report (August 15, 2001) adds:

  • The high-income countries (annual per capita income more than USD 4,650) make up a mere 15% of the world population but possess more than 60% of the global telephone lines and almost 70% of all the mobile telephones in the world.
  • GreaterTokyo has more telephone connections than Africa.
  • Low-income countries (annual per capita income below USD 470) account for 60% of the world population but only 5% of all internet users.
  • 30% of all inhabitants of high-income countries use the internet, as opposed to a mere 1.5% in low-income countries.
  • There are more internet users in New York City than on the entire African continent.
  • Annual per capita investment on information infrastructure in 2000 aggregated USD 115 in the OECD countries but just USD 19 in the rest of the world.

The mix of “emerging markets, emerging technologies and emerging organisations” is what we in India should be thinking of – if we can make innovative solutions work in India, we definitely can extend them to the other markets which have similarities to India. The numbers are on our side: the emerging markets are home to more than 4 billion (two-third of the world’s population) and perhaps 15-20 small and medium enterprises. Bridging the digital divide is perhaps the biggest challenge and opportunity for our generation.

TECH TALK: The Digital Divide: Thin Client and Thick Server

2.The Thin Client.

The USD 100 desktop computer needs to provide all the functionalities that users are accustomed to seeing on a computer in the corporate environment: a Graphical User Interface (GUI) with multiple windows, email, instant messaging, a Read-Write Environment for documents, spreadsheets and presentations, and a web browser. But none of these applications actually need to run on the local desktop.

Think back to the late 1980s and early 1990s when Novell ruled the networked environment. The desktop was almost like a dumb terminal with applications coming from the thick server. To achieve the price point of USD 100 on the desktop, the hard disk and CD need to be eliminated and applications need to be served from the “thick server”.

This “lite desktop” makes for easy management and administration of the desktop – there really isn’t much to do! If a desktop hardware gives a problem, simply replace it with another system since all desktops are uniformly featureless. A person can use any desktop to connect to the server.

3. …and Thick Server

The Thin Client talks to a Thick Server, which could be any machine being marketed as a desktop today.

All the mails, files and user preferences are stored on the
server. All applications are also stored on the server, which is
connected to the Internet for updates. The thick server simplifies the
IT infrastructure management dramatically and lends itself well to
remote management. This is important because many of the small and
medium enterprises will not have the requisite technical staff to
manage the servers (which by themselves will need little
administration).

The Thin Client-Thick Server combination may seem a radical idea in a world of USD 1,500 desktop machines which have 1 GHz processors, 1 GB RAM and 40 GB hard disks as base configuration. But let’s not forget our target audience: users who are being exposed to computers in businesses for the first time. For such a tech-starved audience, a beginning needs to be made. Remember our first taste of computing in universities? It is more than likely it was a simple terminal. The next 500 million users are just as hungry as we were a decade ago.

The Internet is the one big difference from the early 1990s. It is the glue to interconnect people and enterprises, and also serves as the distribution medium for content and software. Sun’s vision of the “Network as Computer” is perhaps much more relevant as a platform to bridge the digital divide and build a foundation for making computing a utility.

TECH TALK: The Digital Divide: The USD 100 Desktop Computer

1. The USD 100 Desktop Computer

It is an idea I have talked about before. The computer may not be the panacea, but it is a very important component of the technology world. It is an extremely versatile device. In the last 20 years, the installed base of computers has exceeded 500 million. The majority of these computers are in the developed world – in companies, government and homes. In countries like the US, whoever needed a computer has one now. With the price of a computer being a fraction of the monthly salary of a person, the computer has made huge inroads as a productivity and entertainment platform.

Computers are critical components in the entire enterprise value chain at every stage. This is not the case yet in many of the developing markets. In most enterprises, no more than 1 in 20 people uses a computer. This needs to change. This means that the price of the computer has to be a fraction of the monthly salary of a person – in local currency.

We still see 10-year-old cars on the roads. Companies buy second hand manufacturing plants. But somehow, with technology, we always want things new. I don’t see why this has to be the case. The Wintel combination and their partners have done a great marketing job in creating a demand for the newest machines and software they keep coming up with it.

The result is that it is impossible to find a 486-based system or Windows 98 or Microsoft Office 97 being sold in the market even though they may be adequate for many of our needs. The industry’s interest is in moving us forward. That may be true for a small fraction of users on the wrong side of the digital divide but certainly not for the masses.

To make computing an integral part of business and personal lives, the price point for the next 500 million computers needs to be reset to USD 100. This is not going to happen by creating new computers (which means RD expenditure and time) but through the use of discarded computers from the developed markets. As the developed countries upgrade their systems, the older computers can be moved to the emerging markets. The base price of the system now becomes a handful of dollars, to which gets added shipping, distribution and support costs.

Computers have become an environmental problem for the developed markets. Disposing and recycling computers – most of which are in perfectly working condition – is not easy in countries like USA and Japan. Not only would sending these 3-4 year-old machines to the emerging markets solve the disposal problem, it would also create a potentially bigger market for the entire industry in a few years as the bottom of the pyramid tastes computing.

TECH TALK: The Digital Divide: Building Bridges

Can Information and Communications Technologies (ICT) bridge the digital divide? Over this week and next, I will present a number of ideas which can help. Taken individually, they may seem like small, incremental steps. But taken together, I believe they can help developing countries like India and many of the small and medium-sized enterprises pull up to a level-playing field.

First, a brief discussion on the characteristics that the ideas need to have:

Cost: The price-points have to be affordable to the mass markets. This limits usage technology priced in the local currency equivalent of US dollars. Such technologies need to be shared but cannot be adopted by markets of one. Cost is perhaps one of the most critical factors which will govern adoption.

Integration: We need to think in terms of a “whole solution” rather than providing just the components. The whole has greater value than the sum of the parts.

Localisation: This becomes important because we are dealing with many markets. Each market has its nuances which have to be factored in. This means that we need to perhaps provide a significant part of the solution as a platform with room for some customisation for specific markets and verticals.

Low RD: One has to leverage the work done in the past by the developed markets. Spending on research and development is not something which is affordable – both in terms of time and cost.

Standards: These ideas should try and stick to established standards, rather than try and create new ones. A good example is the adoption of GSM in the East Asian countries for the mobile telephony business. This decision has helped these countries (including India) leverage off the work done by the cellphone companies in Europe and keep the costs of the phones down, leading to much broader adoption.

Technology may not be the only answer to bridging the digital divide. But it provides the foundation on which many solutions can be built. Writes the Economost (July 12, 2001):

The evidence that technology helps development is strong. The decline in mortality rates that took more than 150 years in the now-developed world took only 40 years in the developing world, in large part thanks to antibiotics and vaccines. Technological innovations in plant-breeding, fertilisers and pesticides have doubled the world’s cereal output in a mere 40 years, compared with the 1,000 years that it took English wheat yields to quadruple. More recently, the development of oral rehydration packets, a simple solution of sugar and salt that increases the absorption of liquids, has cut the cost of treating diarrhoea and saved millions of lives.

In these columns, my focus will be more on ideas with an infotech slant. Obviously, advances in other areas like biotech also can make a big difference. The aim is to spur thinking and seed entrepreneurial thinking. Many of us live in (or have come from) the world’s emerging markets. Who better than us to solve the problems we are most familiar with?

TECH TALK: The Digital Divide: Comments

Let us take a look at what various commentators and journalists have said about the digital divide. First, Stuart Brotman writing in the Technology Review:

[The digital divide] conversations encompass multiple perspectives and options-everything from giving schools, community organizations and citizens of lesser-developed countries broader access to computers and the Internet to simply letting market forces run their course.

The Luddites, for example, argue that no digital divide exists because technology doesn’t really organize anything. The Technologists believe that with a few government policy tweaks, hardware and software dispersion through the marketplace will address any gaps. The Market Adherents say that market forces will eliminate the divide without any government involvement. Meanwhile, the Digital Egalitarians want to mandate equal access to technological tools throughout all strata of society, the Digital Democrats seek a political order that enables all people to participate as e-citizens in a cyberdemocracy, and the Globalists view the divide as proof that the United States is digitally isolating itself from the rest of the global economy. In short, there are many perspectives, but no encompassing view.

The digital divide is not only about offering Internet access to every citizen, nor is it only about social policy or computer penetration. The stakes are in fact much greater. Creating what I call the “digital dividend” will enable businesses to thrive at a new level of postindustrial innovation. The digital dividend is the set of outcomes that the private sector can achieve by promoting widespread penetration and use of digital technologies. Within companies, this can translate into better-trained, more productive employees; outside, it can lead to expanded sales and marketing opportunities at home and abroad, as well as a more diverse supply chain.

CK Prahalad and Stuart Hart, in their article in Strategy+Business entitled “The Fortune at the Bottom of the Pyramid” talk about how the low-income markets present a (counter-intuitive) opportunity for the world’s wealthiest companies:

Doing business with the world’s 4 billion poorest people – two-thirds of the world’s population – will require radical innovations in technology and business models. It will require MNCs to reevaluate price-performance relationships for products and services. It will demand a new level of capital efficiency and new ways of measuring financial success. Companies will be forced to transform their understanding of scale, from a “bigger is better” ideal to an ideal of highly distributed small-scale operations married to world-scale capabilities.

At the very top of the world economic pyramid are 75 to 100 million affluent Tier 1 consumers from around the world. This is a cosmopolitan group composed of middle- and upper-income people in developed countries and the few rich elites from the developing world. In the middle of the pyramid, in Tiers 2 and 3, are poor customers in developed nations and the rising middle classes in developing countries, the targets of MNCs’ past emerging-market strategies.

Now consider the 4 billion people in Tier 4, at the bottom of the pyramid. Their annual per capita income – based on purchasing power parity in U.S. dollars – is less than $1,500, the minimum considered necessary to sustain a decent life. For well over a billion people – roughly one-sixth of humanity – per capita income is less than $1 per day.

The perception that the bottom of the pyramid is not a viable market also fails to take into account the growing importance of the informal economy among the poorest of the poor, which by some estimates accounts for 40 to 60 percent of all economic activity in developing countries. Most Tier 4 people live in rural villages, or urban slums and shantytowns, and they usually do not hold legal title or deed to their assets (e.g., dwellings, farms, businesses). They have little or no formal education and are hard to reach via conventional distribution, credit, and communications. The quality and quantity of products and services available in Tier 4 is generally low. Therefore, much like an iceberg with only its tip in plain view, this massive segment of the global population – along with its massive market opportunities – has remained largely invisible to the corporate sector.

TECH TALK: The Digital Divide

A friend of mine called asking if I had any articles on the “digital divide”. He was making a presentation on that topic. As I searched through my collection, I found quite a few which I emailed him. But it also set me thinking: what exactly is the digital divide? What can be done to bridge it? Is it ever going to get bridged? What are the success stories from which we can learn?

The “digital divide” is the gap in technology (computing and communications) usage and access. This manifests itself in many different ways: between the big companies and the smaller companies, between the people in developed markets and those in the emerging markets, between the urban and rural populations in the emerging markets.

From bridges.org comes a more formal definition:

Simply put, “the digital divide” means that between countries and between different groups of people within countries, there is a wide division between those who have real access to information and communications technology and are using it effectively, and those who don’t.

Since information and communications technologies (ICTs) are increasingly becoming a foundation of our societies and economies, the digital divide means that the “information have-nots” are denied the option to participate in new ICT jobs, in e-government, in ICTs improved healthcare, and in ICT enhanced education.

More often than not, the “information have-nots” are in developing countries, and in disadvantaged groups within countries. The digital divide is thus a lost opportunity — the opportunity for the information “have-nots” to use ICTs to improve their lives.

The divide is brought about by differences in education, language and income levels. The education divide limits the usage of computing. A computer is a versatile platform, and it needs the users to define what they can do with it. With illiteracy levels still high in many of the emerging markets, the adoption of technology is minimal. Language in countries like India is another barrier because most software is still only in English. The perceived market is too small to make investments in creating software for the mass market in many different languages, because companies are not sure if they will recoup their investments. Income levels are a huge obstacle – most technology is still denominated in dollars, which makes adoption beyond the scope of most individuals and enterprises, for whom earnings are in local currencies with unfavourable exchange rates against the dollar.

The result is the division of the world into two – one which has access to computers, communications and the Internet, and one which does not. Taking ideas and technologies from the first to the second does not work well because the two worlds are quite different. What is common is the need for the use of technology – that is the undeniable truth of today’s life and business. What is needed are technologies which can bridge the digital divide and create a digital dividend for the have-nots.

TECH TALK: Emerging Enterprises and Emergent Networks: Looking Ahead

For the first time, the Small and medium enterprises (SMEs) of the world, especially those in emerging markets, are being empowered by technology. As technology becomes affordable, it will downstream to the bottom of the enterprise pyramid creating a world of business very different from the one we see today, one in which the smaller companies can also make a difference, especially if they can form online clusters.

Look at some of the numbers. There are, according to Dun and Bradstreet, 3.2 million small-scale industries (SSIs) in India. The computer base in India is about 6.5 million, of which 3.5 million computers have been sold in the past 3 years. Of this, about 1 million would have gone into homes and at least 1 million would have been bought by the bigger companies. The SMEs have thus bought less than 1.5 million computers in the past 3 years. The SMEs put together, by my estimate, must be employing well in excess of 50 million people.

The problem of course is the cost of technology, which is dollar-denominated. In the US, it is easy to spend USD 3,000 on computing (hardware, software, maintenance) for a person. It amounts to less than 10% of the salary of the person using it. In India, that figure remains the same (assuming people have to buy legal software). But the same money in India becomes a multiple of a person’s salary, rendering it unaffordable for the mass corporate market.

What if this were to change? What if the real cost of computing were to be brought down to 10% of the salary of the person in India? This means a 70-90% reduction in the cost of technology. This would dramatically change adoption levels – my bet is that sales of computers would go up by a factor of 3-5. The amplification power of the penetration of technology within enterprises would be huge across the economy as people start interacting electronically and technology makes possible the “near-real-time economy” in India. Productivity would go up, inefficiencies across the supply chain would come down, and a computer-literate workforce by the millions would open up global opportunities for their enterprises.

Small businesses have typically lagged big businesses in technology adoption by 3-5 years. SMEs are only just starting to adopt technology. As they do so, there is an opportunity for entrepreneurs worldwide to empower SMEs using a mix of existing technology components and innovative thinking. This new enterprise mass market thinks of technology as a utility, as a way to bridge the digital divide across companies and across markets.

As employees and enterprises go online with a PC on every desktop, online clusters of enterprises and people will give greater voice and power to the group hitherto which has mostly been only partially connected to global networks. This may be as unimaginable as the prospect of a million bloggers was a year ago. But it is a future which is rapidly emerging at light speed.

TECH TALK: Emerging Enterprises and Emergent Networks: Journalism 3.0

A pivotal moment in the world of journalism happened last week at the PC Forum in Arizona. Dan Gillmor of the San Jose Mercury News was blogging a panel discussion being made on his website through a Wi-Fi connection. As it turned out, one of the panelists was reading Gillmor’s blogs and actually corrected one of the points made by Gillmor, which Gillmor promptly posted on his blog. The feedback loop was completed. Gillmor later posted his thoughts about “Journalism 3.0”:

It’s based on several principles, including:

  • My readers know more than I do;
  • That is not a threat, but rather an opportunity;
  • We can use this together to create something between a seminar and a conversation, educating all of us;
  • Interactivity and communications technology — in the form of e-mail, weblogs, discussion boards, websites and more — make it happen.

In the near-term, expect changes in the way we get our news. Amateur journalists have already started providing views on developments as they happen on their weblogs. They may not have the finish of an edited article in a mainstream publication, but that’s more than made up by their freshness and rawness. News in the future is going to be more inclusive as many more people have the ability to write and be read.

This is echoed by Dave Winer, a blogger himself (Scripting.com):

As with personal computing, the early days of Web publishing belonged to the hobbyists, reveling that it worked at all. But the Web is maturing, the tools are getting easy, as the understanding of the technology has become widespread. Serious professional journalists use the new tools, moonlighting, publishing the news they don’t or can’t sell to the big publications who employ them.

At the same time, we’re returning to what I call amateur journalism, people writing for the public for the love of writing, without any expectation of financial compensation. This process is fed by the changing economics of the publishing industry which is employing fewer reporters, editors and writers. But the Web has taught us to expect more information, not less, and that’s the sea-change that the NY Times and other big publications face — how to remain relevant in the face of a population that can do for themselves what the BigPubs won’t.

Writes Dale Peskin in an article entitled “The Future of News: Preparing for the Coming Era of Participatory News”:

As an interconnected society moves toward participating in the news, the Brotherhood of News seeks to protect its values and exert its control. Just as zero changed the equation shaping humanity’s vision of the universe, accessible media changes the equation that shapes news and informs society. Everyone is a journalist in the age of access. But for most news organizations, collaboration with their audience is an irrational concept, a dangerous idea.

Storytellers – specialists in the art of conveying human emotions — rule this future. And in this future, everyone is a storyteller. Everyone creates the collective experience. Everyone creates the collective intelligence.

We would travel backward and forward in a loop. Time is never linear. Neither are its stories. They are organic, always growing and changing. They have no beginning, middle or end.

How to travel? The Web. From there we go where imagination leads. On the Web, imagination takes an interconnected society on a journey of timeless discovery through words, images and interaction. Instead of writing essays we would build a site. We would create experiences. We would make stories.

Our stories will take us beyond convergence to emergence. There, news becomes the product of a universally distributed intelligence that develops from an interconnected society enabled by interactive media. It occurs in real time, self-regulating, constantly enhanced. The connections enabled by media lead to mutual recognition and enrichment of individuals, rather than a cult of communities and institutions.

The calculus for the fundamental unity of knowledge emerges. The guiding tenets: No one knows everything. Everyone knows something. All knowledge resides in humanity.

Something similar can happen in the world of business, driven by the emergent networks formed by the small and medium enterprises.

TECH TALK: Emerging Enterprises and Emergent Networks: Emergent Networks

Small and medium enterprises (SMEs) have long remained in silos, isolated and islands of information. At best, they have been hubs connected to the spokes (the bigger companies, whom they may be doing business with). They have never been able to easily connect together. This is what the combination of the technology infrastructure within the SMEs along with the creation of self-organising SME Clusters on the Web makes possible – for the first time, they can now interact much more deeply with each other. The Ants start talking. These interactions and feedback will help build out an Emergent system, where the collective intelligence is far greater than that of the individual entities.

Why is this important? Because in today’s world, the voice of business belongs to the ones who are Big and can spend the most, and not necessarily to the majority. Look at what happened just before the Indian Budget in February. The newspapers were full of reports of the “representations” made by various industry associations on their demands for the Budget. But whose voices were they? In most cases, only those of the bigger member companies who could afford to send people to make pitches before the managing committees. The smaller companies just go about doing their business, silently.

But what if this silent majority could interact together? It is not easy (from a logistics and cost point of view) for the smaller companies to meet up together physically. This is where the SME Cluster Blogs come in – on the Net, they can voice their opinions and collectively, push up the good ideas and pull down the bad ones. No single entity can dominate, and yet collectively, they will wield enough power to make themselves heard. The SME Clusters give voice to the silent majority.

The only way this can happen is via the Internet. Just like an eBay could never have been possible in the physical world. For this, it is important first for SMEs to build up their own IT infrastructure and get “plugged” into the flow of information – through cost-effective hardware, software and communications. The logical next step then becomes to aggregate the SMEs together into online communities.

A lot of this may seem very speculative or implausible. But changes are afoot in the world of technology, which are going to make these emergent networks happen in the coming years. One indication of this is how journalism is going to change in the near future.