I have often underestimated the important of distribution. My belief in the past has been: build it and they will come. It is not always the case. For many years, I focused more on the technology that we were trying to aggregate on the Linux-based messaging front, rather than worrying about the distribution. This was a mistake. When one part of the chain is commoditised, the differentiating factor moves elsewhere.
Look at what has happened in computing. As hardware has become standardized, the winner has been Dell, which has focused on distribution. Now, as software too becomes commoditised, the essence of building out a successful business will shift to distribution. After all, if we are all using the same open-source software components (no alternative there, since the proprietary software is way too expensive for our bottom of the pyramid markets), how we get the software across to the end-customers will become increasingly important given the fact that there is a significant nonconsumption segment.
My belief is that for cracking open the SME technology market, even in this age of the Internet and virtual-everything, we will need a physical presence close to the customers. This is because we are trying to demonstrate the solutions to them, and also give them the confidence that we are there in the neighbourhood to help. This presence in the proximity of the customers is part of the integrated solution that we discussed earlier.
In the case of the SMEs, this can be accomplished through the equivalent of Tech 7-11s, neighbourhood convenience stores which showcase technology and also provide local co-ordination for the channel, training and support. We underestimate the need to touch-and-feel things before they are purchased. In emerging markets like India, computers are not so ubiquitous that they will be bought over the Internet. Software is even more invisible, because few SMEs pay for it, and thus we have either non-usage or piracy of a few key applications. What the Tech 7-11 needs to do is to demonstrate how the complete IT solution can help in making SMEs more productive.
The same is the case in rural markets, where the RISC becomes the distribution point for information and services. In fact, local distribution which we can also think of as the last mile bridge is more important than we give it credit for. As technology-driven entrepreneurs, the focus tends to be on creating the next new thing rather than thinking about how it can get to the intended customers.
The same need for local distribution creates another interesting opportunity. What is needed is the equivalent of an information marketplace, organized by neighbourhood in a city. Currently, the bottom of the pyramid in the retailing value chain are the local shops. They have no easy way to publicise their offerings in a few kilometres radius of where they are. Their current options are flyers in newspapers and ads on local cable channels. If there was a way for them to notify the people in their vicinity of the new things they have in their shops or the sales they have on the weekend, they could grow their business. This is the opportunity for an information marketplace, built around weblogs and RSS-enabled syndication of microcontent. Information may be a commodity, but distributing it to the right people at the right time still presents an excellent business opportunity.
Tomorrow: to Bridge Divides.
TECH TALK My Mental Model+T