Bus. Std: New Markets for Future Technologies

My latest column in Business Standard (ICE World):

As we look ahead to 2005, the rapidly converging areas of computing, communications and consumer electronics are creating an unprecedented set of opportunities and threats. My belief which has got reinforced over the past year is that it will be the emerging markets like India will define future technologies in the. While the top 10% of these markets are just like their counterparts in developed markets (the top of the pyramid), there is a big chasm which separates the top from the middle.

It is this chasm which presents an opportunity for entrepreneurs and established companies. This middle of the pyramid needs homegrown solutions which are not just priced differently but also may need different business models. This market segment is not just about making things faster, better and cheaper (not all of which are necessarily possible simultaneously) but also about focusing on the utility and value that the device or service provides and building specific solutions to address those needs.

Think about the planned Rs 1 lakh car from the Tatas. It is not just about taking the Indica and trying to cut costs dramatically. To build the car, the Tatas will have to fundamentally rethink every aspect of the car and the corresponding value chains. They did a similar exercise when they came up with the Tata IndiOne hotel in Bangalore to offer a room for business travellers at less than a thousand rupees. Disruptive thinking is the need of the hour.

Entrepreneurs in India have a great opportunity. As Indias consumer class burgeons, there is an opportunity to not just provide solutions to them but also propagate these solutions to other emerging markets globally. India serves as a laboratory to try out innovations and a large, first market.

For the bottom of the pyramid thinkers, the middle is what comes first. The way to the bottom is via the middle. Just as the top globally is almost similar, the middle across emerging markets is very similar. And that is the market that needs to be addressed first. India may have 700 million people in rural areas, but it also has 300 million in urban and semi-urban areas. These potential customers comprise a huge target market of families across 45 million households, 40 million employees across 3 million small- and medium-sized enterprises, and 100 million students across schools and colleges. They are the ones on the edge. The right solutions can help provide new windows of opportunities for them. This is the first market for Indian entrepreneurs.

Besides thinking about the markets outside the top 10%, there are three other guiding principles which I apply to my thinking and writing as we seek out opportunities across these markets: services, subscriptions and ecosystems.

For the next markets, it is important to think of the services that the solutions provide. The target customers have limited resources. So they need to be convinced of the value that the solution provides. For example, instead of talking about computer hardware specifications, this market needs to know what they can do with a computer. That old marketing adage of customers needing a quarter-inch hole rather than a quarter-inch drill is perhaps most apt to describe the marketing approach that is needed for this segment.

The middle segment is also more likely to adopt a monthly subscription-based model than one which requires a large upfront investment. Reliance Infocomm recognised this fact when they launched their mobile service and converted the handset capital expenditure into operating expenditure. This is partly about EMI (equated monthly installments) and partly about offering flexibility of upgrades in a technology world that is rapidly evolving.

Finally, the solution provided needs to address the entire backend ecosystem, rather than just the silo that it is operating in. For example, to target computers to this segment, it is necessary to think about the connectivity and services (applications and content) that will be provided because that is the value chain the computing device is a part of. At times, it will become necessary to reinvent all of the elements of the ecosystem to provide a whole solution that is not just cheaper but also more desirable and manageable than the current offering.

We are at a fascinating point of time. Even as new technologies converge (and diverge) providing us with an amazing array of options and opportunities, we are also part of one of the fastest growing economies in the world. We can build not just the India of our dreams but also create the next Intel, Microsoft, Cisco, Nokia or Google for the middle of the pyramid across emerging markets out of India. As Alan Kay said, The best way to predict the future is to invent it. And that is what Future Tech is about.

Future Techs first column was published on December 17, 2003. There have been 27 columns so far. (All columns are available at http://www.emergic.org/futuretech.) The goal of Future Tech during its first year has been to provide insights into future directions in technology, especially from the perspective of emerging markets like India.

An anniversary is always a good time to look back at what has been and introspect about the future. In the next three columns, I have compiled my best ideas over the past columns. After that, it will be back to predicting the future by working towards inventing it!

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.