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Bottom of the Pyramid Strategy in Action
Robert Katz, 8 Nov 06

Craig%20Barrett%20China.jpgLast Friday's Wall Street Journal featured a front-section story, Tech Firms Woo Next Billion Users (subscription required), describing the aggressive "bottom of the pyramid" (BOP) strategies of tech firms Intel and Microsoft. In it, we learn that Microsoft is rolling out 50,000 entrepreneur-run computer kiosks throughout India; Intel, meanwhile, has already trained 1.3 million Chinese and Indian teachers on classroom technology use. Teacher training and kiosk development aren’t profit centers – at least in the short term. But both firms have taken a strategic, long-term approach to market and product development. Microsoft India chairman Ravi Venkatesan is quoted in the article:

"This is a good way to do long, long-term business development...We are under no illusions that this is going to generate a quick payoff."

Another excerpt cements the long-term strategy:

Their aim is to reach what executives call "the next billion users" of consumer technologies like the Internet and cellular phones. The images of executives helping the poor can also help maintain good relations with the government, a critical part of doing business in both China and India...Getting technology to rural residents isn't easy. It requires navigating local bureaucracy, offering extremely inexpensive products and teaching people who may not have easy access to electricity the benefits of the chips, software and computers. And executives acknowledge that their efforts won't necessarily show up on the bottom line right away.

The article goes on to describe how Intel designed a computer that will hold up under the harsh, dusty conditions of rural India. The authors mention BOP projects undertaken by Motorola, AMD, Quanta, and the One Laptop Per Child project. All in all, it is a pretty comprehensive look behind the scenes of big firms' BOP projects.

Kudos to the Wall Street Journal for its focus on the business models at work and not the corporate philanthropy angle. Now we need follow-up: will Microsoft roll out the full 50,000 kiosks, and will they in fact be profitable? Will Intel work with or against the One Laptop Per Child project? Many questions remain, but it is good to see the mainstream business press taking for-profit, long-term approaches to sustainable development (and market development) seriously.

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Comments has caught my eye recently. AA powered, $99 retail price from Amazon. Simple monochrome screen, but *has wifi* meaning that it could form a really good communications platform.

I think something like this is a lot more realistic than One Laptop Per Child is at the moment. I can't shake the feeling that OLPC has leant a little too far into the future, and that a lot of resources are being wasted trying to shoehorn a $300 or $500 device into a $100 budget.

The two things the Zipit really misses are:
1> A USB connector so you can add an external keyboard etc.
2> Some way of having per-user storage, rather than keeping all files locally.

But given that it runs Linux, and the company making the hardware has played moderately nicely with the open source community, perhaps future versions of the hardware will have an accessible USB port that people can configure appropriately to add this kind of functionality.

"State of the Wal-Mart" thinking. :)

Posted by: Vinay Gupta on 8 Nov 06

Vinay, thanks for the pointer - I had been meaning to check this out, and your comment was just the reminder I needed. I would take your concern about OLPC a step further - why are computers the *only* option? Why not think a bit more outside the box and talk about the potential of cell phones - especially with WiFi and/or VoIP capability - to best serve users? Many BOP customers already see the need for a cell phone - why should they have to buy a new device?

Posted by: Rob on 8 Nov 06

There's a new Open Source cell phone with GPS features. It's got a lot of potential. Expensive - $350 - but what's expensive now will be cheap in five years!

Possibly a great platform. I don't know what you'd do with the GPS features, but there's got to be something...

Posted by: Vinay Gupta on 10 Nov 06



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