Another reason why the $100 laptop is doomed

Provocative post title, no? I came across this article today which looks at the reasons for low penetration of PC’s in developing countries. From the article Introducing Computing to the Emerging Market: Mobile Devices by Suvarna Singh and Bibhu Choudhary,

We are not trying to suggest that price is not a factor influencing PC
penetration in developing countries. However, the success of many
expensive international brands in emerging markets calls for a
different angle of analysis
.

The other day I was doing my weekly
grocery shopping at a local shop in the suburbs of the small Indian
city Hyderabad. My grocer, who had never been to high school, pulled
out his brand new Motorola MPX 200 running Windows Mobile 2003 and
called up his boss to find out the selling price of potatoes. My
curiosity rose and I spoke to him about his business in length. When I
suggested a point of sale terminal for his shop, he seemed intimidated;
"Computers look good with you sir. I am better off with my cash
register."

In light of the above experience, when we analyzed the telecom sales and service data from the developing nations, the findings were interesting. The Average Revenue Per Unit (ARPU) of mobile phones in India is $2,384 per year. The expenses incurred on the cellular phone services over a period of 2 years by the average subscriber are enough to procure an entry-level home PC. Gartner projects a Combined Annual Growth Rate of over 47% for the mobile connections in India through 2009 (Forecast: Cellular Services – India 2000-2009, Gartner 26 April 2005).

There is something about the form factor of a cellular phone that suggests simplicity. Be it the weight of the phone, the size of the screen or the small number of keys, these devices help people overcome their technophobia. That the whole thing fits into a pocket gives a sense of control to a hesitant first-timer. On the other hand, a cubic foot of CPU having multiple connection sockets, a foot long keyboard with nearly a 100 keys and a large monitor makes computing look like rocket science. No amount of "user friendliness" in the UI makes the entry barrier to computing low enough to enable the grocer in India to make the first mouse click and surf the Web is search of a better market for his potatoes.

Something to think about.

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This entry was posted in Business, Design, India/China/Asia. Bookmark the permalink.

5 Responses to Another reason why the $100 laptop is doomed

  1. So let me get this straight; Two researchers from Microsoft’s Mobile Devices group say mobile devices are the future for emerging markets? Wow, I’m impressed. These guys earn their salaries. Also, the $100 laptop is a charity project, not a bottom of the pyramid business. I don’t believe there’s a conflict, at least I hope not.

  2. niti bhan says:

    🙂 No, that was me using a provocative post title to get your attention, I know the $100 laptop is a charity project, I was just wondering if the reasons given in the article for the slow penetration of PC’s would impact such BoP projects?

  3. Seriously now, they might. Mobile phones are easy to understand and use, even for first timers. The future could honestly belong to the mobile phone. Then again they might not; until screen technology changes quite a bit and if the vested interests in computing give way a bit, there may be a future for computers at the BoP. Convergence huh! Who knows?

  4. nupur goenka says:

    I feel mobile phones are popular not just because they are easy to use and understand, but also because the function of hearing somebody’s voice on a device and that device being able to understand your response and delivering it to the right person, has been around for ages and has been adopted by all generations currently alive. It does not feel like a revolution. I used to talk on the fixed line and now I talk on something that moves with me. This is also why VoIP has been so readily accepted by older people who use the internet, on the other hand chatting is still alien to them. My 60 yr old father who uses the internet on an average of 12 hours a day knows what skype is and uses it; knows what msn chat is, also has an account, but never uses it.

  5. niti bhan says:

    Nupur,
    That makes sense, my mom and dad are the same way, far more comfortable using Skype to talk than any of the chat lines. Of course, facility with a keyboard also has much to do with this, but what i hear you saying in your comment is that the barrier to entry is lower in this case (of the mobile) because the action is one that the user is already familiar with (talking on the phone).

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