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With the dot-com bubble a distant memory, recession-ravaged Silicon Valley insiders are wondering aloud about the next big thing. They haplessly sift the sands of social networks and they chase the chimera of wireless networks, but they ignore technology’s biggest opportunity that is staring them in the face.
It is what I call a Massputer a computer that costs $300 for the computing hungry masses in emerging economies like India, China and Brazil. Users of this massputer should be able to do basic tasks like writing documents, Internet surfing, email and perhaps some business-related tasks like data entry.
There are nearly four billion people who live in these emerging markets and assuming that only 10 per cent of them can afford $300 it is still a market of 400 million. Currently, the PC troika of Intel, Microsoft and Dell typically charge $750 for every computer, which most people in these emerging markets find unaffordable. Even the so-called network computers cost an unaffordable $500-plus.
So this is a perfect opportunity for brave entrepreneurs. It is not an easy task, but it isn’t impossible. With free open source software like Linux and powerful low-cost processors made by companies like Texas Instruments, the ingredients are all right there for someone to build this Massputer. Sure, it isn’t as exotic as building a super fast optical system, but it can definitely be lucrative.
At $300 a machine, the market is going to split wide open. In India alone nearly 55 million such machines could be sold to schools, colleges, government, and small businesses, estimates Netcore Solutions, a Mumbai, India-based company. Multiply this many times, and you see the numbers add up. The total market opportunity for the lower priced machines is upwards of $16 billion. (This is a concept championed by Rajesh Jain.)
The $300 sticker is vital- it keeps the devices affordable, and at the same time allows the corporation selling this massputer makes a decent profit. Gizmos such as color televisions, washing machines, refrigerators and air conditioners were snapped up in large numbers once they were priced right around $300. The proliferation of mobile phones in the emerging world is proof that at the right and affordable price people everywhere will adopt the right technology. There was a time when a mobile phone cost $400 and a mere 10 million people had the service. Now more than 400 million phones will be sold this year and 1.4 billion people, many in not very rich countries, will make mobile calls. That is because the price of the phone at $100 is now affordable in these emerging countries. More users means the price-per-minute has come down as well. In short, everyone benefits.
In an article for MIT Sloan Management Review, Harvard Business School Professor Clayton Christensen described such breakthroughs as “disruptive innovations,” or a breakthrough that brings products to those “left out entirely or poorly served by existing products and who are therefore quite happy to have a simpler, more modest version of what is available in the high-end markets.”
For the established giants, there is little risk of cannibalizing their markets. After all US consumers are used to the ever-powerful machines, and have time and again shown little or no interest in such stripped down machines. Even General Motors, bowing to market forces makes tiny cars in Asia. Why can’t a PC maker do the same?
Many see the tip of the technology pyramid as being exotic. That was true in the era of the mainframe where volumes were low and the technology was complex. Today there is an inversion of this phenomenon where the most complex technology is produced in high volume at commodity prices. Current PC industry giants such as Microsoft, Intel and Dell are shackled to their gilded past and are ignoring this market reality. The days of $150 processors and $300 operating systems are gone. Like many before them, those who hang on to the past are destined to become part of it.
The social implications of Massputer cannot be underscored. Popularity of cell phones and text messaging promoted social revolutions, and peaceful protests in hitherto turbulent societies in Asia. Philippines comes to mind. I believe the availability of a Massputer connected to the Internet will help develop more educated, more informed and more open societies. If rest of the world has to embrace the principles of free markets, they need the tools. Massputer is a perfect example.
Massputer is the market of the future. Any takers?