India and $4 processors

It’s not exactly news to suggest that a significant part of the global capitalist opportunity lies in the developing nations. Anyone who follows the news regularly, let alone those that follow economic and technology trends in some detail will be aware that much is made of the scale available in China, India and Brazil amongst others. What is perhaps left out from a more superficial analysis, is the nature of some of the disruptions and how these different geographies adopt positions that we take for granted in the developed world and turn them on their head.

Changing big issues is difficult

Changing big issues is difficult

To some extent I imagine that part of this is incredulity matched with a level of sub conscious yet peculiarly willful ignorance. If that particular oxymoron is too much for you I do apologise, but I struggle to otherwise make sense of how little there is in terms of sensationalism and subsequently, almost, outrage in the coverage.

Take for example the whole, one laptop per child initiative, characterised as $100 laptops. From Wikipedia

The wireless networking has much greater range than typical consumer laptops. The XO-1 has also been designed to be lower cost and much longer-lived than typical laptops.

OLPC initially stated that no consumer version of the XO laptop was planned. The project, however, later established the laptopgiving.org website to accept direct donations and ran a “Give 1 Get 1” (G1G1) offer starting on November 12, 2007. The offer was initially scheduled to run for only two weeks, but was extended until December 31, 2007 to meet demand. With a donation of $399 (plus US$25 shipping cost) to the OLPC “Give 1 Get 1” program, donors received an XO-1 laptop of their own and OLPC sent another on their behalf to a child in a developing country.

I love the one laptop program. I am certainly not advocating for outrage over its wonderful goals and achievements. I am, however, curious as to why we aren’t outraged at the reality of certain sectors of ‘developed’ societies, that have a similar lack of digital savvy and computation / internet access, but aren’t also targeted with solutions like the one laptop program. I know the argument is very ineffectively summarised as socialism evil, but really isn’t it time to move beyond that already (as if equipping children with the skills they need was even socialism anyway).

I don’t know how much of OLPC is charitable intent (ie. business losses) and how much actually covers cost (the laptops are sold to governments) but I suspect that the ratio is fairly healthy in a business context. I may be wrong (and would be delighted if someone can point me to some information) but I do have my reasons for this assumption.

DataWind. Completely outside of the concept of charitable intention we have this.

DataWind is a London based company whose purpose is to create cheap computing hardware for, primarily, India, in a bid to bridge the gap between the developed and the developing worlds. This is not a charity. They have a very solid business plan and intend to make a lot of money. I’d bet they are successful too and have every hope that they will be, I think they have put their fingers on one of the key growth dynamics of the next 20 years and for that they deserve to be rewarded.

DataWind began winning attention last year when it struck a deal to supply India’s government with 100,000 of its Aakash 2 tablets, for roughly $40 each, by this March 31. That tablet works only near Wi-Fi points, but DataWind also sells an $83 commercial version called Ubislate 7C+, which comes with an unlimited mobile data plan for around $2 per month.

Within 18 months, Tuli says, he hopes to bring the price of a basic tablet down to $25 and make the Internet connection free.

Not only are those numbers impressive, and just hugely alien to the developed world’s technology markets, but DataWind also have the stated objective of making connectivity free.

Wow.

Such a though in the west would be quasi sacrilegious. In a developing country it’s just common sense.

A gigahertz processor costs $4. It’s good enough for most everything you’d want to do with a tablet, and not just for poor people in India. Hardware has gotten cheap enough that restaurants or resorts should be giving customers tablets to walk away with for free.

$4. $4. $4. $4….. I could quite happily highlight that number again and again. $4.

I’m reeling slightly. That’s a ridiculous price when compared to the cost of computing in the UK. I’ve been observing for a couple of years now that the march of Moore’s law has stopped translating into obvious price reductions in the UK market. I’m typing this on a £350 laptop, which is roughly what my last 2 laptops cost. Yes, the clock speed is faster, but somehow actual performance on everything except richer internet media experiences, is somewhat unchanged, and that mostly depends on a decent broadband connection.

Our assessment was that when the cost of purchasing PCs fell to within 20 percent of monthly salary, you started to see them in every home. In a place like India, there are about billion people for whom $50 meets that criterion.

So, this is the point when the economics of this whole thing should start to make your eyes water with envy. That is such a casual statement for such a huge number. For context that is roughly 3 times the US population. Are you starting to see why delivering free internet access is an attractive concept?

The first killer app on these devices is going to be Internet access.

Neither do we need to deliver anything stunningly complex or innovative. That’s worth repeating – just the internet, all on its own. To every youngish, or not so youngish coder sitting in their bedroom, or eating ramen in California, desperately trying to invent the latest sexiest, fortune making app this must hurt.

Nobody focuses on the problem of creating apps for somebody whose monthly income is $200…

There are something like five million fruit walas in India, so if you had an app for them, there could be a lot of money to be made.

This is how the deployment phase of Carlota Perez’s long cycle economic theories will play out. She has been very specific in her statements that the expansion of new markets will be about exactly these territories.

Let’s hope that once the value is proved in the developing world such ‘ridiculous’ innovations such as widespread free internet access will be made available in the so called ‘advanced’ nations.

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