Some of the recent Emergic Freedom market ideas that have come in my various discussions are:

1. Target Assemblers

The computer assemblers are the weak link in the Intel-Microsoft chain. Selling Intel PCs now has become a commoditised business with little differentiation for them – in fact, in most cases, the customer decides the price he’s willing to pay for the specific configuration. Microsoft is after the assemblers because it sees them as the purveyors of pirated software. In short, assemblers are getting squeezed both by customers and the vendors. They need a different solution. This is where Emergic Freedom can come in. By cutting cost of computing, it can create more demand. It is an alternative to the new Intel PCs and Microsoft software platform. It gives the assemblers the capability to go to end-users with a differentiated offering.

From our viewpoint, assemblers can bridge the last mile by taking the solutions to organisations in their neighbourhood, building on the relationships they already have. One of the ideas is to get each of the assemblers to set up a Tech 7-11, which works both as an information, computing and communications centre, and as a showcase for the Emergic Freedom solution. Once people try out using the Linux desktop and the applications, they’ll realise they are not much different from the Windows applications they’ve been using.

2. Franchise Tech 7-11s

The Tech 7-11 needs to be at the heart of taking the solution to the mass-markets. The emphasis here is more on providing information and computing needs locally, rather than on just communications (as today’s cybercafes do). By offering content and applications from the local “thick server”, it should be possible to provide a wide range of services which (a) bring a larger user base to interact with computers (b) show them the utility of computing so that they will want them in their organisations. Thus, the Tech 7-11s are key in opening up the next and new markets.

3. Target SME Verticals

Hospitals, Garment companies, small manufacturers, and other such SMEs – all need business automation. How can we provide a solution for under Rs 125,000 (USD 2,500) which can provide them all the necessary hardware and software to make it happen? For this price, we can given them one “thick server” (Rs 50,000), 5 “thin clients” (Rs 40,000) and software (Rs 35,000) which can provide them the necessary basic software to manage their enterprise. For hospitals, we’d provide a hospital management software. For SMEs, we’d provide a basic CRM software for the services companies and an inventory management software for the manufacturers. Build them like Lego components using Web Services (on a “Visual Biz-ic platform, like what I’ve talked about in the past), so new modules can be integrated easily over time.

We need to show a clear business benefit at an attractive price point: SMEs want to automate repetitive processes. While our original e-Business suite idea will take time to do, we can aggregate a collection of small software applications which can simplify their life in the near-term, and them starting to use technology without the need for in-house IT staff.

What is needed here is to go in with a “whole solution” – hardware, software, support and training (working with the assemblers). Even for the software, there are plenty of companies which probably have developed the software but are unable to sell it to more than a handful of companies – marketing is the biggest problem for the small software product companies. This is where we need to act like a Tech Hub, providing distribution via the Assemblers and the Tech 7-11s.

I’ll have some more ideas tomorrow.

Where B2B exchanges went wrong (News.com) talks about the differences between the two markets:

Breakthrough markets are every entrepreneur's dream--a new, level playing field, created by technology, where the assumptions and strategies of existing players don't help or can even prove to be a hindrance.

On the Net, eBay is one of the best examples of a breakthrough leader, Day and Fein say. Before eBay, there were few outlets for consumers to connect with other consumers to trade goods. Garage sales and flea markets are erratic and unreliable; eBay created a genuinely new marketplace with customer-centric features such as its "feedback" system for rating buyers and sellers.

In breakthrough markets, "a single-minded focus" is helpful, as is "the ability to continuously adapt while resisting the impulse to grow as quickly as possible."

Re-formed markets use technology to adapt existing ways of doing business, rather than creating entirely new ways of doing business. Instead of creating genuinely new markets, the B2B exchanges were mainly about facilitating interactions and squeezing costs, but they didn't change the basic structure and functioning of the existing markets.

So, new entrants in re-formed markets must look at existing leaders, not at other start-ups, as their true competition. "The odds favor the leading incumbents in markets being re-formed by the Internet and the first movers in breakthrough markets," the study says.

Title: Disruptive Bridges: A Vision for a Digitally Bridged World

Short Description: Technology is essential to bridge the digital divide. Yet, most technology has been priced in dollars, putting it beyond the reach of a large number of businesses and consumers in emerging markets like India. The computer which is the lynch-pin of an economy, is still seen as a luxury by many. What can be done to create mass-market adoption of technology? What can be done to ensure that there is affordable and ubiquitous access to Internet-connected computers in developing countries like India and China?

Detailed Description

The technological divide in the world runs deep. Even as the developed markets are awash, even satiated with computers, the world's developing markets have very low penetrations. For example, China has an installed base of less than 30 million computers, India about 8 million. Both have populations in excess of 1 billion.

The hard truth about computing technology is that it has not made itself affordable to the developing world. Pricing continues to be dollar-denominated, creating a market only at the top of the pyramid. So, even as the developed nations have adopted computing and raced ahead in terms of productivity, the developing countries are faced with a Hobson's choice: spend a lot of money in dollars to make computing part of their DNA, or stay away and risk being left behind. For the most part, consumers and enterprises have chosen the second option.

Existing and emerging technologies offer an opportunity - one last opportunity - for the world's developing countries m to use technology to bridge the digital divide leapfrog into the New World - provided we leverage existing and emerging information and communications technologies smartly. Think of these technologies as disruptive innovations which help bridge the digital divide - "disruptive bridges".

The way to make "a connected computer accessible to every employee and family" in every developing country of the world is by offering solutions which offer full-fledged desktop computers for USD 100, software as a service for USD 5 per month, ubiquitous, cheap, high-speed wireless communications via WiFi and grassroots distribution via Tech 7-11s.

Speaker bio: Rajesh Jain is Managing Director of Netcore Solutions Pvt Ltd based in Mumbai, India. Rajesh's vision (http://www.emergic.org/emergic.html) is to create cost-effective technology solutions for emerging markets like India and China, in effect creating the computing platform for the next 500 million users. Previously, Rajesh had founded India's first Internet portal, IndiaWorld, which was acquired by Satyam Infoway in November 1999 for US$ 115 million in one of Asia's largest Internet deals. Rajesh writes a daily technology weblog at http://www.emergic.org.

What I added in my proposal: I had gone through the presentations of last year's ET conference. What I saw was a distinctly US/developed market perspective. My talk is about providing an alternative view - what can we do to leverage the newest emerging technologies to create solutions which can create computing's next markets. The talk is about targeting the bottom of the pyramid - consumers and SMEs - in the world's emerging markets, and making technology the next utility for these users.

The conference is in April 2003. Let's hope I get selected!

From IEEE Spectrum: "An increasing number of other games are taking advantage of changes in computer architecture and the growth in processing power to become smarter than ever before. Although most of these games use relatively unsubtle AI techniques, a few pioneers are even showing the academic AI community a trick or two. While AI originated in the laboratory, it has now been co-opted by designers of video games, and work is under way on increasing the learning powers of a video game's cast of characters and refining their social interactions with one another and with human players, too. At this point, even cinematographers and the military are showing interest in possible applications."

How do we bring the price point of “My First Computer” to Rs 500 per month? Let us first consider what the components of the price are.

“My First Computer” needs to be used in a network environment, and not as a stand-alone computer. Considering that we are targeting non-consumer in enterprises and government, this should not be an issue. The two elements of the solution are the thick server and the thin client. The thick server is a standard desktop. A system to support about 10 users would cost Rs 40,000 while one to support 40-users would cost Rs 70,000. The higher-end solution would have a dual CPU, have two disks with software RAID and increased memory. This is because all the processing is happening on the server. Thus, in the 10-cuser situation, we can expect the monthly cost in the case of a rental to be about Rs 1,500, assuming a loan period of 36 months. For 10 users, the cost per user thus becomes Rs 150 per month.

The thin client cost varies from Rs 7,000 for an old (recycled, in quantities of one) computer to about Rs 15,000 for a new one. One option is for users to buy the system of their choice. The client need only have a motherboard and network card, along with the keyboard, mouse and monitor. There is no need for a floppy drive, hard disk or CD-ROM since all storage and processing is happening on the server. The motherboard needs to have just a Pentium I CPU and 16/32 MB RAM.

An interesting variation on how the clients can be funded is the following. Think of the older thin clients as assets whose value depreciates by no more than 10% a year. This is a reasonable assumption because the price points are anyways very low and given that there is (a) software which can leverage these thin clients, and (b) there is a demand for thin clients – which there can be, considering that there are hundreds of millions of users who do not have a computer at this point of time, and who could afford one if the price points were lower.

Now, if there is a person or institution with surplus cash, their options for getting more than 10% returns per annum on the cash are very limited. So, if we think of the thin clients as assets which depreciate 10% a year and the need to give more than 10% returns a year on cash, if we can provide a solution which gives a higher rate of return (say 25% or more, to account for the increased risk), then investing in thin clients may be a good value proposition. For a 25% investment return on a Rs 7,000 thin client, the investor needs to get Rs 1,750 per annum, which works out to Rs 150 per month.

Thus, we can think of setting up an investment vehicle to buy thin clients and provide above-market returns to investors. This may seem a far-fetched option considering that this has never really been tried in the world of computing with respect to older computers, but I believe it can be done and in fact, can provide a win-win situation for all entities.

Tomorrow: Economics (continued)