TECH TALK: The Rs 5,000 PC Ecosystem: The Rationale

I have often talked about the Rs 5,000 (USD 100) Personal Computer in these columns as the cornerstone for engineering a revolution in taking computing to the next 500 million users. To build out computing for the next users in the world’s emerging markets, we need to think in terms of an ecosystem built around the Rs 5,000 PC (5KPC). In this series, I elaborate on these ideas, looking at specific segments and how they can be transformed using low-cost computers.

There are two driving factors behind the 5KPC thinking. For one, the PC can be the vehicle for opening up new windows and opportunities. For the first generation of users over the past quarter century, it has done just that. Neither the TV nor the telephone (or the cellphone) can match the computer’s interactive platform which enables its users to connect to each other, information and applications. The PC has engineered the technology and productivity revolution in the developed markets in the past two decades, flanked by the Internet and cheap connectivity. So, the question is: how can the PC now be taken across the digital divide to the next generation of users?

This brings us to the second factor. These users need a solution at a much lower-cost – even though the computer cost has fallen to USD 200 (excluding monitor and software), that is still too much for most users in the rest of the world. I think the magical price point for computing to become a mass-market phenomenon in the developing countries of the world is USD 100 (Rs 5,000). Today, even the cheapest computers available in India are at least 3-4 times as much. Of course, they have the newest processors, plentiful memory and more storage than can be imagined. Software by itself costs way too much – Microsoft Windows and Office can cost as much as the computer itself. (Of course, most users have their own way around these costs – piracy.)

I have long believed that for consumers and enterprises in developing markets, computers are not a luxury, but a necessity. Here are two quotes from a story in San Francisco Chronicle, about the significance of a low-cost computing project in Laos:

“Right now, the villagers have no way of telling what the market is like in the big towns they sell their stuff to, telling what the weather report is for their crops, things like that. This will absolutely change that. Plus, they will be able to talk to relatives in America some of them haven't seen in decades.” – Lee Thorn, who is creating the Jhai computer.

“The important thing is for them to have communication, because every day they sell their ducks, rice, weaving and chickens, and every day they have to sell for less money than they should because they can't know what the real price is down in the towns.” - Vorasone Denkayaphichitch, co-ordinating of the project in Laos.

And this from a story in the New York Times recently on Internet access in Ecuador:

"In the late 1990's, everyone jumped up in arms over the digital divide, but it has proven almost impossible to bridge. Why would access to technology be any different than access to education, health care, employment or financial aid?" – Peter Hakim, president of the Inter-American Dialogue, a Washington-based policy-analysis center, and an expert on Latin America.

Food, Water and Electricity are the basic essentials of life. They ensure today’s survival. But they do not alter quality of life from generation to generation. In this context, the connected computer can become a passport to a better life, or a growing business. Food and water take of the present, computers can provide for a future.

Tomorrow: The Concept

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The Concept

Let’s first build out on the Rs 5,000 PC (5KPC) concept. What are we talking about? What will this computer do? What are the complementary elements we will need to make this happen?

The 5KPC is, in essence, a thin client, a network computer. It “lights” up in the presence of a network. Without the connection to a “thick server”, it has very limited use. This is very similar to a cellphone or a television today. Both need networks to function. Without the cellular network, the cellphone is little more than a clock and good for a few games. Without the cable network, the television screen displays only static. In fact, think of some of the other devices we use – our regular landline telephone and radio. Both are network devices in the sense that without the connectivity they are useless.

The desktop computer started its life as a standalone device – because when it was launched the data networks were almost non-existent. So, a lot of smarts were built into the device, leveraging Moore’s Law to keep a cycle of increasing processing power, cheaper memory and storage, and a wide array of peripherals. The network connections came in later in the form of the phone and Ethernet connections. The next big leap for tomorrow’s computers will be 802.11 (WiFi) connectivity. All of the additional complexities for the standalone computer meant that the cost started at a few thousand dollars and is now down to a few hundred dollars. But they are still too expensive for most of the users outside of the developed markets.

This is the context for the 5KPC. What’s needed is a computer which costs no more than Rs 5,000 (USD 100), and offers software and communications for no more than Rs 250 (USD 5) apiece per month. At the same time, this should have the form factor and performance of the latest computers we are used to. So far, the discussion on affordability has always meant reducing the form factor to that of a handheld computer (a PDA). We are not talking of that. What we are saying here is how can we get a desktop computer with a keyboard, mouse and monitor for the Rs 5,000 budget.

The 5KPC is actually a PC terminal, connecting to a “thick server” via a network. It can even be thought of as an “embedded PC”. All the processing and storage is done on the server, with the 5KPC essentially being a display and user interface machine. (In that sense, it is very much like the Tablet PC – one could in fact, call the 5KPC a “Table” PC!).

By shifting processing to the server, we can dumb the machine down to being a Pentium 1 class machine (100-200 Mhz), and with very little memory (2-32 MB, depending on the network connection available). It has a network interface and support for the basic peripherals – keyboard, mouse and monitor. It also could have a USB interface. What it does not have is a hard disk, floppy drive or a CD-ROM drive.

Tomorrow: The Concept (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The Concept (Part 2)

The Rs 5,000 PC (5KPC) never needs to be upgraded – all the processing happens on the server in the network. This is one of the reasons its administration is simplified – we rarely need to call customer support for our telephone. For the 5KPC, the network connectivity is what makes it come alive – the network provides the digital dial-tone.

This simplification also ensures that the 5KPC is a zero-maintenance device – the next set of users are not going to be half as savvy as the first generation in worrying about upgrades, device drivers and the like. Also, they are likely to be deployed in markets where customer support may not be easy to get. The 5KPC is, thus, a “sealed endpoint” – if it does not switch on, it needs to be replaced – there is no debugging it!

In addition, the 5KPC is rugged – because there are no moving parts, it can work in various conditions and requires a lot less power. Open up the 5KPC cabinet and you will see a simple motherboard (a single-board computer) and a power supply, along with a set of connectors. Ideally, it should also work in situations where there is no power – because round-the-clock electricity cannot necessarily be taken for granted in many of the emerging markets. Two ideas to enable this: one, use a car battery along with an appropriate converter to provide an AC supply. Or, make the power consumption so small that it could, like the Jhai PC in Laos, be powered by bicycle pedals.

So, what is the bill of materials for the 5KPC? The actual computer should cost no more than Rs 2,500 (USD 50), including the cabinet. The keyboard and mouse will cost about Rs 500 (USD 10). That leaves us with Rs 2,000 (USD 40) for the 14-inch or 15-inch monitor. Is this achievable? Yes. Here’s how.

There are two options for the computer motherboard: either use an old one, or build a new one. The work is awash in older computers, which are now becoming e-waste as users in the developed markets like US, Japan and Western Europe upgrade to newer, fancier machines. These old PCs still have a lot of life in them. The problem is that the software that they need to run on the desktop (typically, Windows 2000 or XP, now that Microsoft is ending support for the older versions of Windows on the desktop) requires an ever increasing set of resources. Even the monitors are being junked as users upgrade to fancier flat-screens.

So, for that part of the world, the computers which have been disposed are junk – to be taken to landfills. But these computer can be very valuable as our 5KPCs, if a way could be found to transport them cost-effectively to the emerging markets and software can be created to make them useful as “thin clients”.

Tomorrow: The Concept (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The Concept (Part 3)

The second option for creating the Rs 5,000 PC (5KPC) is to build new computers. Can a computer be created for Rs 2,000 (USD 40)? Yes. But it is not going to be Intel or AMD who is going to do it. There is a third player in the world which sells Intel-compatible microprocessors and chipsets. That is Via Technologies of Taiwan, which had bought out Cyrix a few years ago.

For Via, the first world is not going to choose it as the CPU option – Intel and AMD have done a great branding job, and besides, the users need the cutting edge hardware to run Microsoft’s cutting edge OS. What Via needs to be (and perhaps is doing so) is to make low-cost motherboards – all they need are a processor, some memory, the appropriate connectors and the drivers. If Via does not do it, I’m sure someone else will – we are not talking rocket science here.

The second option still leaves us with the issue of where to get the monitors from. New monitors cost about Rs 4,000 (USD 80), which is double our budget. The solutions: use older monitors – they have a lifetime of many years, or to consider a hook-up to a TV. The TV idea has a problem with resolution – one cannot get the same quality of display that one can get on the computer monitor.

The gaming consoles (PlayStation, Xbox) have solved this problem – they use the TV as a monitor. One may not get the same quality as a monitor for text, numbers and web pages, but in some situations, having some display is better than none. I feel that it is definitely possible to get the older monitors – they are now outdated technology for the developed world which now wants flat screens. Hardware that is a generation old can be a wonderful thing for the technology requirements of the world’s emerging markets.

Next, let us now talk about the network connection – this is after all the lifeline for the 5KPC. There are multiple options here – from high-speed (100 Mbps or more) Ethernet connection to WiFi (802.11b cards which support upto 11 Mbps should be available cheap as the developed world upgrades to 802.11g or 802.11a) to cable connections (from 64 Kbps to 512 Kbps) to a dial-up connection (at 56 Kbps). The 5KPC will work under all situations – in fact, it should be designed to work with the lowest connection (dial-up).

The operating system at boot-up time could either come off the network (if the bandwidth is high) or from a local EPROM (if the speed is slow). Applications run on the server. There is a big advantage in this – all updates need to be only done on the server, and not pushed to the client. This is like the ASP model – the difference being that there is not a single centralized server, but a set of “thick servers” for every organisation or service provider.

Tomorrow: The Concept (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The Concept (Part 4)

The “thick server” that we refer to here can be of two types: it can be a single, new desktop computer with enhanced memory and two hard disks with real-time mirroring of data (“software RAID”), or a collection of clustered desktop machines. Think of these as inexpensive “blade servers” with a network-attached storage. This second solution circumvents the single point of failure problem inherent in the first option, thus offering greater scalability and reliability.

The thick server would contribute about USD 30-50 (Rs 1,500-2,500) to the solution cost – that is, the additional loading on what it would cost to support the 5KPC. In that sense, the solution we have outlined is not a “perfect” 5KPC – the real cost per client is about Rs 6,500-7,500 (USD 130-150).

The final topic that needs to be addressed in the context of the Rs 5,000 PC (5KPC) on the technology side is the software. The 5KPC uses Linux and other open-source software. That is going to be the only way to keep price-points at a rock-bottom level.

Applications run on the server and are displayed on the 5KPC using either a terminal-server application like LTSP (Linux Terminal Server Project, which runs an X server on the client) or vnc (virtual network computer). vnc, created by AT7T Labs, is “a remote display system which allows you to view a computing 'desktop' environment not only on the machine where it is running, but from anywhere on the Internet and from a wide variety of machine architectures.”

The idea of doing processing on the server and sending the keystrokes and mouse clicks from the user and getting the updated screen from the server is not a new idea: running applications on the server over low-speed connections is already being done – Citrix has a solution which works in the Windows world.

The basic set of applications that need to be supported include an email client (Ximian’s Evolution), a desktop productivity suite (OpenOffice), a web browser (Mozilla or its lightweight variants like Phoenix), an instant messaging client (GAIM) which provides interoperability with existing IM clients (AOL, ICQ, MSN and Yahoo), and a PDF reader (Adobe’s Acrobat). All these applications are available for free on Linux.

Summary

So, that’s how the 5KPC can be constructed: either old and recycled computers or new, low-configuration ones, running open-source applications on a Linux base, along with a network connection to a thick server.

The 5KPC is a “bottom-of-the-pyramid” strategy to bridge the digital divide. It targets nonconsumption – making computing available to those who have not able to afford it so far because of the costs of the solution.

Next week, we will consider how the 5KPC can be the centre of the computing ecosystem for the next set of users. There are various market segments which we will discuss – education (schools and colleges), government, small and medium enterprises, bank branches, homes and telecentres. The underlying vision we want to achieve is that “a connected computer accessible to every employee and family”.

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The WiFi Advantage

The Rs 5,000 PC (5KPC) is not going to bring about a revolution on its own. It needs to leverage other developments and technologies which together can enable the formation of an “affordable computing” ecosystem. Last week, we discussed briefly two of the elements of this ecosystem: the “thick server” and open-source software. The thick server is the one which does all the computing and storage. Open-source software is the platform for the applications. There is one additional element of the ecosystem we need to discuss before we go ahead: WiFi.

WiFi (802.11) offers wireless communications using open spectrum (2.4 Ghz and 5 Ghz) at speeds ranging from 11 Mbps (802.11b) to 54 Mbps (802.11g and 802.11a). The cost of wireless access points has fallen to under USD 100, while the cost of the cards required in the computers is down to under USD 50. In the next year, the incremental cost of adding WiFi to a computer is likely to be under USD 10 (Rs 500), as companies integrate the technology on to the motherboard itself. Hotspots (public wireless access points) are sprouting up all over the place in many countries.

Wrote William Gurley of Benchmark Capital in his recent “Above the Crowd” newsletter:

WiFi is to 3G as the personal computer was to the mainframe.

In the early days of the PC, most people considered the initial market for the IBM/Intel/Microsoft-based personal computer to be fairly narrow. In 1980, no one envisioned that one day you might run your company's entire ERP system, or power a massive array of web sites on this technical architecture. However, the "increasing return" forces highlighted above eventually created a product that, from both a feature perspective and cost perspective, was appealing to a much broader array of applications and uses than ever previously envisioned.

This exact thing is currently happening with 802.11. This tiny, and increasingly inexpensive radio is already shockingly versatile. The same $30 radio can be used to serve wireless connectivity in your office, connect both your PCs and your multimedia in your home, and provide coverage to a police force across an entire downtown area. Add a Pringles can as a directional antenna (no kidding!), and this $30 radio is capable of providing high-speed, line-of-sight connectivity at a distance of 10 miles. In fact, the majority of the volume in the line-of-sight fixed wireless market has shifted almost entirely to low-cost 802.11 radios.

Originally designed to connect PCs and handheld computers to the network, people are now using these low cost radios for an increasing number of diverse customer applications. In remote areas, 802.11 can be used as a DSL alternative. Hospitals are using 802.11 not just to connect doctors and nurses but also to connect hospital equipment. 802.11 is a wonderful solution for industrial sensors in remote monitoring as well as control equipment designed to intelligently manage such things as power and HVAC systems. You can even use 802.11 to build an extremely cost effective video surveillance network. It is also feasible that 802.11 will be the driving force behind a wholesale conversion to VOIP and an entirely new phone structure in the enterprise.

So, why is WiFi almost free? The answer is (1) because the price of the parts could go as low as $5 over the next five years, and (2) because the entire PC industry has a vested interest in seeing 802.11 dominate over 3G. As such, within a matter of years, 802.11 will be a standard feature on every single portable computer, with a marginal cost to the consumer of $0.00.

Tomorrow: The WiFi Advantage (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The WiFi Advantage (Part 2)

For the emerging markets, WiFi's disruptiveness stems from it being a low-cost bottom-up network, which can provide wireless broadband to bandwidth-starved societies. For many users, the killer app for WiFi is likely to be voice in the form of VoIP (voice-over-IP), using regular phones but carried over the WiFi networks. A customer-owned WiFi network can be majorly disruptive to the existing telecom operators, according to Clay Shirky:

Two cheap consumer devices loom large on this front, devices that create enormous value for the owners while generating little revenue for the phone companies. The first is WiFi access points, which allow the effortless sharing of broadband connections, and the second is VoIP converters, which provide the ability to route phone calls over the internet from a regular phone.

Hardware symbiosis will further magnify the threat of WiFi and VoIP. The hardest part of setting up VoIP is simply getting a network hub in place. Once a hub is installed, adding an analog telephone adapter is literally a three-plug set-up: power, network, phone. Meanwhile, one of the side-effects of installing WiFi is getting a hub with open ethernet ports. The synergy is obvious: Installing WiFi? You've done most of the work towards adding VoIP. Want VoIP? Since you need to add a hub, why not get a WiFi-enabled hub? (There are obvious opportunities here for bundling, and later for integration -- a single box with WiFi, Ethernet ports, and phone jacks for VoIP.)

WiFi hubs and VoIP adapters allow the users to build out the edges of the network without needing to ask the phone companies for either help or permission. Thanks to the move from analog to digital networks, the telephone companies' most significant competition is now their customers, because if the customer can buy a simple device that makes wireless connectivity or IP phone calls possible.

WiFi has the support of much of the computer industry, which sees it as the force to ensure a new cycle of upgrades in the coming years, and a profitable shift from the desktop to notebooks. Telcos are now also getting into the business of setting of setting up hotspots. The economics of WiFi make it very compelling, as Business Week wrote recently: “It typically costs less than $1,000 to deploy a hot spot that can accommodate about 10 users at once. That's only about one-tenth the cost of providing equivalent capacity on a 3G network. End users save, too. Downloading a 20-megabyte PowerPoint presentation over 3G could take nearly 20 minutes and cost $16, while over Wi-Fi it would take about three minutes and cost just $2.50, figures telecom researcher Analysys.”

So, where does WiFi fit into the 5KPC (Rs 5,000 Personal Computer) ecosystem?

The 5KPCs can be equipped with WiFi cards, sourced from the developed countries (for older computers) or built onto the motherboard (for the newer ones). This eliminates the need for cabling in the enterprise and for the last mile, and solves the connectivity problem. The wireless access point could be in the enterprise or in the neighbourhood. WiFi can thus become the foundation for a bottom-up wireless broadband network, of which India has already seen two in the past – the community telecom access points (via the STD PCOs) and cable.

Using WiFi and a shared broadband connection will also bring down the cost of connectivity for users. Today, it costs Rs 500 per month for more for individual users via dial-up or cable. WiFi can not only increase the connection speeds (from 56/64 Kbps to a 1-2 Mbps) but also reduce the cost to Rs 100-250 per month. At the same time, the barrier of connectivity for getting additional computers is eliminated, thus enabling wider and easier deployment of the 5KPCs.

Tomorrow: The Alternatives

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The Alternatives

To make affordable computing a reality for the mass-market, it is not that the Rs 5,000 Personal Computer (5KPC) is the only option. There can be other candidates – a handheld computer (PDA), the TV and set-top-box combo, a data-enabled cellphone are three other possibilities. Let us discuss each of them.

The handheld computer or the PDA has been touted for a long time as the way to get mass-market adoption for computing. One such example out of India is the Simputer. While these are all laudable initiatives, I don’t think they will ever become mass-market computing devices for a number of reasons: the size of the display is too small, data entry is a hassle, mobility and portability are not essential for most users, and the price-points will still be on the higher side. My belief is that most of the new users need a full-fledged desktop, with a 14 or 15-inch monitor and a proper keyboard. The PDAs can, at best, become adjuncts to the desktop, but not replace the need for it.

The TV with a set-top box is a second option. The problem with the TV approach is on four counts. Firstly, the display resolution still does not match that of a computer monitor. The TV may be good for showing the rich graphical worlds for games, but it does not yet display the text and numbers that most users need for their basic applications. Secondly, the TV is synonymous with leisure and entertainment, and is used in the “lean-back” mode. The PC is used in the “lean-forward” forward for study and work. So, for the kind of uses that we envision for the computer, the TV is not suited from a mental image that we have of it. Thirdly, the TV is present in homes and not in the workplace. Finally, even at home, the TV has alternate uses as an entertainment device – in most cases, it is shared by multiple family members. Try wanting to check email when prime-time soaps are going on in the evening…

The wireless or Java-enabled cellphone could be the third alternative. The cellphone suffers from similar drawbacks as the PDA. The numerical-oriented keypad makes it hard to do a lot of extended data entry (even though SMS has become popular in much of the world) and the display size is quite small. The cellphone can become an accessory to the computer, but will not be able to replace it as the primary device for information work.

So, I believe that the road to making computing a utility and ensuring its widespread deployment is to look at the Rs 5,000 PC. And as we saw last week, it is definitely possible to bring down the price-points as long as we accept the existence of a network. (In fact, both the cellphone and the TV are useless without the network.) The question we now need to consider is how can the 5KPC make a difference to our lives. Which are the market segments it will impact and how? How will the future be different with the 5KPC?

Tomorrow: The Markets

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: The Markets

The Rs 5,000 PC (5KPC) is the anchor for taking computing to the next 500 million users. These are markets which are as yet invisible. The technology vendors have not tapped these users in the past two decades, because, among other things, the price-points have been too high. The existing value chain created by the likes of Intel and Microsoft is not geared to tap these next users and make a profit. Whether they will do so in the future is a matter of conjecture. But what this does do is open up an opportunity for the creating of a new value chain, a new ecosystem built around the 5KPC.

Which are these markets? Think of the world’s emerging markets – countries like India, China, Brazil, Mexico, Russia. Then think of the schools and colleges, the government offices, the small- and medium-enterprises, the BFSI (banking, financial services and insurance) sector branches, the homes, and the telecentres in these countries. These are what constitute the bottom of the pyramid. The limited adoption of technology has hampered their integration into the world’s economic system. This is where access to computing can make a big difference – by making them more productive, their work and businesses more efficient, the children and students smarter and much more aware of the wide world outside. In essence, computing can be the passport to a better quality of life in the coming years for these “nonconsumers”.

These markets are what Vijay Mahajan, Marcos V. Pratini De Moraes and Jerry Wind call the “Invisible Global Markets”. They state that developed markets – with a GDP of more than USD 10,000 – constitute only 14% of the world’s population. Companies focusing on these markets do not see the other 86%. Among the strategies that they outline in their paper (Marketing Management, Winter 2000) are:

1. Build products to compete against “bullock carts” rather than automobiles
2. Create product and service revolutions that can be exported
3. Pay attention to the informal economy
4. Use global family networks
5. Understand that customers don’t know how to be customers
6. Recognise that low income doesn’t mean low quality expectations
7. Use “demand pooling” to reach critical mass
8. Bring your own infrastructure
9. Rethink the entire marketing and business strategy
10. Bridge the digital divide

(The most recent issue of The Smart Manager has an adapted version of the same set of ideas by Vijay Mahajan.)

In tomorrow’s column, we’ll take a look at each of these ten ideas and apply them in our context to see what we can learn. And we can contemplate how to target this next (or rest) 86% of the world, it would be useful to keep the following comments by the authors in mind:

Customers in these invisible markets stretch out like countless grains of sand on the beach. Individually, they may represent a very small opportunity. Because of their sheer number, however, this forgottem 86% of the world represents a huge opportunity. Companies that see these opportunities will find creative ways to gather these grains together to build castles.

You cannot wait for these customers to appear on your radar screen. You have to go and find them. You need to move off the beaten path – both in the products you develop and the creative strategies you use – to turn these invisible markets into visible returns.

Tomorrow: 10 Ideas to Tap Invisible Markets

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: 10 Ideas to Tap Invisible Markets

Let’s see how we can the 10 ideas outlined by Vijay Mahajan, Marcos V. Pratini De Moraes and Jerry Wind in their paper (Marketing Management, Winter 2000) on “The Invisible Global Markets” in the context of building our Rs 5,000 PC (5KPC) ecosystem”

1. Build products to compete against “bullock carts” rather than automobiles: The competition for the 5KPC is not necessarily the 20KPC. Rather, it is nonconsumption, or in the case of small and medium enterprises (SMEs), the paper-pen approach to writing letters and doing accounts. In schools and colleges, a handful of computers (if present at all) are shared by dozens of students – in that case, the computer is not a “personal” computer, it is more like a TV. By bringing the cost down, we can now create individualised access to the computers, thus making for a learning experience (as compared to a “viewing” one earlier).

2. Create product and service revolutions that can be exported: India can be the first market, the laboratory for implementing these 5KPC ideas. But that is not the only market. The opportunity lies in replicating these ideas across other markets like India. The language requirements may be different, but the same desires and needs for a “connected computer” exists across the countries at the bottom of the pyramid.

3. Pay attention to the informal economy: Most of our life is spent in cities. Our friends and family live in cities. Semi-urban areas or the rural villages are alien to us. But these are the places where the next set of opportunities lie. They are not what we come across in our daily life – we have to go our of our way to tap into this “other” economy. Their problems are different – for example, uninterrupted electrical supply which we take for granted is a dream for most people outside the major metros in India. This means to make a computer work, we need an alternate and cost-effective power supply.

4. Use global family networks: India has its Non-Resident Indians (NRIs), China has its Overseas Chinese. Can they be persuaded to partake (for profit) in the computing buildout? For example, can NRIs get together and provide Rs 150,000 (USD 3,000) to put together a 10-computer lab for the village/school that was part of their childhood? This “microfinance” can, in a distributed manner, complement the resources that are available via NGOs and the government.

5. Understand that customers don’t know how to be customers: According to me, one of the reasons (besides price) for the poor off-take of computers in the emerging markets is that people and enterprises still don’t know what to do with them besides the regular email, browsing and Office applications. What’s needed is the creation of “application bundles” relevant for different verticals, and appropriate training for end-users on how to make the best use of the computers. A community portal where the users can share experiences and ask questions about computing without being embarrassed about their ignorance would also be very helpful.

Monday: 10 Ideas to Tap Invisible Markets (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: 10 Ideas to Tap Invisible Markets (Part 2)

Continuing with the ideas outlined by Vijay Mahajan, Marcos V. Pratini De Moraes and Jerry Wind in their paper (Marketing Management, Winter 2000) on “The Invisible Global Markets” in the context of building our Rs 5,000 PC (5KPC) ecosystem”:

6. Recognise that low income doesn’t mean low quality expectations: When we talk of the 5KPC, we are not asking users to compromise in features, applications or performance. We are giving them a full-fledged computer with state-of-the-art performance and an easy-to-use GUI. In fact, in terms of convenience and the applications that are available, these users, much like their cellphone brethren in the emerging markets, have an opportunity to leapfrog existing users in the developed nations because of their lack of legacy.

7. Use “demand pooling” to reach critical mass: This is where the concept of “telecentres” comes in. Just like STD PCOs provide telecom access to a neighbourhood obviating the need for individual ownership, the telecentres can become the computing and communications centres to provide access to individuals and enterprises in the area. Cybercafes have done much the same in India so far by offering Internet access for as little as Rs 20 (40 cents) an hour. But what has been missed out is the access to computing and applications. The telecentres can become the “instant business office” for SMEs and allow them to test-drive applications before they decide to invest in computing on their own.

8. Bring your own infrastructure: Connectivity and bandwidth has been a bugbear for much of the world’s emerging markets. WiFi is the way to bring about the broadband communications revolution in these markets. As WiFi technology improves and its costs fall, they create the infrastructure to make possible the 5KPCs which can now be “lit up” in the presence of a network. This infrastructure leverages the newest developments in wireless technologies. Because it uses open spectrum and is built-out in a distributed manner (“customer-owned networks”), the costs are lower as compared to 3G networks.

9. Rethink the entire marketing and business strategy: Creative and innovative solutions will be needed to tap into these new markets. One example is to consider a rental business model, based on utility pricing. For example, the hardware, software and communications could be provided for as little as Rs 500 per month, creating a 3-year total cost of ownership of Rs 18,000, which should be enough to allow the entire value-chain to offer the services profitably. Another idea we have discussed earlier is the use of older computers and accessories, discarded by countries like US and Japan.

10. Bridge the digital divide: This is exactly what the 5KPC ecosystem, along with its concomitant ideas of the thick-server, open-source software and WiFi make possible. They make computing affordable, thus making it possible to take it to the technology have-nots, across the digital divide. The digital divide can be bridged by “disruptive” innovations. For example, we can think of building an SME Barter network – cash is for them an incredibly valuable resource. College students can become the next big open-source developer community. The new markets and opportunities are only limited by our imagination.

With this background behind us, let us now look at each of the seven markets that we have mentioned – schools, colleges, government, bank branches, SMEs, homes and telecentres. We will see how the 5KPC ecosystem can bring about dramatic changes in each of these areas in order to make the vision of “a connected computer accessible to every employee and family” a reality.

Tomorrow: Schools

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Schools

How can the Rs 5,000 PC (5KPC) make a difference in education? First, we’ll take a look at schools. In India, there are 1.2 million schools. Today, few of these schools have computer labs. The focus of the 5KPC should be to enable the creation of computer labs in every school in every emerging market. By teaching about computers from an early age, we are preparing the next generation from the IT-enabled era. In today’s times, it is not good enough to be just literate – one need to be computer-literate.

Let us consider the economics. Consider a school with 1,000 children. The first objective should be to setup a computer lab with 10 computers. While the ratio of 1 computer for every 100 children, it is a start. What would it cost? 10 computers for Rs 5,000 apiece with a “thick” server for Rs 30,000 and software for Rs 20,000 make the base cost Rs 100,000. Other costs would be networking (Rs 10,000), a printer (Rs 5,000). The total costs would be Rs 115,000 (or about USD 2,300).

Recurring costs would be for maintenance – Rs 1,000 per 5KPC and Rs 3,000 for the server and printer, making an aggregate of Rs 13,000 (USD 260). Taken over a 3-year period, the total costs are Rs 141,000. Take into account some financing costs, and we are probably looking at a 3-year total cost of ownership of about Rs 170,000 to Rs 180,000 (about USD 3,600), which works out to a per student per annum cost of Rs 60 (USD 1.20), or Rs 5 per month (10 cents).

[As an exercise, let us compare this cost with that of new PCs and Microsoft software. The cheapest new PCs in India will cost about Rs 20,000 each, with maintenance costs of Rs 1,600 after the first year. Microsoft’s software (Windows and Office) is available for the education segment for Rs 2,500 per annum. Thus, the three-year cost of ownership for a 10-computer lab is Rs 232,000 for the hardware and Rs 75,000 for the software, for an aggregate of Rs 307,000 (USD 6,000). This compares with Rs 126,000 for the 5KPC solution. Thus, for every 2 schools equipped with new PCs and Microsoft software, one could provide the 5KPC solution in 5 schools.]

For this investment in technology, a student will get about half-hour of shared computer usage per week. Here’s the calculation for that: a day has 10 periods of 30 minutes each, with 5 days a week. This makes for 25 hours of education a child gets per week. This is also the computer time available for use. Across 1,000 students, this works out to 40 students an hour on 10 computers. Or, put differently, two students per computer per half-hour. Over a year (9 months of education), the student will get about 18-20 hours of computer education.

The above calculations do not take into account two other significant costs: the cost of the IT curriculum, and the salary for the teachers. Let us assume that the IT curriculum is available for Rs 100 per student per annum, including the cost of the text book. The IT curriculum would cover the basics of computing, logic, programming languages, the various applications, and so on. (On a separate note, I happened to see one of the text books being used in a school in India. I was shocked to find the concepts being taught at least 10-15 years old – the discussion in one of the chapters centred around IBM PC XTs and ATs! Obviously, a relook at the curriculum and standardisation will be needed.)

The schools will also need two teachers, at Rs 3,500 per teacher per month. Over a year, the teach costs work out to Rs 84 per student per annum. Thus, the total cost for providing education in schools is as follows:

Cost of technology: Rs 60
Cost of IT curriculum: Rs 100
Cost of teachers: Rs 84
Aggregate Cost: Rs 244 per student per annum, or about USD 5.

Tomorrow: Schools (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Schools (Part 2)

In India, there are about 200 million students. At Rs 244 (USD 5) per student per annum, the annual cost of providing universal computer literacy is about Rs 5,000 crores (USD 1 billion). The unanswered question: how much of this can be recovered through fees collected from the students? Since we are covering students across every strata, it may not always be possible to get students to pay the entire cost of their computer education, even though as one may look back later, it may be one of the best investments made in their future.

So far, we have talked about computer education. A related area is computer-enabled education, where computers are used to teach other subjects like Maths, Science, History and Geography. These benefits are still not clear, as a recent Economist article (Oct 26, 2002) states:

Classroom computers can be disruptive. They rarely enhance the studious atmosphere in which children are most likely to learn. The new conventional wisdom is that young children in particular learn best when they face the teacher. But computers encourage children to split into noisy little groups. And one of the vaunted advantages of computer-based learning, that it allows children to proceed at their own pace, has so far turned out to be wrong: educational software is much more one-size-fits-all than a good teacher, skilled at tailoring the lesson to the varied abilities of a class.

This view may be somewhat biased towards the West, where the assumption is that families are likely to have a computer at home and the quality of teaching is very good. While no computer can replace a good teacher, it is not always possible to get good teachers in schools in developing nations, especially in the interiors. Besides, a “digital library” and the Internet can help enhance and widen the learning process. It would be nice to see some of the scientific concepts brought alive through animations, making for a richer and more interactive learning. (This is my personal view – I remember spending a lot of time in the school library going through encyclopedias and discovering the world beyond. It was this which helped stimulate curiosity and fire the imagination – both about the past and the future.)

The 5KPC can make computer labs in schools a reality at an extremely affordable price-point. It must become one of the key priorities of government and NGOs. Also, by replicating content on the thick servers, they can bypass the need for high-speed connectivity, and at the same time open up vast digital libraries for the students. The connected computer, like the radio, can open up new windows to the world. Computer education is no longer something that should be available only to the elite – it has to become a universal right. This is one of the fastest and surest ways to begin bridging the digital divide.

Tomorrow: Colleges

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Colleges

The second leg of the computer education initiative revolves around making connected computers available in colleges, with legal software. Here are six ideas:

1. Create computer labs, of the kind we discussed for schools. In colleges, there would be many more computers, since students will be spending a lot more time on computers. In fact, given the Rs 5,000 cost, it should be possible to provide a computer in every hostel room. The 3-year cost for such a computer would be about Rs 10,000 – Rs 5,000 for the computer, Rs 2,000 in maintenance costs over the next 2 years, Rs 2,000 as the loaded cost for the thick server, and another Rs 1,000 as networking and finance costs. Thus, over a 36-month period, the cost works out to Rs 300 per month. This could be recovered through student fees, if not provided by the institution.

2. Consider setting up WiFi networks, rather than running wires across the place. This creates a wireless envelope allowing for connectivity across the campus.

3. Provide each student with a permanent email address of the form name@graduationYear.instituteName.edu (or something similar). This email address will not change even after the student graduates. The difference is that while on campus, each student is given a mailbox, while after graduation, the email is forwarded to another address specified. In addition, every student can be given storage space on the server for his files and mails. Access to the student’s accounts will be possible from any computer on campus, since all these computers are the 5KPCs (thin clients).

4. Make public all research work and projects done by the students. This makes it possible for others to see what work is being done, and instead of duplicating the efforts, work on complementary projects. In fact, students should be encouraged to publish personal weblogs (again, this becomes possible since they have access to a computer in their rooms). What the weblogs do is work as a mechanism for students to build up their profile during the time they are there in the institutes.

5. Ensure that all students learn computer fundamentals – logic, data structures, programming languages and networking basics. Knowledge of what computers can do is going to be critical in whatever professional activity they do – be it in engineering, arts, management or medicine.

6. Encourage faculty to publish their lecture notes and presentation online. In fact, the widespread use of computers can create for a richer interactive environment between faculty and students.

On the software front, the server would comprise of three sub-systems, built on Linux and open-source software:

Messaging, consisting of email, instant messaging, proxy, firewall, anti-virus, and a global address book.

File, Print, Applications Server: this is the “thick” server. It also serves as the Central Repository Server (a Digital Library) and has all the Linux/Open-Source software needed. This is replicated at each college, and updated regularly. This ensures that when students need software, its available locally on the LAN to experiment with.

Content Management and Collaboration: Calendaring, Weblogs, Website management, Knowledge Management (creating Communities of Practice) and other collaboration applications.

The set of ideas outlined here can be applied to every educational institution. Engineering colleges, can, however, do a lot further in building out the 5KPC Ecosystem.

Tomorrow: Engineering Colleges

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Engineering Colleges

Engineering colleges can be the hubs for both the requisite manpower development and for propagating the Rs 5,000 PC (5KPC) ecosystem. Here are five more ideas:

1. Ensure that the projects done have industry applicability. For this, all students should be spending 6 months at industry in their final year – working on Linux/open-source based projects. This is the period which bridges academic work to the world outside. It can also serve to expose enterprises to open-source software. Students can take up vertical industries and create relevant solutions. This work with enterprises will also help them with employment offers from the places where they work, provided they do a good job.

2. Contribute to open-source software projects. There are many projects (eg. Wine) which can do with additional development resources. For the student community hungry for projects, what better opportunity to make a difference! India and China have a very large pool of engineering talent which can be used to build upon the base of open-source software. Considering that these two countries will be the biggest consumers of computers and software in the coming years, the cost savings can be significant. For this, it will also mean that the faculty will need to look beyond rehashing the previous year’s projects but think more “managerially” and create multi-year development efforts. So far, few notable software contributions have come from the world’s developing nations. The engineering colleges have an opportunity to change this.

3. Make the engineering colleges responsible for the neighbourhood community. Engineering colleges dot the landscape. Because of their ubiquitous locations, they can be thought of as “technology hotspots” and can provide services to institutions in the vicinity. For example, students at engineering colleges can take up responsibility for teaching computers at nearby schools. (During my days at IIT, I remember joining the NSS and teaching students from nearby schools – this program of computer education can be an extension of such a program.) Alternately, they can become part-time system administrators at nearby hospitals, bank branches, government offices or SMEs. Either way, they can now be given an opportunity to deploy their skills in the community.

4. Start a Linux Certification Course. The need of the hour for the Linux-based 5KPCs to proliferate along with applications is for more engineers to be familiar with Linux and system administration. A certification program will create the confidence among other organizations to start deploying Linux.

5. Deploy Linux-based Integrated Development Environments (IDEs) to encourage students to get familiar with software development on Linux. This needs to be combined with a revamp of the curriculum which besides teaching languages like C and C++ also places emphasis on Perl, PHP and Python.

The 5KPC Ecosystem creates a new set of opportunities for students as they graduate from their colleges. By becoming users of computers powered by Linux and open-source software, they can be the harbingers of the next computing revolution. The 5KPC can also bridge students to enterprises, thus also becoming an employment generator for these students when they graduate. The 5KPC has a potential to become a bottom-up agent for change in the developing nations. All it needs is a little push from the government agencies in charge of education to make Linux and open-source part of the core education curriculum.

Next Week: The 5KPC Markets (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Government

The government is the biggest spender on technology, and so can be the biggest beneficiary of the Rs 5,000 PC (5KPC) Ecosystem. In India, for example, it is estimated that 70% of the package software revenues come from the government. (Of course, what this means is that enterprises and home users are the biggest purveyors of piracy!) Governments are typically strapped for funds, and yet are expected to provide a wide variety of citizen-centric services. Many of these efforts now go under the name of ‘eGovernance”.

There are two types of uses of technology by the government organisations: one is for internal use, and the other for providing eGovernance services. In the internal usage scenario, providing a computer for every (or most) government employees can help speed up processing of information and decision-making. The days of “pushing” files need to be replaced by “clicking” on files. Given the sheer numbers involved, it is imperative for governments of emerging markets to use lower cost technologies and yet achieve the same effectiveness.

For eGovernance, there are two aspects: the first is the backend computerisation, and the second is the front-end access. First, Here is a definition of eGovernance from BanagaloreIT.com: “E-governance or electronic governance may be defined as delivery of government services and information to the public using electronic means. Such means of delivering information is often referred to as information technology or 'IT' in short form. Use of IT in government facilitates an efficient, speedy and transparent process for disseminating information to the public and other agencies, and for performing government administration activities.”

In fact, the Ministry of Information Technology of the Indian Government has gone further and outlines what a few ideas on what it would like to do:

Government should have an intranet for ensuring smoother flows of data, communications and access to information by different Ministries and Departments. It should be made mandatory for all Ministries and other Departments to put as much information as possible on to the intranet but in a manner in which searches can be made easily.

Transactions between various departments of the government of India and other Government organisations should be networked so that a substantial part of transfer of files and paper can be replaced by an intranet within the Government.

All departments & agencies to ensure that they operate web sites which provide up-to-date information, forms, leaflets etc.

E-mail to be incorporated into the normal range of contact methods and departments & agencies will implement arrangement for rapid response to e-mail queries.

There should be a single web based front-end for all government services to the public.

On the backend computerisation, the use of open-source software can help dramatically reduce costs. Linux, rather than Windows, should be the operating environment. Databases like PostgreSQL and MySQL could be preferred over Oracle and Microsoft SQL. We will discuss the second part in greater detail when we talk about telecentres and how a distributed network of computing and communications centres can make for universal access to information and transactions.

In fact, the government, through its influence on IT decisions, can play a positive role in the promotion and buildout of the 5K PC Ecosystem. We will look at some ideas on what he government can do.

Tomorrow: Government (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Government (Part 2)

Here are some ideas on what governments can do to facilitate the Rs 5,000 PC (5KPC) Ecosystem. The aim, as one of the Indian Government papers points out, should be to create a government that is SMART – Simple, Moral, Accountable, Responsive and Transparent Government.

A 5-year vision of a computer for every employee. The government can lead the revolution by ensuring that it practices “real-time government”. At a hardware-software-communications cost of Rs 500-1,000 per month, the payback period for technology adoption would be rapid since there would be better management of processes. Also, by ensuring that enterprises and citizens can interact with it electronically, the government can cause a domino effect in the usage of technology across the nation.

Preference for open-source solutions over proprietary software. Besides the cost savings, this move will ensure that software can be modified by local developers, if required. Innovative developers, especially students, can create improvised software for use in different government departments as part of meaningful projects.

No specifying of brands or actual configurations in tenders: Computing is changing rapidly. The days for specifying that OS software and Office software means MS-Windows or MS-Word/Excel/Powerpoint are over. There are alternatives which are just as good. Similarly, desktops could be thin clients or low-configuration machines, and not necessarily Intel Pentiums. Government tenders should focus on the solution and its performance, and not specify the modalities of how it needs to be done.

Eliminate all duties on computer hardware and peripherals. There needs to be a recognition that technology needs to become a utility. By penalizing hardware imports, the government is putting an indirect tax on its usage, when the situation should be just the other way around.

Allow the import of used computers into the country. Amazingly, in India, from what I’ve read and talked to people, second-hand computers attract an “anti-dumping” duty. These old computers hold the secret of mass-scale computerisation. In fact, the government can go a step further and launch a national donation program for older computers, as the Thai government is planning to do.

Making education institutions as resource centres. The emphasis in schools should be on not just ensuring literacy, but computer literacy. In colleges, the goal should be on making them hubs for promoting low-cost computing technologies in the neighbourhood.

There are many local government success stories across the world. The problem is that the scaling up of most of these services requires a huge investment, because they are based predominantly on using new Intel- or AMD-based PCs, MS-Windows as the desktop platform, commercial databases like Oracle on the backend. The mix of open-source software and low-cost (or used) PCs is what is needed to make these “demos” replicable across a state or nation.

In the adoption of new technologies, the government can lead the way, and become a testbed for new ideas. What is needed is Will and Vision, both of which are qualities not ordinarily associated with most governments in the world. What is needed is for a few entrepreneurial-minded officers or ministers to become the harbingers of change agents in their countries. Can it be done? In India, chief ministers like Chandrababu Naidu (Andhra Pradesh) and SM Krishna (Karnataka) have shown that it can be. These initial success stories need to be translated nationally and globally.

Tomorrow: Bank Branches

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Bank Branches

Banks, Financial Services companies and Insurance companies (collectively dubbed as BFSI) are among the largest users of technology. Much of their business relies on the electronic movement of information. Also, by the nature of their business, they need to have a distributed physical presence in a lot of neighbourhoods. For example, India’s largest bank, the State Bank of India, has over 9,000 branches, while the largest insurance company, Life Insurance Corporation, has over 2,000 branches. The opportunity for the Rs 5,000 PC lies at these BSFI branches.

Typically, the branches have some form of computerisation, and about 5-10 PCs. In most cases, these will be networked terminals or “thick desktops”, running a proprietary application. The numbers across a single organisation are large. In the case of terminals, the organization would be keen to give a modern GUI-based desktop to the users, so they can use email, a web browser and other applications. In the case of the thick desktops, the challenge comes in the form of both upgradation costs every few years and the incrementally high cost for new users.

This is where the 5KPC can make a big difference. What it does is bring down the single biggest impediment to computerisation: the high cost of hardware. The 5KPC provides for a saving of at least Rs 20,000 (USD 400) per user. Multiply this by a few thousand users, and the savings become enormous.

Each branch can have a 5KPC for every employee, connected to a thick server. The users now get the performance of a new “thick desktop”, the look-and-feel of a Windows-like interface, the full complement of applications (email, browser, IM, Office suite) without the attendant problems of having to upgrade every few years. In addition, support is simplified dramatically because the client computers don’t need any support and the thick servers at the branches can be managed centrally.

The issue that most BFSI installations have is that of running their proprietary applications on a Linux/open-source platform. They typically will have an application written in Visual Basic or Developer 2000 and running on a MS-Windows desktop. The application drives the platform. Rewriting the application is a non-trivial exercise. For the 5KPC to be useful, it needs to be able to support this application. Is this possible? Yes!

There is an open-source software project called Wine. Here’s a brief introduction from its website:

Wine is an implementation of the Windows Win32 and Win16 APIs on top of X and Unix. Think of Wine as a Windows compatibility layer. Wine provides both a development toolkit (Winelib) for porting Windows sources to Unix and a program loader, allowing many unmodified Windows 3.x/95/98/ME/NT/W2K/XP binaries to run under Intel Unixes. Wine works on most popular Intel Unixes, including Linux, FreeBSD and Solaris.

Wine does not require Microsoft Windows, as it is a completely alternative implementation consisting of 100% Microsoft-free code, but it can optionally use native system DLLs if they are available. Wine comes with complete sources, documentation and examples and is freely redistributable.

Wine is the trick to making existing Windows applications work on Linux, and thus the 5KPC. This is not yet a trivial exercise – Wine itself is over a million lines of code, and does not support every Windows application. Some effort will need to be put in to make Wine support the proprietary Windows applications. But the benefits in hardware cost savings are substantial enough to justify this exercise.

[A few other alternatives exist: Crossover Office (a commercial implementation based on Wine), Win4Lin (from NetTraverse) and Windows Terminal Services from Microsoft with rdesktop (which is free) running on the 5KPC. Each of these will entail a per user cost.]

While new applications should be developed to ensure they work on a browser (so they are OS-independent), to make a mark in this sector, the 5KPC solution will need to support an existing legacy of Windows applications on Linux. The sheer volume of opportunity in the BFSI sector makes it a key segment in the 5KPC ecosystem.

Tomorrow: SMEs

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: SMEs

SMEs (Small and Medium Enterprises) are aplenty in the world – about 25 million of them form the most crucial links in global supply chains. The majority of them are in the world’s emerging markets, where the costs of technology limit their adoption. And yet, they (and their bigger enterprise brethren) can be the biggest beneficiaries in terms of real-time information access if SMEs can “provide a connected computer to every employee”. This is where the Rs 5,000 PC (5KPC) can come in.

What the 5KPC makes possible is a low total cost of ownership for computing. The mix of low-cost computers as thin clients, open-source software, server-centric computing and WiFi can help bring down the aggregate cost of computing and communications to about Rs 500 (USD 10) per employee per month (Rs 18,000 over a 3-year period), which would be about a quarter of the alternative (a new PC with Microsoft Windows and Office). Of course, today most SMEs end up using pirated software, so the actual cost may be lower. But then piracy is not a long-term solution to the rising costs of desktop software.

First, let us look at the four stages of technology deployment in enterprises. In the first phase, SMEs need to get email. This means setting up a messaging server on the LAN with email addresses for the staff of the form name@companyName.com. Email lets the SME begin electronic interactions with customers and suppliers. In the second phase, computers need to be given to all – this is where the 5KPC can now it affordable to put a computer on every desk. The impact of email and other new technologies is limited if only some of the people in the enterprise use it.

In the third phase, SMEs need to now leverage the computing infrastructure to make sure that the staff become productive at what they are doing. Collaboration software, digital dashboards and knowledge management solutions can help make individuals and teams more efficient within the enterprise. In the fourth phase, SMEs can now start using business automation software – an integrated eBusiness suite can consolidate all the information and make it accessible for all. It entails a rethink and re-engineering of key business processes and information systems keeping in mind that a computer is available on every desk. This is the vision of the intelligent, real-time enterprise, one which is also plugged into the extended value chain.

In this SME environment, at the heart of the technology infrastructure is the 5KPC. The Rs 500 per month cost ensures that anyone earning more than Rs 5,000 per month can be given a 5KPC with immediate returns if that person can be made 10% more productive through its use. And that is definitely an achievable goal. The low-cost computing and communications infrastructure that the 5KPC enables can help enterprises better leverage information and knowledge. By ensuring universal access to computing, it bridges the enterprise “digital divide”.

Tomorrow: SMEs (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: SMEs (Part 2)

The key area where SMEs need assistance is in the appropriate use of technology. Big companies have the McKinseys and Andersens to help them. SMEs have only themselves and their ilk. They need help at multiple levels:

Design of Business Processes: SMEs need templates and libraries of business process maps and best practices from where they can select the appropriate ones and perhaps customise them if necessary. What is needed is the equivalent of a “Visual Biz-ic” (a la Visual Basic) for specifying and re-using business process descriptions. The increasing use of business process standards being specified by associations like RosettaNet can be especially useful for SMEs.

Consulting and Training: This is where the engineering colleges, their faculty and students can play a role. Once the Rs 5,000 PCs (5KPCs) are there in SMEs, they will need engineers to implement solutions and train their staff in the right use of computing. On the other hand, engineering college students are looking for the right kind of projects and the faculty is seeking to complement their teaching with consulting assignments. The combination can help SMEs leverage technology better.

Connecting with other SMEs: The SME communities are still quite splintered, mostly connected only through trade associations. Online is a great way for them to connect up, complemented by periodic local (physical world) gatherings. Think of the online version as a Slashdot for SMEs. They can share their ideas and experiences, and suggest solutions to challenges being faced by others. In doing so, they build a shared knowledge base in an emergent manner – where the whole is much greater than the individual parts. This could later be extended into creating an online marketplace, based on bartering products and services.

Using their website more aggressively: SMEs need to use the Web for marketing and promotion more aggressively. The corporate website should have plenty of information and be updated regularly. This can be complemented with a weblog, written by the CEO. The blog can become a hub and sounding board for new ideas, and get other individuals and organisations to connect up with the SME. (I have started to see this happen through my weblog.)

At present, many of the SMEs in India (and perhaps other emerging markets) use PCs for three purposes: email, accounting and documentation. This is because PCs are on the desks of only a few people, primarily because of their costs. SMEs can, in fact, use this lack of legacy to their advantage – they have little worry for older software which needs to be maintained.

The 5KPC has the ability to completely change the perception of a PC, making it as important as a desk and chair for the staff. The PC has to be combined with a freedom and change in culture, which may be harder to accomplish. The connected computer is a window to the outside world. Employees are now free to use email and the web – and there is potential for some misuse. But over time, the SMEs will discover that their people and their ideas can become their greatest strengths. This is their passport to growth and business success.

Next Week: Telecentres and Homes

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Telecentres

Even with the Rs 5,000 PC (5KPC), the total cost of computer ownership may still be perceived to be high for a significant majority of the people, especially in semi-urban and rural areas. This is where telecentres (or Tech 7-11s, as I used to refer to them in earlier columns) come in. By focusing on providing access to computers rather than ownership, we can accomplish the same goal of taking computing to every family and employee.

This is akin to the way telecom access in India is available to most of the country via Public Call Offices (PCOs) even though at a national level, there are less than 40 million telephone lines (and an additional 10 million cellphones) for a population of 1 billion. A million of the telephone lines go into PCOs which serve a community rather than a family. Telecentres take a similar approach a computing.

Telecentres are computing and communication centres. They will typically have 5-40 of the 5KPC, depending on the available space. These “PC terminals” are connected to a thick server. The server cost would be about Rs 50,000 (USD 1,000). Thus, with an investment of about Rs 200,000 (USD 4,000), it should be possible to set up a 10-15 computer telecentre. In addition, the telecentre will have telecom services, via a few wired or wireless phones, perhaps an IP phone, a fax machine, a printer and a photocopying machine. It also will have a wireless (WiFi) access point, thus providing coverage to the neighbouring homes and offices. It is connected to the Internet through a broadband connection – ISDN, cable, fibre or wireless.

What makes the telecentre affordable in terms of investment is its use of the 5KPC running Linux. For an equivalent setup using new PCs and Microsoft Windows and Office, the cost would be higher by about Rs 40,000 per PC, making it unaffordable. Today in India, other than the branded chains, most cybercafes use pirated software – but that is not a sustainable model for growth. What the 5KPC provides is a solution which is not only cheaper, but also uses legitimate software. This is the only way to build a scalable, replicable and viable solution.

The telecentres perform multiple functions:

Cybercafe: First and foremost, the telecentres perform the role that cybercafes do - connect people to the Internet. They provide email, browsing and chat, and now increasingly voice-over-IP and video chat/conferencing. The one flaw in a cybercafe-only model is that its only source of income is tenuous – that of charging people by the time they use the computer. This charge has been falling steadily. Cybercafes need additional income source to survive and thrive, and this is where the myriad other services that the telecentre makes possible come in.

Computing Point: This is the real strength of the telecentre. It goes beyond just communications. In a way, by providing communications and community services, cybercafes have leapfrogged ahead – but left behind those users desiring basic computing services. The telecentre offers computing time and storage space for hire – for writing letters, making presentations, or running specialised business applications. It lets people test-drive computers before deciding if they need one at home or in their office.

Digital Library: The server in the telecentre can become a huge repository of digital content. Disk space is cheap. Data mirroring on the local server can be done by dispatching CDs regularly to the various telecentres, and copying the megabytes of data on to the hard disks. What does this is ensure that users don’t need to worry about going to the Internet over slow connections – they get “broadband” access to the content on the LAN itself in the telecentre. Anything that can be digitised can be made available locally for access. The digital content can include mirrored websites, software downloads, educational content, e-books, government forms and notifications, and more.

Tomorrow: Telecentres (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Telecentres (Part 2)

Continuing with the functions that Telecentres equipped with the Rs 5,000 PCs (5KPCs) can perform:

Instant Business Office: Kinkos is a chain of stores in the US in most urban and office neighbourhoods which serves as an “outsourced back office” for individuals and small businesses – offering computers, printers, photocopying machines, fax machines, binding services and more. For small businesses, it is an extension of their office. Similarly, telecentres can combine Kinkos-like features to offer services to the small and medium enterprises in the neighbourhood. The model is the same: shared ownership brings down the unit cost for all.

Wireless Access Point: The Telecentres have an 802.11 (WiFi) wireless access point, which enables them to provide connectivity to the 5KPCs in the vicinity. Thus, homes, businesses, kirana shops (the neighbourhood grocery stores – like the 7-11s to be found in many Asian cities) can be equipped with just the 5KPC embedded with a wireless card, which can connect to the server in the telecentre through open spectrum. Connectivity speeds would range from 11-54 Mbps, while the range would be a few hundred metres (perhaps higher, if there is line-of-sight available). What these access points do is enable instant and cheap connectivity for the end-users, eliminating the need for everyone to have a high-speed Internet connection. They also bring down the price for the endpoints (the computers) with the caveat that they need the presence of a network to “light up”. From the telecentre’s point of view, they create an additional income source beyond the limitations of the telecentre real estate.

E-Governance Front-end: Another important role for the telecentres is as the “touch-points” for various citizen-centric services offered through the various e-governance initiatives which are being implemented by governments and municipal corporations worldwide. As the backend computerisation of governance takes place, what is missing is the mechanism for citizens to get access to these services. This is where the neighbourhood telecentres come in by making it possible to use a “connected computer” to access the various services. This is the route which will reduce pain points in the lives of the citizens – be it renewing driving licences, checking land records, inquiring on the status of submitted applications, paying bills or even voting. In fact, in Andhra Pradesh in India, one of the services started by the government is “match-making”!

Software Distribution: There is an amazing array of open-source software available. Lindows lists over 1,700 Linux applications. Many of these applications are large in size and require a lot of time for downloading over low-speed connections. This is where telecentres can come in. They can offer these mirrored applications which can be run by users to get a feel for what they do, and if there is interest, the application could be copied on to a CD for use by the individual or SME for a small fee. Thus, the telecentre becomes a software distributor (or replicator).

Thus, the telecentre is much more than just a single Internet kiosk or a cybercafe. It offers multiple facilities. It opens up new possibilities by providing high-performance computing in the neighbourhood. It brings information, communication and software to the doorsteps of consumers and enterprises, and can facilitate many new application areas.

Tomorrow: Telecentres (continued)

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Telecentres (Part 3)

The key question is: how to make the Telecentres economically viable? The Rs 5,000 PC (5KPC) only helps to make the Telecentre less expensive to set-up. But a 10-15 computer centre will cost about Rs 200,000 (USD 4,000) to set-up and about Rs 20,000 (USD 400) monthly to manage (people, space, bandwidth and maintenance costs). The two questions that we need to address. Where will be the initial set-up costs come from? What are the sources of income?

The initial investment can come from three possible sources: local banks and financing organisations (for example, World Bank, microcredit institutions), the community members themselves who would set the telecentre as a co-operative, or individuals and corporates who would invest in telecentres by providing “microfinance” at the location of their choice. Telecentres could also be set up institutions like post offices, banks, railways (at their stations), hospitals, schools and colleges.

Each telecentre should be run as a profit centre, with the objective of providing returns to the investors over a period of time. If we were to look to a three-year payback of the principle amount with interest, the additional revenue that would need to generated each month is about Rs 7,000. Thus, we need a business model that generates about Rs 27,000 each month at a minimum, or about Rs 1,000 per day. If we assume there are 10 computers, we are looking at an income of Rs 100 per computer per day. Taking it one level further, if the computer is used for about 5 hours a day (50% utilisation), we are looking at generating Rs 20 per computer per hour.

Cybercafes in India today charge between Rs 15-40 per hour, with the median being about Rs 20. So, in theory, just be offering cybercafe services, it should be possible to generate enough revenues for break-even. But over time, as telecentres (or cybercafes) proliferate, the hourly rate is likely to come down to Rs 10. That is what we need to assume. This means the additional set of services that are on offer need to generate the balance Rs 10 per hour.

By offering value-added services like eLearning, printing of documents and forms, storage space for documents, access to specialised software applications and neighbourhood wireless access services, it should be possible to bridge the revenue gap and create an economic model for the telecentres which is self-financing. As individuals and enterprises discover the value of the Internet and computing, they will want more services, and this can create a positive feedback loop as entrepreneurs come in to create these offerings.

The telecentre can be thought of as a platform which bridges the digital divide, by offering equal access and opportunities to people across the emerging markets. For example, they can use a site like eBay to market their crafts globally, as entrepreneurs in Ecuador are doing. In India, ITC’s e-Choupal program is helping provide the latest prices for agricultural products through Internet kiosks across villages. The telecentre can be a positive disruptive force for the next users, because it breaks down the barriers imposed by geography through centuries. By bringing information, computing and communications to the mass-market, the telecentre is the “disruptive bridge” that the emerging markets and their people need to create new opportunities and open up new horizons.

Tomorrow: Homes

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Homes

The question that has puzzled me for some time is as follows: Why aren’t more people in India buying computers for their homes? I am sure they recognise the importance of computers, especially for their children. And yet, less than a million PCs are being bought for homes. (The number is probably lower: a total of 2 million PCs will be sold in India this year). Availability of cheap consumer financing means that one can take home a PC for Rs 1,000 per month (payable for 36-42 months). And yet, home sales are not skyrocketing.

Why is that? Is it that people find the Rs 1,000 monthly installment high? Or is that there are other factors – electricity issues (lack of available of reliable power across India), space issues (where do they keep it in small homes), software issues (where do I get – pirate – relevant software), Internet access costs (which can run upwards of Rs 500 per month for as little as 30 minutes of daily dial-up access).

My belief is that one of the key issues in this conundrum is the total cost of ownership. Computers are believed to become obsolete in 3-4 years. Which means, that from the home user’s point of view, the monthly outflow for a connected computer is at least Rs 1,500. This is not a small figure for most Indian families. The price point for mass market adoption is, according to me, no more than Rs 500-700 per month. Or, put another way, the upfront cost should be no more than Rs 5,000 and monthly outflow should be about Rs 250-500 per month. At those price points, it is comparable to the cost of two other networked devices – the TV and the cellphone. So, why not apply the same model to the computer to drive mass market adoption?

The Rs 5,000 PC (5KPC) can do just that. It needs a network to come alive and be useful, just like the TV needs the cable network and the cellphone needs the GSM/CDMA network. So, to make the 5KPC an economic reality, it means that the service operator has a three-year revenue base of a minimum of Rs 9,000 (36 months at Rs 250 each month) to provide for the loaded thick server costs, software and wireless connectivity. The thick server loading is about Rs 2,000 per 5KPC in enterprises – this will probably be the same homes, since even though usage is not that high, it is likely to be bursty, especially early in morning and late evenings.

Wireless connectivity using WiFi can probably be provided for Rs 3,000 (cost of equipment – cards and access point) since there are no spectrum costs. These costs will probably halve in the next year. That leaves a budget of Rs 4,000 for software and operations. Considering that all the software used is going to be open-source and based on Linux, it should be possible to put a solution together within these limits.

What this does not take account is the upside. And that is where the 5KPC scores. The 5KPC desktop can be remotely controlled by the operator, who can now sell “icon space” to banks and other service companies for a small fee per user. Everytime the home user starts the 5KPC, these icons (and therefore the brands) will be visible. It is akin to how cellphone companies can provide links to value-added services which are “one-click” away on the cellphone.

In addition, as desktops proliferate at home, it now becomes possible for the nighbourhood stores to set up relationships with consumers in the neighbourhood through RSS (Rich Site Summary) feeds which provide information on what’s new. RSS feeds are based on XML and can be automatically picked up by special programs (RSS Aggregators and News Readers), based on the user’s subscriptions.

For years, people have talked of interactive TV with set-top boxes. That hasn’t happened. The computer is the ideal interactive device. In effect, the 5KPC will create a whole new ecosystem of interactive services targeted at home users. The 5KPC is what can make the vision of “a connected computer accessible to every family” a reality.

Tomorrow: Moreover

Tech Talk | PermaLink

TECH TALK: The Rs 5,000 PC Ecosystem: Moreover

The markets for the Rs 5,000 PC (5KPC) are not limited to the ones we discussed – schools, colleges, government, bank branches, SMEs, telecentres and homes. The 5KPC opens up new markets which hitherto would have been inconceivable given the costs – hotel rooms (why lug a laptop), hospital rooms (why be deprived of connectivity when one is unwell), factory floors (so that even the blue-collar workers can now be connected), point-of-sale terminals (for lotteries or merchandise) are some examples. The 5KPC enables a computer wherever it can be imagined. Think of the 5KPC as a “disruptive innovation” – it opens up new markets where it can delight users, and then over time, it can target even mainstream users.

In fact, the opportunity for the 5KPC is not just limited to the developing countries. There is an interesting discontinuity in the world’s existing markets. As organisations in countries like the US seek to upgrade three- or four-old PCs, the USD 100 PC can be a very interesting alternative to minimise support costs and get off the treadmill of enforced obsolescence. In fact, the upgrades may be forced upon tens of millions of users as Microsoft seeks to end support for its older Windows operating systems in June. As CIOs consider alternatives, they’d do well to look at the USD 100 PC and open-source software.

By themselves, the 5KPC and many of the ideas discussed in the past columns are not new. What’s new is the markets that need to be targeted, and the focus on “value-added aggregation” – putting together whole solutions for different verticals. In a sense, the markets need an iMode-like solution with hardware (the 5KPC), software (open-source components) and network connectivity (via WiFi, cable, dial-up or LAN) integrated together. In fact, much like iMode, the additional services that can be layered on top will be the key.

For emerging markets, the 5KPC offers an opportunity to leapfrog in terms of computing and a connected citizenry. It is very difficult to imagine the impact of making technology available to whole nations in a very short period of time. In fact, in countries like India, the two revolutions of computing and communications could run in parallel – making available – suddenly – voice and data services to the masses in their homes and offices. By making technology a utility, the 5KPC can herald the creation of a New World Order.

The 5KPC is an idea whose time has come. It is an idea which by itself will not bridge the digital divide, increase growth rates or eliminate poverty. But for the world’s poorest countries, the 5KPC can be an equaliser. It can open up new vistas and fire up people’s imaginations. After that, it is to the individuals and the enterprises to convert these openings into dramatically better futures. It is up to this generation of entrepreneurs to go and build out the 5KPC Ecosystem. The Next 90% is waiting.

Tech Talk | PermaLink