With affluent markets
maturing, tech’s next 1 billion customers will be Chinese,
Indian, Brazilian, Thai… In reaching them, the industry will be
deeply transformed
Cultural Customization
There’s no easy formula for selling in emerging markets. Some
corporate or government customers in Russia and Brazil are as
big as any in the U.S., and their needs are just as
sophisticated. Russian Railways, with 1.2 million employees,
spent $2 billion over the last three years building a modern
data communications system. “We’re very proud,” says Anna Belova,
deputy minister of the railway. “We have a huge scale of tasks,
and we find creative solutions.” Now other giant Russian
enterprises see it as a role model and are boosting their tech
purchases, too.
To target innovations that will resonate in these markets,
companies are conducting in-depth studies of peoples’ needs.
Intel, for instance, has a team of 10 ethnographers raveling
the world to find out how to redesign existing products or come
up with new ones that fit different cultures or demographic
groups. One of its ethnographers, Genevieve Bell, visited 100
homes in Asia over the past three years and noticed that many
Chinese families were reluctant to buy PCs, even if they could
afford them. Parents were concerned that their children would
listen to pop music or surf the Web, distracting them from
school work.
Intel turned that insight into a product. At its User-Centered
Design Group in Hillsboro, Ore., industrial designers and other
specialists created “personas” of typical Chinese families and
pasted pictures that Bell had taken of Chinese households on
their walls. They even built sample Chinese kitchens – the room
where a computer is most often used. The result: Late this year,
Intel expects a leading Chinese PC maker to start selling the
China Home Learning PC. It comes with four education
applications and a physical lock and key that allows parents to
prevent their kids from goofing off when they should be
studying.
Many products designed for consumers and small businesses in
emerging markets will have to fit some demanding specifications:
They need to be simple to use and capable of operating in harsh
environments. A handful of products have already come out with
these factors in mind – and many more are on the way. India’s
TVS Electronics Ltd., for instance, is selling a new kind of
all-in-one business machine called Sprint designed especially
for that country’s 1.2 million small shopkeepers. It’s part cash
register and part computer, designed to tolerate heat, dust, and
power outages. The cost: just $180 for the smallest of three
models.
Pricing is often the make-or-break factor. In rural South
Africa, where HP has set up a pilot program similar to the one
in India for developing technologies for poor people, the
average person makes less than $1 a day. Clearly, not too many
can afford to buy their own personal computers. HP’s solution?
The 441 PC (as in four users for one computer). It’s a machine
set up in a school or library that connects to four keyboards
and four screens, so multiple people can get on the Net or send
e-mail at the same time.
Some of the best ideas for the developing world have the
potential for catching on everywhere – including the U.S. It’s
already starting to happen. Kishore Kumar first developed a
simple PC-based remote health-monitoring system for distant
villages in his native India. Now his company, TeleVital Inc. of
Milpitas, Calif., is marketing the technology in the States. The
first U.S. customer, Battle Mountain General Hospital in Battle
Mountain, Nev., couldn’t afford patient-monitoring equipment –
or people to operate it. Now it’s hooking up with a hospital 100
miles away to track its patients. Says Battle Mountain
administrator Peggy Lindsey: “We in rural America can really use
equipment like this.”
When tech companies modify their existing products for emerging
markets, they can end up with improvements that have a broader
impact. That’s what happened at Nokia Corp. (NOK ) when it set
out to reduce the costs of setting up and operating wireless
telephone networks. One improvement, called Smart Radio
technology, can cut in half the number of signal-transmission
sites operators need. Wrap that and other new technologies
together, and operators can build networks for up to 50% less
than before. Nokia has been rolling out these innovations from
Thailand to Peru. DTAC, the No. 2 Thai cellular operator, is
installing the new gear around Bangkok. “If this works, we can
use this concept to penetrate into much more remote areas
up-country,” says Sigve Brekke, the company’s co-CEO.
Dell already has translated emerging-market innovations into
successes in its traditional markets. After SmartPC took off in
China, Dell in 2001 introduced a version for the U.S., for the
first time going after bargain hunters. A year later, Dell
absorbed the SmartPC into its mainstream consumer product line
as sales took off. “We try to take some of the best ideas we
have seen that are happening in local environments and make it a
global product,” says Dell Senior Vice-President William J.
Amelio.
Dell, Nokia, and other Western giants need all of the
innovations they can muster, especially as the field of
competition shifts to emerging markets, and they’re confronted
by a stampede of aggressive challengers. Chinese
communications-equipment maker Huawei is giving Westerners fits
in its home market, where it has captured a 16% share in the
crucial router business, second only to mighty Cisco, according
to IDC. And thanks to prices up to 50% lower than rivals’,
Huawei is expanding everywhere from Russia to Brazil. It already
ranks No. 2 worldwide in broadband networking gear, says market
researcher RHK. “Huawei is being very aggressive,” says Cicero
Olivieri, director of engineering and planning for GVT, a large
telecom company in Brazil. |
