Government Brings PCs to Poor

Thursday, December 29, 2005


Plans by governments to help make PCs cheaper for their citizens can help drive market penetration around the globe, but community-shared computers may be best for the world?s poorest regions, analysts said Wednesday. A recent Gartner report said that thanks in part to affordability programs, PC installations in emerging markets could reach 1.1 billion by 2015, representing an increase of 850 million, or 327 percent, from 260 million in 2005. That would mean market penetration for PC of 20 percent in 10 years, up from just 4.7 percent currently.

Poor consumers in emerging markets have been described as ?the fortune at the bottom of the pyramid? by some business experts. Computers for the underprivileged masses have been seen as ways to expand a market that is slowing in most countries…?Government involvement is vital in these programs,? the report said. ?This involvement can vary from simple endorsement to full operational ownership.? The report said PC and software vendors, component suppliers, sales channels, ISPs (Internet service providers), and financial institutions must work together to make machines and web access affordable. They must also offer consumers a way to pay for it all as well as support when technical problems arise.

But in many places, subsidized machines and cheap Internet aren?t enough.

?Four billion people in the world can?t buy dinner, let alone a PC,? noted Roger Kay, president of research and consultancy firm Endpoint Technologies Associates. ?In certain societies you?re never going to have individual ownership.?…?Connectivity should be available for a small fraction of household income,? the report noted. ?As an example, monthly rates of $20 to $25 in the U.S. translate to less than $5 in an emerging market.?

And in some countries, like China and India, new wealth will translate to new customers. It is possible to finance a PC with a two-year loan at a cost of $10 a month, the report said. ?Although this is a significant amount for many, it is affordable for millions of currently underpenetrated emerging-middle-class households the world over.?

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Source: Red Herring (link opens in a new window)