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PCs for Third World, by design

Posted: 16 Jun 2006 ?? ?Print Version ?Bookmark and Share

Keywords:David Lammers? Intel? Advanced Micro Devices? AMD?

Intel Corp. and Advanced Micro Devices Inc. (AMD) are taking their fierce rivalry to the Third World. At stake is an untapped emerging market of 3.8 billion people, whose purchasing power, according to World Bank figures, is less than $4,000 per household.

At the recent World Congress on Information Technology (WCIT), Intel disclosed plans to invest about $1 billion over the next five years in its "World Ahead" program, specifically targeting the emerging markets. AMD laid out its own program called "50x15" in 2004, with a goal to connect 50 percent of the world's population to the Internet by 2015.

The competing programs from the two microprocessor giants are not the first attempts by the tech industry to sell computers and connectivity to developing countries. The "$500 computer"a concept unsuccessfully floated more than a decade ago--is another example.

Blaming previous failures on "a top-down approach taken by U.S. engineering teams parachuting down into the Third World," Navi Radjou, VP at Forrester Research Inc., believes prospects may be brighter this time around. "This shouldn't be about a technology device," he said. "This is about a business model, and what kind of broader partnerships or collaborations you can build locally."

In sharp contrast to the early 1990s, today's initiatives appear ready to deliver locally-designed devices and to create a network of local manufacturers willing to build them. Furthermore, appetite for new educational devices among populations in the emerging markets is also rising. Recalling the absurdity of marketing $500 PCs to people with incomes of $1 a day, Radjou said that this time, AMD is partnering with microlending banks to make PCs affordable to rural users. NGOs that the company works with are collaborating with microfinancing agencies to subsidize Internet costs.

But no worthy cause comes without strings attached--usually in the form of corporate technology agendas. Intel, in particular, may face criticism as it integrates WiMAX, its proprietary wireless broadband technology, in every device aimed at the Third World. Some think Intel expects the world to change its spectrum rules to favor WiMAX. Going into the Third World market, said Radjou, to "focus on one technology platformsuch as that of Intel's WiMAXis one of the pitfalls."

Intel vs. AMD at WCIT
Technology one-upmanship was prevalent onstage at the WCIT last May, as Intel and AMD strutted their stuff before an audience of about 2,100 delegates.

Intel CEO Paul Otellini showed Eduwise, the code name for a mobile computer designed by an Intel team in Bangalore, India especially for Third World students. The little notebook comes with wireless connectivity, a keyboard sized for small hands and a built-in carry handle like the one on a child's school lunchbox.

Otellini's competitive juices were clearly flowing as he described Intel's World Ahead program. "No one wants yesterday's technology," he said, a dig at the low-cost Personal Internet Connectivity (PIC) system that AMD has been providing to schools in Africa, Latin America and other regions for two years as part of its 50x15 program. While AMD's first-generation PIC has a built-in 56k modem and USB ports to add wireless dongles, Otellini said, the World Ahead systems will have built-in WiMAX connectivity as a core technology.

When asked about AMD's wireless plan, Daryl Sartain, director of business strategy for the company's Innovation Solutions group, said, "We are headed toward wireless, and yes, the second-generation PIC will work with wireless modules." He added, "But many of the regions served with the PIC only have phone lines. We are letting their market needs drive us."

Otellini's passionate keynote followed a speech by AMD CEO Hector Ruiz, a native of Mexico whose talk clearly resonated with the largely non-white delegates. Ruiz brought onstage Veronica Kgabo, the principal of Diepsloot Combined School in South Africa, who described how important the AMD-designed PIC systems were to her students. Otellini countered by showing a video of Mexican president Vicente Fox, who thanked Otellini and Intel for a promise to provide Mexican teachers with 300,000 of the ruggedized Eduwise portables. Intel will also provide computer training to about 400,000 Mexican teachers by 2010, Fox said.

Even if AMD and Intel don't expect to make money from their emerging-markets initiatives immediately, they do anticipate a payback one day. Ruiz termed AMD's 50x15 effort as "a business venture, but not a charity," adding that AMD sees much of its long-term growth coming from emerging markets. Ruiz said the 50x15 program is needed to accelerate access. "Without programs like these, it will take until 2030 to get to 50 percent penetration. We can do better than that," he said.

In the 50x15 learning labs AMD has rolled out across the globe, "the focus has been on developing partner technology and communications ecosystems to provide affordable Internet access and computing capabilities," according to an AMD spokesperson. Calling its program a "for-profit effort," the company stressed that PCs are not the only things AMD and its 50x15 partners are investing in. Others include applications and tools that would entice a broader partnership and entrepreneurial business models in each region.

AMD's 50x15 partners include Microsoft, Samsung, Lenovo, HCL in India, Telefonica in Brazil and Cable & Wireless in the Caribbean region.

Intel is pushing a much more focused technology agenda with its World Ahead program. Its vision is that many of the educational computers will be linked to the Internet via WiMAX wireless networks within a few years. Otellini said WiMAX links may extend about 50km, rather than the several hundred meters possible with Wi-Fi networks.

Intel is now involved with about 175 WiMAX trials worldwide, and Otellini skillfully weaved together its WiMAX thrust with its World Ahead program, calling on political leaders to "remove government barriers to WiMAX technology." Intel will spend about $500 million of its own funds on WiMAX-related efforts over the next five years "to finish it out," he said. Worldwide, private companies will invest about $5 billion to deploy WiMAX, which Otellini said "will narrow the difference between urban and rural areas" in Internet access. Now, about 15 percent of the world's population has access to the Internet, but only about 4 percent has broadband access.

Economic issues
Both Intel's World Ahead and AMD's 50x15 programs rely on a network of business partners, NGOs and governments to spread the financial costs. While the virtue of such programs is undeniable, the economic issues are more complex.

Take Intel's Eduwise notebook computer, for example. Mark Beckford, general manager of Intel's emerging-markets platform group, said Intel plans to develop its Eduwise notebook and then contract out manufacturing--initially to a single ODM. Beckford said Intel expects its World Ahead hardware to be priced about 20 percent less than prevailing hardware in regional markets. If a desktop costs $500 in a computer bazaar, for example, the Intel-designed hardware would hit a $400 price target, he said.

Although Intel has mentioned a $400 target for the Eduwise laptop, it is still a relatively high-cost system for Third World nations. By contrast, Linux-based laptops being designed by the One Laptop Per Child (OLPC) alliancebacked by MIT Media Lab's Nicholas Negroponte as well as AMDhas a $100 price tag as its target. AMD's PIC system, a small machine shaped like a boom box, can now be bought for less than $200.

Intel's Eduwise system would be ruggedized and smaller than a normal laptop, with special software that will allow a classroom teacher to turn on or deny a student's access to the Internet, for example. But can a specially-designed laptop compete with the cost reductions seen in commercial low-end notebooks? For example, Barry Lam, CEO of Quanta Computer Inc., a major notebook ODM based in Taiwan, has been vocal in his support of efforts to extend Internet computing to the developing world. Quanta will reportedly build the $100 laptop for the OLPC alliance.

Or will the Eduwise hardware be subsidized sufficiently by companies, governments and NGOs?

To make a computer affordable enough for rural users in emerging markets, technology advancements alone are not enough. It takes the ingenuity of business models, partnerships and the will of companies like Intel or AMD to make it happen.

Small and large companies have been trying to develop special low-cost systems aimed at the affluent in developing countries. Taiwan's Via Technologies has designed CPUs and systems aimed at the low-cost computing segment. Profits, already razor-thin throughout the PC industry, are difficult in these emerging markets.

On the other hand, the number of potential customers is huge. AMD estimates that, worldwide, there are 500 million households1.5 billion peoplewith annual incomes equivalent to $4,000 to $20,000 per year. About two-thirds of them live in developing countries such as Brazil, China and India. Another 550 million households, with some 3.8 billion people, are genuinely poor, with annual incomes of less than $4,000 per year.

Initiatives need power

In any Third World initiative, an often overlooked problem is that "the power grid is always unreliable--you can count on it not working in many of these countries," said AMD's Sartain. While working with Negroponte's OLPC program, AMD developed prototypes equipped with hand cranks to keep systems running during long power failures. Now the engineers are leaning toward foot-pedal power, because cranks are not an efficient solution for students seated at desks and tables, said Sartain.

"It's not easy, but people do find innovative solutions," said analyst Radjou.

- David Lammers
EE Times

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