When the current rich markets become saturated, the next billion of the tech industry's customers will be Chinese, Indian, Brazilian, Thai, etc. To be able to serve them, the industry technology must reform really.
For the first 50 years of the information age, about 1 billion people are used to computers and most of them live in North America, Western Europe and Japan. But these markets are almost saturated. According to IDC's forecast, US computer sales are up only 6% a year from now to 2008. To survive, inevitably the industry has to find the next billion customers. And many of these new customers will come from as far away as Cape Town, Shanghai and Andhra Pradesh. The explosive growth opportunities will obviously move towards developing countries.
Technology companies are flocking to "new lands" to hope for a wave of growth. According to IDC, technology sales in emerging markets, especially China, India, Russia and Brazil, will grow 11 percent annually over the next five years, to $ 230 billion. The attraction in these markets is not just the large population, but the level of living and the size of the middle class are growing rapidly. At present, the number of people in the middle class in China is 60 million and in India is 200 million. These well-off consumers have a high interest in fashion as well as high-quality brands in the US, Germany and Japan.
This is an opportunity that any company wants to join. Microsoft has offered software products to Malaysia, Intel pushed up chip sales in India, Cisco Systems in Sri Lanka and many other companies. In IBM, where IBM's sales have surpassed $ 1 billion, "Big Blue" is expected to hire 2,000 employees and spend $ 100 million to develop. market.
Competitors everywhere
Companies that dare to pioneer will encounter many obstacles because they have to compete with indigenous companies and of course understand the market more. In China, for example, the indigenous company Lenovo Group Ltd. has beaten Dell and many other "invaders" to take the position of leading personal computer vendors. Big names in the West are accustomed to dominating developed countries, but when they move to other geographic areas, they do not always win. They face big challenges from service companies in India, online game developers in Korea, security companies in Eastern Europe and equipment manufacturers in China. Even Microsoft is no exception. Open source software with growing support from developing countries is hindering the company's growth.
The most recent historical record of this phenomenon was the PC revolution in the late 1970s and early 1980s. Before this period, computers were the only device dedicated to the government sector and episodes. big delegation Then, along with Apple Computer Inc.'s Macintosh. and IBM's PC, the information technology industry has entered the broad consumer market. Computers begin to become popular on everyone's desk, from students to small businesses. This change is like a global earthquake. Microsoft, Intel and Dell have become the new champions. Today, with the rapid advancement of technology in emerging economies, the industry has enormous customer base. And a new generation of companies will try to push back the old names.
Power shift from West to East
That's when the PC era, dominated by US companies, was giving way to wireless technology. This trend is especially prevalent in Asia, where mobile phones have the most net access. While the number of PCs sold in Asia this year is estimated at 30 million units, mobile phone shipments are expected to reach 200 million units, according to the Yankee Group. This brings a big advantage to South Korea's Samsung and LG Group, two mobile phone makers and computers. In the past four years alone, they have moved from outside the charts to the third and sixth place in the world. "In the twentieth century, the technology-driven torch was from Europe transcending the Atlantic to the Americas. Now it's crossing the Pacific Ocean to Asia, "said Geoffrey A. Moore, a technology consultant at TCG Advisors LLC.
Challenges in emerging markets have forced Western powers to come up with more bold new strategies. It will be a full revolution, the next phase of the PC era. Many new inventions have been designed specifically for the developing area, from a very robust handheld handset in India, to e-Town, a package that covers all products and services. Necessary for rural Chinese households to access the Net. And one person has devised a mobile phone for the Islamic market with 1.4 billion people. Until recently no one. The Ilkone mobile telecommunication company in Dubai has started selling phones that not only download the Quran, but also have alarm systems for prayer and pointing the user toward Mecca.
Developing countries need new business strategies as well as new products. Most Chinese or Indian rural families can not afford a PC. In many cases, a handheld computer for the whole village is a very viable idea. A new type of business, opening up the technology kiosks for users to use the utility of IT as a service, is gaining much attention in the Asian region. Given the financial shortage of rural people, programs that offer pay-as-you-go services not only promote the use of mobile phones but also increase the sales of computers and Internet services.
Create a customer
For large technology companies, the transition to emerging markets will have a lot of difficulties to overcome. They have the opportunity to attract new customers, but only when they outperform new competitors. They will have to invest a considerable amount of money. However, for many products, prices are not necessarily too low. Even though the first billion customers make $ 1 trillion in sales each year, sales from the next billion are unlikely to hit that number. And finally, low prices in emerging markets will put pressure on prices everywhere. It can be said, with the technology, although it brings a lot of value for many people, but also can not maintain the growth rate of revenue as the past brilliant.
On the more positive side, the expansion of technology into emerging markets has had a positive impact on the world economy and the future of technology. Investment in technology will boost national economies by increasing productivity, increasing GDP and stimulating demand for all products, especially technology. And when computer workers in China and high-paying Indian programmers become consumers, they become customers first. As calculated by A.T. Kearney, whose average daily income is $ 10,000 a year, will double to 2 billion by 2015 and nearly half of those in emerging markets. "If there is a middle class strong enough to create a potential consumer market, we have a platform for expansion," said Sarbuland Khan, head of the IT team. create more jobs for the poor ".
Re-evaluate business strategy
In many cases, technology companies will only succeed if they are willing to change tactics that they have applied well in the developed world. Take a look at Dell's case. In 2000, Dell introduced a PC in China called SmartPC, much different than its predecessor. This machine is pre-installed, not ordered and manufactured by Taiwanese companies. With prices below $ 600, SmartPC has made Dell the leading outsourcing provider in China. Dell's share has risen from 1% in 1998 to 7.4% this year.
However, Dell has not yet taken the top spot in China as it has achieved in the US. The main reason is that Dell maintains direct sales practices to its customers, via the Internet or by telephone. Chinese people have a common habit of looking at the computer directly before buying. Therefore, the best way to sell is through a large retail system. This is also the strength of two local manufacturers, Lenovo and Founder Electronics. The two companies surpassed Dell with market share of 25.7% and 11.3% respectively, according to IDC. Custom-built, Dell has also launched Smart PC stores and other products. But in August, the company dropped out of the consumer market as its competitors cut PC prices to $ 362. "In the largest and fastest growing market in the world, domestic PC makers have taken full advantage," said IDC senior analyst.
Motive force
The biggest challenge still lies ahead. Huawei has invested heavily in Internet Protocol Version 6, or IPv6, the standard for the next generation of the Internet, with greater security, speed and capacity. China is expected to accept and disseminate IPv6 faster than any other country in the world. And if the close relationship with the Chinese government helps Huawei become a leader in this technology, it will defeat rivals like Cisco, Alcatel and Lucent. "The Cisco family in the world will have to change their business model to compete with these small, agile companies," said William Nuti, senior vice president of Cisco.
Everywhere in the developing world, new companies are constantly appearing as obstacles in Super Mario Brothers. The online gaming business is one example. NCsoft has taken advantage of being a pioneer in broadband exploration for online game development, with more than 5 million subscribers each month. NCsoft is currently expanding into Taiwan, China, Japan and the United States, where it sold 228,000 versions of City of Heroes within three months of its release in April.
Even Microsoft is having a hard time competing. Linux is emerging as a viable alternative to the Windows operating system in emerging markets and reduces Microsoft's market share. China, Japan and Korea are working together to launch a free, open-source version of the software. Many governments are considering policies to support open source software packages and one of them is Israel, which has decided to stop using Microsoft products in state agencies.
Microsoft does not seem to have a suitable solution to this problem. In October, the company will start selling cheap Windows in Thailand, Indonesia and Malaysia, in an attempt to stop the spread of open source software. But so far they have refused to do the same in China, where they have replaced four executives for six years. "Conventional business will not be effective in China. They need to find a new direction, "warned Jack Gao, Microsoft China's chief executive officer from 1999 to 2003.
Patience is probably one of the important characteristics of technology companies wanting to break into emerging markets. It took Hewlett-Packard 3 years to set up trial programs in India and South Africa, and eventually they began to profit from the product and improve the lives of the people. In spite of this, billions of consumers in "new" markets will have a better future through access to technology or, rather, the future of technology.
Nguyen Hang
