Reaping What You Sow... Doing Well Doing Good
12/1/2005

Lessons for your Business From the Frontlines of the Digital Inclusion Battle

Miami — Serving high-growth markets is considered to be the ultimate win-win scenario today. Highly successful books such as C. K. Prahalad's "The Fortune at the Bottom of the Pyramid," and Staurt L. Harts' "Capitalism at the Crossroads" illustrate clearly that doing good in the world can also be good business for companies in nearly all industries.

As readers of this newsletter know, this notion of "doing well by doing good" represents the heart and soul of AMD's 50x15 Initiative as well. When he first unveiled 50x15 at the World Economic Forum's Annual Meeting in Davos in January 2004, AMD President, CEO and Chairman, Hector Ruiz, explained that the initiative is "built upon incentives and strategies that are not just about goodwill but also about good business."

In 2004, AMD President, CEO and Chairman, Hector Ruiz, explained that the initiative is "built upon incentives and strategies that are not just about goodwill but also about good business."

Through AMD's work, and the work of our partners and many hundreds of smaller companies, non-profit organizations and government agencies around the world, the concept is starting to take hold. People are beginning to regard digital inclusion initiatives as a way to generate new streams of revenue.

However, more remains to be done. Many people around the world continue to regard digital inclusion as an important goodwill activity not a business opportunity. It was in this context that Dr. Allen Hammond, vice president for innovation and special projects at the World Resources Institute, a non-profit policy research institute in Washington, D.C., spoke at AMD's first Global Vision Conference.

The two-day conference was the first event of its kind in which senior business leaders and technology visionaries from around the world came together to discuss the role technology plays in modern society and how technological trends are likely to evolve over the next decade. Much of the second day focused on analyzing the opportunities for technology companies in high-growth markets. Presentations from the speakers are available for download here.

Hammond's goal was to illustrate just how lucrative the opportunities in emerging markets are. The central theme of his presentation was to show, through example, that counter to what most westerners may think, poor people around the world are statistically much more likely to spend money on Internet connectivity and IT technology than the middle class.

"For them it replaces travel," Hammond noted. When compared to the cost of travel, he added, "people living at the bottom of the pyramid can realize 90 percent savings by making phone calls… and for that reason, they are willing to spend a higher portion of their income on connectivity than middle class people in the U.S. or Europe."

According to World Bank data, Hammond explained, the market opportunity is substantial. "Bottom of the pyramid households in the top 20 emerging countries earn a combined total of $2 billion per year… They are highly entrepreneurial and typically they are willing to spend about 5% of their income, or $100 million in total, on connectivity services and solutions that work."

Hammond presented six case studies that offered compelling evidence to back up his conclusions:

1. In Brazil
Official statistics overestimate poverty, largely because of the informal economy that has evolved over the years that now represents nearly half of the overall economy. "Seventy percent of Favela residents own their own homes," he noted. "In fact, low income households in Brazil have a lot more buying power than the World Bank thinks they do."

Explaining that service provision is vastly under-reported in Brazil because much of the work and activity is happening outside of the country's official economy, the opportunity to do well by doing good is substantial. "The next step is to connect the informal economy to the formal economy in Brazil, and that takes IT."

2. SMART Communications In The Philippines
SMART Communications in the Philippines provides low income citizens with pre-paid text messaging services. With nearly 21 million total network subscribers, Hammond notes that response has been enormous — so much so in fact that Hammond says the company is now the single largest buyer of servers in Asia "because they are handling an awful lot of data."

SMART Communications' services are marketed through 500 local shops, all electronically. More compelling according to Hammond is the fact that "messaging units" have become a form of currency for low-income people. Essentially, people are able to download messaging units and trade or transfer them as part of what has become a lucrative barter system. "People are using (messaging units) to pay for things like cab fares," Hammond said.

3. E-Choupal In India
ITC's E-Choupal initiative is completely transforming life for the small farmer in rural India. According to the E-Choupal web site, ITC's goal is "to confer the power of expert knowledge on even the smallest individual farmer. Thus enhancing his competitiveness in the global market."

Hammond explains it in real-world terms: "Before, the middle men used to take all of their profit, which is a primary reason why these farmers are poor to begin with." Through E-Choupal, these farmers are equipped with PCs in their homes, which opens up a world of previously in accessible opportunities. "Internet access allows farmers to talk to each other, to tap into the Chicago mercantile exchange… and to build their own IT network across India. As a result, these farmers can now sell grain at yesterday's closing price directly to customers, cutting out the middle men and retaining their profits."

Current statistics are compelling. According to ITC's web site, since the initiative was launched in 2000 there are more than 5,300 E-Choupal installations across the country, covering 31,000 villages and empowering more than 3.5 million farmers. More impressive is that ITC's plan for the next ten years calls for establishing 20,000 installations to cover more than 100,000 villages, or more than 10 million farmers total.

4. WIZZIT In South Africa
Where do people who have very little money, practically no access to technology and minimal education go for banking services? More importantly, why would they need to?

WIZZIT has the answers. WIZZIT is a start-up company in South Africa that provides a full range of banking services via cell phone to people without bank accounts. The business model has been so successful in terms of generating a profit," says Hammond, "that a major cell phone company has launched a similar system at nearly the same price point."

WIZZIT's services provide access to all of the fundamental advantages people in the western world obtain by keeping their money in a bank. This includes earning including interest, use of debit cards, and the ability to build a credit history — all of which are vital to their entering the global marketplace and living a more fulfilling and productive lives.

5. Latin America and AMD's PIC Programs and Learning Labs
Hammond closed his presentation by noting that AMD's 50x15 Initiative is also an important and increasingly influential model that offers valuable lessons for other western companies. "The PIC (Personal Internet Communicator) is one of the first products engineered for these (bottom of the pyramid) markets, where support and infrastructure are lacking" and the success speaks for itself.

Hammond noted that for the first time poor people across Brazil now feel they have a stake in the country's economy and are able to see opportunities long felt to be out of their grasp.

"Poor people in Brazil were actually protecting their local banks during riots over the summer," Hammond said. The riots started when demonstrators, angry about the sale of Brazil's national phone company Telebras to a private group including MCI in the U.S., Telefonica in Spain and Portugal's Telecom would result in halting services to the country's poor, took to the streets.

Indeed, here at AMD, the impact of our efforts is being felt in profound and heartening ways. Recently, AMD received an e-mail from the director of a non-profit organization in Guatemala asking to deploy the Personal Internet Communicator (PIC) in schools across the country. "It would be really helpful because people having access to computers or Internet in our country are the minority," he added.

This e-mail is the latest in a seemingly unending flow of similar requests from people and organizations around the world. More than 1,000 requests for the low-cost, user friendly Internet access device have rolled in from Asia, Africa, South America, Europe, the Middle East, Eastern Europe, Australia, New Zealand, Russia and even the United States since the device was launched a year ago, on Oct. 28, 2004. The requestors are as diverse a group as the nations they represent, from prospective business partners hoping to land a deal to sell the PIC in their countries, to non-profit organizations, teachers and students, private citizens, parents, children, and government officials. All of them have contacted AMD because they believe that the PIC would help them address a critical communication need in their part of the world.

In less than a year, the PIC has achieved global visibility in a way very few products ever do. Today, the device is being used by young students in Mexico, in government-sponsored public Internet access kiosks around Brazil, by families and students in the Caribbean and India, college students and researchers in Russia, grade-school students in South Africa and, most recently, by children and families in the United States, and Hurricane Katrina victims. Plans are also underway to bring the PIC to China, Turkey, and other countries.

The stories of how the PIC has changed the lives of people who use it are both poignant and compelling. In one particular case, producers at CNN were so deeply moved by the account of one South African student who nearly dropped out of school until the PIC changed his life, that they produced a 10-minute feature on him that was broadcast around the world on Sept. 18. (Click here for the story and video.)