Early in the life of Geekcorps, I spent a great deal of my fundraising energy talking to large tech companies and trying to persuade them that sending some of their employees to the developing world with us was a wise business move. “You see,” I would say, “the market for IT goods in the developed world is slowing; the critical new markets are in the developing world. Work with us and you’ll have a chance for key employees to get to know those markets and develop products for them.”
This pitch didn’t go over real well. Two companies – Cisco and HP – pointed to the work they were already doing in the developing world as an excellent reason not to work with us. The rest pointed to charitable work they were doing in the US as reasons they couldn’t support “charitable work in non-key markets.” And more than a few looked at me with wide, blank eyes and an expression that read, “I don’t understand your crazy moon language.”
So it’s oddly gratifying to see Business Week’s (international) cover story titled “Tech’s Future” focusing on technology in the developing world. The piece leads with the following: “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.” (Many thanks to Rajesh Jain’s indispensibleEmergic for the link.)
Business Week seizes on the general premise I argued for a few years back, pointing out that computer markets in the developed world are expected to grow at roughly 6% annually, while in the developing world, they’re expected to grow at 11% per annum. These numbers are a wakeup call for Dell, IBM and others, who are now scrambling to develop products for these new markets, hiring anthropologists to help them understand PC usage in households around the world and learning what does and doesn’t work in marketing and retailing. (Dell’s build-on-demand model? Not very popular in China, where there’s a premium on seeing and touching the goods one is buying. Dell’s got a tiny fraction of market share compared to China’s big two computer retailers…)
What’s most interesting to me in the Business Week article is the speculation that giant multinationals may lose to culturally sensitive local companies in the battle for these new markets. (This isn’t a new development – there’s a great story about Ghanaian software developer SOFT’s victory over Microsoft in the West African accounting software market reported last year by BBC…) Many of the countries most interesting to multinational tech companies are technical powerhouses in their own right: India has a strong technical services industry; Russia and Eastern Europe have strong security and crypto specialists; Brazil has a great crop of open source hackers; and China has expertise building cheap hardware.
While it’s not surprising that a Chinese hardware manufacturer might be able to go toe-to-toe with Cisco in China, it’s a little surprising (and, to me, very encouraging) to see one go after other developing markets aggresively. China’s Huawei has a 16% share of the router market in China, second only to Cisco – their web site makes clear their global ambition, with maps of their presence in Eastern Europe and press releases about 3G phone service in Africa.
So, emboldened by Business Week, I offer the following “radical” prediction: Over the next ten years, the most interesting developments in IT will come from developing nations, not from Silicon Valley. In the same way that university-student net geeks became critical players in the dot.com boom (because they understood the Internet on a deep level and saw possibilities that others missed), creative engineers from the developing world will become critical players in the next IT boom cycle. It will be interesting to see whether smart venture capitalists “get” that they need to start hanging out in Mumbai or Sao Paolo, or whether they’ll cling to an antiquated model where the US innovates and the rest of the world follows.