Meeting All the World's Tech Needs

Qualcomm, Intel, Philips—all are among Western companies tailoring tech for a range of emerging-market uses, from computing to streetlights

by Bruce Einhorn and Jack Ewing

It wasn't long ago that some Western tech executives dismissed the prospect of a surge in new customers from emerging markets. Yes, countries like India and China had hundreds of millions of people not yet connected to the world via PCs and cell phones. But most of them were peasants who wouldn't make good customers, or so the misguided reasoning went.

Now, says Paul Jacobs, CEO of Qualcomm (QCOM), more and more execs are getting over the misconception that low-income consumers in emerging markets only want basic services and aren't worth pursuing as customers. "Everybody used to say that the low end was just voice and text," he says, referring to areas where telecom operators usually don't make much money.

But, he adds, there are rural customers who are just as quick as their city cousins to use cell phones for the kind of more advanced multimedia transmissions that operators treasure. "There is actually demand there for all kinds of connectivity," he says.

That's a big reason Qualcomm and other tech behemoths are developing new designs tailored specifically to the needs of consumers in countries like India. For instance, Qualcomm engineers are working to replace liquid-crystal displays on cell phones with new technology that can reflect natural light, so they'll eat up less energy and be easier to see out of doors. Motorola (MOT) launched an India-designed mobile phone that uses similar reflective technology.

Hotter PC Sales Growth

Indeed, the tendency for Western companies to sell technology targeted at the developing world will probably flourish in 2007. New statistics issued by market research group International Data Corp. illustrate just how important those countries are.

Shipments of cell phones in 2006 topped 1 billion for the first time, up 22.5% from 2005, according to a Jan. 25 IDC report. Driving much of that growth was demand from the developing world.

"Device shipments into emerging economies in Asia/Pacific, Central and Eastern Europe, the Middle East, Africa, and Latin America have surpassed shipments to mature markets," said Ramon Llamas, research analyst in IDC's mobile technology and tracking team, in a statement. "And the difference between the two continues to grow."

What's true for cell phones is equally true for PCs. Singapore-based IDC analyst Bryan Ma predicts that computer sales in Asia will grow 15% this year, thanks largely to demand from China and India, following last year's 17% growth. That compares with 10% growth globally and just 2.6% in the U.S. last year.

No wonder, then, that companies like Intel (INTC) are focusing more on hotter-growth countries beyond North America, Western Europe, and Japan. In May, Intel CEO Paul Otellini announced the company's "World Ahead" program, an effort to connect 1 billion users to the Internet via wireless access.

Intel hopes to roll out its Classmate PC, a low-cost computer for use by schoolchildren in countries where ordinary PCs are beyond the reach of most families. Up against Intel is One Laptop Per Child, an organization run by MIT professor Nicholas Negroponte that is working on an even lower-cost machine, expected to cost about $150, compared with at least $400 for the Classmate PC (see BusinessWeek, 6/12/06, "In Search of a PC for the People").

Meeting Basic Needs, Too

Technology for cell phones and computers grabs the most headlines, but in 2007 companies will be looking to emerging markets for opportunities in more mundane sectors, too. Consider, for instance, the humble light bulb.

Twenty percent of the world's electricity consumption goes to lighting, says Philips Electronics CEO Gerard Kleisterlee.