An MNC Perspective on ICT Innovations for Emerging Markets Mission and Research Program of HP Labs India

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An MNC Perspective on ICT Innovations for
Emerging MarketsMission and Research Program of
HP Labs India

• Gita Gopal
• Associate Director,
• HP Labs India
• Nov 19, 2003

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Context in 1999-2000

• Economic downturn and saturation in Western
  markets
• However, countries like India had 6 annual
  growth
• Prahalad and Harts article on economic
  opportunities in serving the worlds poor, citing
  successes in consumer goods industries
• Some MNCs richer than many countries questions
  about corporate social responsibility
• Many developing countries were expressing desire
  to aggressively use ICT to jumpstart economic
  development
• Belief in HP Labs that in a decade or sooner,
  growth for companies like HP would come only from
  todays developing economies
• Strategic imperative to examine kinds of ICT
  solutions needed to create a market and gain a
  leadership position

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Mission of HP Labs India

• To generate innovations targeted at the world's
  emerging economies by deeply understanding the
  confluence of relevant social, cultural, economic
  and technological drivers

• established October 2001
• centered in India but with a global emerging
  markets mission

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Top Level Strategy of HPL India
Understand the IT needs of the large and
dynamically growing middle-tier in emerging
markets such as India, and create innovations and
strategies that allow HP to access it

• top-tier is addressed by current products and
  solutions and current strategies for growing
  market share
• - bottom-tier has other priorities and does not
  yet have capacity to consume goods or services
• - middle-tier is largely underserved by IT and
  has not seen many of the benefits of utilizing IT
  due to barriers such as lack of local language
  services, affordability of access devices and
  reach of communications capabilities.

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2 Parallel and Complementary HP Approaches

• HP I-community
• Focus on geographic area Kuppam
• Under Corporate Affairs
• Public private partnership to accelerate economic
  development through application of technology
• Open up new markets
• Goal to create replicable engagement

• HP Labs India
• Focus on middle-tier
• In HP Labs with charter to create new business
  opportunities for HP
• Strong focus on contextual technology innovation
  to create new markets
• Goal to create innovations suitable for global
  emerging markets

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If only they could see clearly.

• The Fortune at the Bottom of the Pyramid C.K.
  Prahlad and Hart
• Serving the Worlds Poor, Profitably C.K.
  Prahlad and Allen Hammond
• The Great Leap Driving Innovation from the Base
  of the Pyramid Stuart L. Hart and Clayton M.
  Christensen

Unfortunately, it is not so easy.
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Disruptive innovation within HP

• One of the things that has made them successful
  has been a relentless ability to focus on just
  their business and to treat distractions, not
  just as annoyances, but to go annihilate them,
  because they cannot afford to be distracted.
• Unfortunately, a new business is
  indistinguishable from a distraction.
• Chief Technology Officer,
• Global Business Unit

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Need new flows within HP
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HPL India strategies for the middle-tier next
3-5 years

• Look at pull of the growing middle class on
  government and business services
• Look where large scale infrastructure is being
  built
• Look where IT is under-utilized
• Look where efficiency gains are not realized due
  to barriers of local language access,
  affordability of devices and communications reach

• Create adjacencies with existing products and
  business groups if possible
• Focus on government/public sector and large
  companies as economic buyers
• Explore alternative go-to-market approaches that
  address cost structures of MNCs

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Understanding the middle tier
India as an example
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The Indian market a consumption perspective
RICH
CONSUMING CLASS Car
2 M
CLIMBER Motorcycle
42 M
62 M
ASPIRANTS Bicycle
38 M
DESTITUTE
Source NCAER, Millions of Households in 1999
27 M
Purchasing power
CreditRama Bijapurkar
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Middle-tier market size estimation
Number of households in mn, NCAER
The middle-tier is growing companies must
target meeting the latent needs for
communications, government services, consumption,
entertainment.
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Languages Galore

• Languages 17 official languages
• 10 languages spoken by 50 million or more
• 25 languages spoken by a million or more
• 325 dialects
• States formed based on language

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Telecom Infrastructure
mobile phones increase by 1.5 m a month long
distance tariffs fallen by 2/3s in 5 years
Arun Shourie, Minister ICT, India, Aug
2003 ..of the last 1 million (Reliance)
customers, only 25 speak English Dr.
Sandeep Sibal, Chief Tech. Advisor, Reliance,
September 2003
Source ICICI Securities Telecom sector
report-2002
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Daily Logistics
Long queues for bill payment
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E-governance

• E-Government is about a process of reform in the
  way Governments work, share information and
  deliver services to external and internal clients
  for the benefit of both government and the
  citizens and businesses that they serve.

• In 2002, the Indian government spent a little
  over US1 billion on e-governance initiatives
  which is 9 of the total IT spending in India
  (Gartner)

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A Cash-Based Society
Less the 1 have credit cards
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ICT for Global Emerging Markets - issues

• Industry cost structure
• H/W capital intensive w/ minimal labor component
• economies of scale
• feature/capability rich
• obsolescence principle
• Usability barriers
• keyboard, font/character
• written literacy
• local language
• IT skills
• Value proposition
• Not convenience, not labor productivity
• System productivity
• Lack of power, communications infrastructure
• Channels and support

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HPL Indias Research Program
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Research themes and customer value propositions
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Research themes and customer value propositions
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Make access devices affordable
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HPs community computer (aka, x41)
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x41 solution
Cost per user including monitor

• from 4 users 4 (for) 1 PC..

Eric Rueda, Linux Around the World, LinuxWorld
2002, San Francisco.

• ..up to 6 users 4 (for) 1 PC

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Make access devices affordable
4-4-1
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HP Digital Studio

• camera, scanner, PC, printer
• 3000 price to operator
• 1500 deployments, growing
• significant cost advantage vs. Polaroid for ID
  photos, etc.
• profitable for operator, HP
• annuity revenue/profit stream for HP
• potential for PC-less photo kit for ltlt200

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Photo Shop overview

• PCs pull printers pull supplies business model
  in India and similar markets limited by magnitude
  and rate of PC penetration
• affordability of PC, printer, supplies
• consumers must purchase our products to gain
  their benefit
• Photo Shop model delivers consumer imaging
  benefit as a service
• service provider purchases equipment
• consumers pay on a per-print basis
• Can the Photo Shop model expand (significantly)?
• What is the potential financial scale of this
  business?
• does this model apply in other geographies?

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Digital photography opportunity
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A variety of outlets
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Make access devices affordable
4-4-1
HP Photo Shop
Scriptmail, SOMA small business appliance
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Scriptmail

• Motivation
• Characteristics of the language and lack of
  standardization make using keyboards an inhibitor
  to communicate in non-Roman languages
• Hypothesis that allowing handwritten input in a
  simple, targeted appliance will dramatically
  increase use of email

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Indian Keyboard Layouts
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Current Scriptmail Prototype paper input
- Digitizer such as Pegasus packaged into
Scriptmail device - Printed keyboard - Low cost
device
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Script Mail VisionValued Client in Emerging
Market Countries

• A general form filling device
• The form is identified by marking a unique launch
  box
• Protocol to transmit ink into various fields
  suitable for further recognition work
• Examples e-mail form, railway forms, census
  forms, government forms.

Name ----------- Address----------- ------------
-------------- Age Sex------------------- Edu
cation .. Date of travel
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SOMA Small Business Device
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Methodology Multi-disciplinary Approach
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Business Analysis Private sector Retail

• Current Indian Retail Market Size US 180
  billion (10 of GDP, 6 of employment)
• Growth rate 11-12, with projected market size
  of US 300 billion in 2010
• Classified as
• Organized sector chain stores and supermarkets
  (with modern supply chains)
• Unorganized sector what is not organized

• Window of opportunity in the Unorganized sector
  is excellent
• Over 5 million outlets less than 500 sq. feet in
  size

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Contextual Inquiry Businesses and Locations
Covered
Type Of Business Mumbai Coimbatore Chandigarh Kuppam
Chemist 1 3 3 3 10
Grocery/General Store 7 3 4 4 18
Food store/Restaurant 1 - 2 2 5
Hardware Store - 2 1 2 5
Jeweler 1 - 1 - 2
Cosmetics 1 2 3 1 7
Stationary 1 2 2 3 8
Footwear - 1 - - 1
Salesman 1 1 1 1 4
Chartered Accountant - 1 1 1 3
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Traditional retailing environment
 
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Work Spaces
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Artifacts
Reference Index
Short Item Book
Customer credit Record
Salesmans Catalogue
Postcards sent by supplier to shopkeeper
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Retail Supply Chain
Retail Outlets
Local Suppliers
Regional Suppliers
Last-mile gap In Supply chain
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Design - Four Concepts
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SOMA Prototype at HPL India

Wireless Network
SOMA Handheld
Specifications PC with Linux as base station RF
networking to handhelds Electronic pen device
interface for inputting database Bill printing
(40 column thermal printer) Accounting
application has been developed Custom GUI has
been developed Custom handheld with application,
wireless stack and system boot code (no OS) All
components are being integrated by August Also
experimenting with low power ARM based Samsung
S3C2410 processor for diskless base station using
smart media memory
SOMA Handheld
PC Based SOMA Base
SOMA Handheld
SOMA Industrial Design
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Research themes and customer value propositions
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Market expansion by removing language barriers in
access to information and services
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Access to Information in Hindi- Proof of Concept
(Delhi)
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Creating the ecosystem to take voice services to
new markets
Viability of applications Rough market sizina
Launch of LDCIL Still need to find technology
provider
Ensure all necessary players exist App
developer, platform provider, speech technology
provider Who will be the front-end? Prioritizing
entering this market country strategy as well
as product line strategy
Platform and application delivery capability
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Online Form Filling/ Data Capture in Emerging
Markets
Customer Value Proposition Use handwriting input
and appropriate technology to cost-effectively
computerize a paper-based society
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Research Program Threads
PEN-APP Pen-based Application Concepts
PEN-DATA Handwriting Data Representation, Tools,
Datasets
PEN-HWR Handwriting Recognition
PEN-PLAT Pen Platforms Input Technologies
PEN-ENTRY Pen-based Data Entry Constrained
Handwriting
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Research Program Threads
PEN-PLAT Pen Platforms Input Technologies
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Continuous word recognition
Partners IISc Multiple shape classifiers
Analysis of challenges with Devanagari IIT-M Alte
rnative word recognition algorithm for
Tamil Telugu underway
Internal
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Integrated data capture concept for National ID

• Salient features
• Integrated capture of form data and biometrics
• Form data entry in local language via real-time
  handwriting recognition
• Portable kit
• Key Benefits
• High accuracy
• uses constraints to avoid or reduce possibility
  of erroneous entry
• Efficiency
• reduces data entry per household by 50-80
• Ease of use
• uses natural handwriting for Indic data entry

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Research themes and customer value propositions
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Telecom Network in Rural Areas - Typical Scenario
Distances between Fibre Drops (Towns) approx 25
Kms

• Avg. Village
• Area 5 sq. km.
• Total of 650,000
• villages in India
• About 75-100
• villages
• per fiber drop
• population per
• village
• 500 to 1000

Optical Fibre Backbone
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WiFi for Access

• Investigating the use of 802.11b
• for last mile
• Expect 802.11b access to be
• cheaper, easy to deploy,
• obviously broadband
• operates in the unlicensed band
• facilitates a viral entrepreneural
• model
• combating attenuation due to
• foliage and other interferences
• is a major challenge

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Option 1 Access Point based Network
Star Connected Architecture

• high gain directional antenna
• sectoral (three sectors, requiring
• three antennas)
• will need to exploit PCF (point
• coordination function). Not
• implemented in of the shelf cards.

Long links 15-18 km
Village Node
directional antenna
Fibre
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Reconfigurable 802.11b Platform

• Developing a reconfigurable 802.11b platform
• Physical layer on a Xlinx DSP development board
• writing the MAC layer for 802.11b
• Advantages of the reconfigurable platform
• investigate various functions that are part of
  the standard but not implemented in, of the
  shelf, 802.11b cards and APs
• investigate if some minor changes in the physical
  layer (with the scope of the standard) can help
  in multi-hop and long link communication

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Top Level Strategy of HPL India
Understand the IT needs of the large and
dynamically growing middle-tier in emerging
markets such as India, and create innovations and
strategies that allow HP to access it
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Summarythis is hard.
but it is possible
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