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BusinessWeek
Online
By Pete Engardio in New
York, with Geri Smith in San José, Costa Rica
August 27, 2001
Hewlett-Packard:
Amid
the cow pastures and potato fields of San Joaquin Cutris,
a remote Costa Rican village with 500 residents, one
telephone line, and neither a doctor nor post office,
sits what some Hewlett-Packard Co. (HWP )
executives believe may be the Information Age's Next Big
Thing. It is a white, recycled shipping container with a
satellite dish and screen doors and windows on the ends.
A giant tent-like tarp shields it from the blazing sun
and seasonal rains. Inside are six PCs, a digital
scanner, and a TV that faces outside.
The structure is one of the more than dozen telecenters
HP has helped set up in impoverished areas of Costa
Rica, the Dominican Republic, and Senegal with the help
of nonprofit groups. Since the San Joaquin Cutris center
opened Apr. 29, dozens of villagers have been surfing
the Internet, swapping e-mails with overseas relatives
or searching for information, and watching health and
agricultural training videos. Equipment for sending
electronic medical and soil data to labs will arrive
soon. "Already we're less isolated," says
Freddy Murillo, a dairy farmer who persuaded the Costa
Rica Foundation for Sustainable Development to put a
center in the village. "This project is going to
bring many benefits to our community."
Such efforts won't make a dent on HP's bottom line for a
while. But the company insists the project isn't
charity. The computer equipment giant has a two-tiered
plan for making money from the far edge of emerging
markets. First, it hopes to profit by selling equipment
for these hardy info-tech centers, most of which are
funded by governments and private foundations. The
company says it is also landing multimillion-dollar IT
contracts from African, Asian, and Latin governments,
which now know and trust HP because of its involvement
in development programs.
SEED CAPITAL. What happens next is anyone's
guess. But HP's managers hope that spreading IT
throughout the Third World will result in new businesses
no one had imagined, and trigger huge demand for simple
and economical computer products. If anyone can turn
this vision into reality, it's HP. A pioneer in nations
like China, Brazil, and Singapore for decades, it
derives 60% of its $41 billion in sales overseas. Now,
HP hopes to develop what may be the great marketing
frontier of the coming decades. "The wealthiest 1
billion people in the world are pretty well served by IT
companies," says Lyle Hurst, director of a year-old
HP program called world e-inclusion. "We're
targeting the next 4 billion."
HP has worked with grassroots social groups, aid
agencies, and local governments to learn what consumers
in low-income nations need. The research revealed demand
for low-price, simple IT devices and ways to connect
them to the Net. That's where the telecenter comes in.
If it wins enough orders, Lyle says, HP will be able to
provide fully equipped centers with computers, satellite
hookups, and solar generators if needed. HP picked
Senegal, a regional commercial hub, as a showcase in
Africa. It joined forces there with Joko, a group
founded by the popular musician Youssou N'Dour to use IT
to create jobs for the poor. HP gave seed capital and
staff for a program that has trained 600 Senegalese to
use the Net. Thousands are on the waiting list.
"There is a huge market of people who want
skills," says Abdoul Aziz Mbaye, president of the
Youssou N'Dour Foundation, which funds Joko.
Long term, HP wants to spawn a number of profitable
businesses from these projects. Centers in Costa Rica
already are starting a newspaper and coffee-trading
business. In Senegal, Joko will try to help
entrepreneurs start e-businesses that enable overseas
Senegalese to remit funds and communicate with relatives
at home. Telemarketing services for France are another
possibility. In hardware, HP is developing derivatives
of its Jornada handheld PC to process soil test samples
and small-business loans. Yet another project: remote
monitoring of U.S. buildings that need security but
cannot afford 24-hour staff. Why not have workers in
South Asia or Africa watch the video screen? "You
don't need somebody who is terribly well-educated to do
it, just a reliable telecom line," says Debra Dunn,
HP's vice-president for operations.
Dunn says HP will soon unveil pilot projects in these
areas. The ultimate payoff is unclear. But you don't get
a harvest until you start planting.
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