The Race to Connect Africa: Apple vs. Microsoft

May 19 2008 / by Alvis Brigis
Category: Economics   Year: 2009   Rating: 9 Hot

With the rapid rise of the iPhone and Microsoft’s announcement that it will back the One Laptop per Child initiative, a massive battle for the African computer market may be shaping up sooner than expected.

The AP reports a new deal between Apple and cell provider Orange that will bring the iPhone to “Austria, Belgium, the Dominican Republic, Egypt, Jordan, Poland, Portugal, Romania, Slovakia, Switzerland and African markets later this year.”

At the same time, Microsoft has finally agreed to provide Windows to the now promising OLPC initiative after years of ridiculing the then far-fetched project.

Though the iPhone presently costs more than a OLPC PC, $399 vs. $100, that price is due to sharply drop (perhaps to the $100 -$200 range) with the imminent release of the new 3G iPhone, which itself may be priced at just $199 if rumors about a hefty AT&T subsidy prove correct.

While lack of comm infrastructure and politics will certainly remain the primary barriers to diffusion, it looks as though these low-cost yet high-value products, driven by large companies getting accustomed to rapidly exploding markets in which first-mover advantage is critical, may catalyze a perfect storm for connectivity in under-developed nations, most notably African countries. (cont.)

Just imagine the iPhone or the OLPC-PC subsidies that could be put up by actors like the UN, philanthropic organizations including or the Bill and Melinda Gates Foundation looking to make a difference and advance corporate interests, private philanthropists interested in big-leverage plays, international development agencies like IMF or The World Bank , other nations with vested or security interests, the governments of the developing nations themselves, distributed web-based coalitions, and so forth. With several billion un-connected humans (1 billion in Africa alone) just waiting to link to the web, the financial, functional, and cognitive potential is too obvious to ignore.

Furthermore, as large-scale corporate philanthropy and market development begins to lay a foundation of connectivity, it’s probable that smaller web-based businesses will quickly innovate strategies to identify and cultivate value. IMO, such a distributed computational attack, in which most ideas will fail but many will flourish, seems to be just what the doctored ordered as this will most effectively infuse capital, culture and knowledge at the lowest possible cost.

As the effectiveness of market-based philanthropy in Africa increases over the next several years, it will be boosted by new innovations like better WiMax, Walking Hotspots , evolving social media software, rapid language translation software, faster computer chips, evolving intuitive virtual worlds, a higher resolution Google Earth, etc x 10.

In turn, the reporting of successful (on a variety of levels) African projects and ventures will fuel a culture more likely to appreciate the value of and support For-Profit Development in the region. Ideally, people will begin to understand that it is in their interests (short-term as well as long) to apply the technologies made possible by accelerating change to grow the pie (which could of course open a Pandora’s Box of disruptive possibilities). But that’s still a few years off.

Barring any surprise competitors, it appears Apple and Microsoft will be left to build the initial digital inroads as they race to solidify product market share. My hunch is that Apple will dominate this battle due to the iPhone’s 1) more basic and intuitive interface, 2) lower power requirements, 3) multi-functionality, 4) greater stability (see this vision of a Windows powered OLPC-PC might look like), 5) portability, and 6) development platform.

Microsoft appears to have seriously misjudged the computational and consumer potential of smaller devices like the iPhone and will pay the price as Africans leapfrog over the problematic Windows OS to adopt smaller more effective devices. My bet is the company will need to develop or back then deploy an affordable 3G cell-phone to put up any serious fight for market share.

And what about Google, that other 500 lb. gorilla in the room? However things turn out between Microsoft and Apple, Google, both a long-term supporter of OLPC and a major iPhone developer, will win because it is positioned to add tremendous value (through search, Google Earth, language translation, gmail, new social networks, etc.) and to grow the pie. Already making major moves on the continent, Google appears poised and eager to capitalize as African brains hop online.

As far as the rest of us, if things go smoothly it looks as though we all might win. Hopefully that’s a trend that will manifest and strengthen as we embark on our collective voyage through the curve.

Comment Thread (4 Responses)

  1. OLPC vs iPhone in Africa??? iPhone??? Why not give them LG Prada phones? What’s next? A massive battle for the African auto market between some cheap car and Bugatti Veyron?

    Posted by: johnfrink   May 19, 2008
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  2. Well if the price of the iphone drops quickly I can see it outcompeting OLPC. If the new 3G iphones will cost 199$ then what will the older models run? 150? 140? At that price point it begins to make sense.

    Posted by: FutureFly   May 19, 2008
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  3. @ johnfrink – It’s likely that we’ll see a $199 3G iPhone in the next few months. The price will continue to drop as components get cheaper. Throw in some additional subsidies (or time) and it becomes feasible for Africa, especially due to added utility, better stability, portability and lower power costs. My hunch is that it will be easier to install cellular networks than broadband in underdeveloped regions, making the iPhone a more useful product (also a phone, also a music player) than a OLPC that essentially hooks into dial-up. The OLPC will have a place, especially in schools, but my bet is that smaller 3G devices will spreade further and faster.

    Posted by: Alvis Brigis   May 19, 2008
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  4. @Alvis I still think you are comparing apples and oranges. I’m sure there a quite a few people in Africa who can afford iPhone, even at $399. Those are not the people who are the target of OLPC project. OLPC is for kids who probably live on $1/day, who could use such device at school to get introduced to information technology, online learning resources, etc. A phone, even a fancy one like iPhone is not a good device for that. And how many of those poor kids have spare money to pay for a monthly data plan?

    Posted by: johnfrink   May 20, 2008
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