Microsoft aims to expand into emerging markets by creating products with social benefits, according to the software giant’s head outside North America

It is now approaching a decade since Microsoft founder Bill Gates infamously said that poor countries had no need for information technology. In 2000, Gates said: “The world’s poorest two billion people desperately need healthcare, not laptops.” How times have changed.

Gates is now devoting his attention, and huge personal fortune, to improving public health in Africa through his charitable foundation. And the company he left behind is developing software for billions of future customers in emerging markets. It is a move that could be seen as complementary to Gates’ efforts to spur development in the world’s poorer nations.

Microsoft International president Jean-Philippe Courtois says opening new markets is vital for the software giant’s long-term survival. “To stay relevant in 15 years’ time, we cannot just keep selling to rich and affluent people in the world,” says Courtois, the company’s head outside North America. “In the last few years we have been reshaping our mission to address the social and economic development of the next billion people.”

Social innovation

Microsoft faces a world where, for all of the software giant’s success, just the richest one billion have access to IT. This presents huge opportunities for a $51 billion global firm, Courtois says.

According to analysts IDC, global IT spending was $1.2 trillion last year, or 2.5 per cent of global GDP. Fast growing areas are central and eastern Europe, while in Brazil, Russia, India, China and Mexico a total of 1.2 million IT software jobs are set be created by 2011.

Courtois believes that Microsoft must constantly innovate to stay ahead. He says: “The company was created around a promise, 30 years ago … that one day there would be a personal computer in every office and every home.” That mission has changed over time, he observes, as the PC dream was superseded by email and the internet, and most recently, “web 2.0”.

To reach emerging market customers, Microsoft is having to adapt its software again. Courtois highlights two examples of what he calls “social innovation” – a term made popular by Unilever chief executive and fellow Frenchman Patrick Cescau to describe new products that have social benefits.

The first is a piece of software called Windows MultiPoint, which enables up to 12 children to use and control a single computer at the same time, via multiple mice and other peripherals. This saves schools having to buy a separate PC for each child. Courtois explains: “The big opportunity is India and developing countries that do not have the luxury of a full classroom of PCs.”

Having designed the product in India, Microsoft has seen interest from western countries, where many schools still do not have one computer per child. “It was designed for emerging countries, but it is coming back already to rich countries,” Courtois says.

An even newer example of the company’s changing approach is Phone Plus. Courtois explains: “The idea is that in many countries, the PC is not your first screen. The phone is your first screen. In India you get six million new phones being sold every month.” In a Beijing laboratory, Microsoft developers are searching for a way to morph a mobile phone into a computer. The aim is to develop software and the capability for a phone to link it up to a keyboard, mouse, and a range of displays such as an analogue television.

Courtois admits that these products are yet to make Microsoft much money, saying: “It’s really about the revenue five to ten years from now”. The company plans over a ten-year horizon.

Aside from developing new products, Microsoft is selling existing products cheap, such as a $3 software package that includes Windows and a student version of Microsoft Office for customers in China. The company is training local software companies in how to develop applications for Microsoft systems.

When entering new markets, the biggest challenge for Microsoft is winning the trust of governments, says Courtois. To do this, he believes the company makes the case for the wider economic benefits of a high-skilled IT sector. A Microsoft-commissioned study from IDC in October last year found that for every $1 the company earned in revenue, $8 went to companies that sell IT products that run with or on Microsoft software. “These arguments work very well with governments,” says Courtois.

Open-source software rivals, which offer applications for free, could give Microsoft a run for its money in poor countries. As Courtois knows, how the firm makes new products relevant to emerging markets will determine how many of the next billion IT users it manages to reach.

Worldwide remit

Jean-Philippe Courtois leads global sales, marketing and services for Microsoft International, a territory that spans 100 subsidiaries operating in more than 240 countries. As president of Microsoft International, Courtois drives strategic planning, global operations and key growth initiatives in developed and emerging markets.



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