CeBIT 2007: World's Poor Don't Need Pared-down PCs

Low income consumers in emerging economies do not need pared-down cheap PCs, but affordable access to the Internet and full-featured second-hand PCs, the world's main two microprocessor makers, Intel and AMD said at CeBIT.

Intel and AMD, which sell virtually all the key microprocessors for the 250 million personal computers sold around the world every year, are not taking a cue from the global mobile phone industry, which has dramatically cut the price of cell phones to the point where they cost less than $30.

"People want a normal (PC) experience. People don't want a second class experience," Christian Morales, Intel's manager for Europe, Africa and Middle East said in an interview at CeBIT, the world's biggest technology trade show.

The biggest cost of a personal computer is usually the microprocessor, with fast, advanced chips selling for more than $200, or one-third of the total cost to produce a PC. The other expensive elements are large flat displays, memory chips, a DVD drive, a hard disk and software.

It is no surprise, therefore, that mobile phone penetration will reach three billion consumers this year, including remote and poor areas, while computers are used by around one billion consumers who are mostly well off.

Intel and AMD maintain that it is not the cost of PCs that's holding back PC adoption.

"I can go to India and buy a PC for less than $50. There's a secondary market for it. And because of the compatibility that PC still runs most of the key software programmes," said Stephen DiFranco, worldwide director for sales and marketing at AMD.

He draws a parallel with the clothing industry.

"One-third of the world's population cannot afford new clothing, but there's a huge infrastructure to provide used clothing. It's very likely that with PCs, with a rotation every year and notebooks which are replaced every two years, we're starting to see a similar infrastructure," DiFranco said.

Even when a cheap mobile phone becomes the preferred device to access the Internet amongst low income consumers in emerging economies, microprocessor makers still benefit because they also provide the chips that power the computer servers needed to send Internet pages and services to these phones.

Intel's Morales, who manages an economically diverse region with countries from Switzerland to Mali, believes expensive Internet access is the real stumbling block holding back adoption of computing in Africa.

"The number one issue in Africa is the access cost to the Internet," he said, pointing out that consumers in Paris can pay one-fourth the price of a broadband Internet connection compared with consumers in Africa.

Internet access is key to selling computers, Intel found in its research among universities, students and consumers several years ago.

"Getting the Internet infrastructure in place is the first concern. Getting the financing schemes in place to pay for those PCs over a number of years is second. The cost of the PC is the fourth or fifth issue," Morales said.