Wyse sees profit in bridging the digital divide

BANGALORE, INDIA – Thin client computing vendor Wyse Technology has identified applications for bridging the digital divide as a new key market opportunity, according to an executive of the San Jose, California, company.

The company announced Thursday that it is part of a consortium that is piloting in India a platform for the delivery of services to rural areas around its thin client technology.

“It is a significant market opportunity for us, but it is too early however to say what percentage of our revenues will come from digital divide projects,” Tarkan Maner, chief marketing officer of Wyse told reporters Thursday in Bangalore, India.

The pilot project, which started in Anekal, a village in the Karnataka state of the country, is one of several similar initiatives planned by Wyse in the Middle East, Latin America, and some countries in Europe, Maner said.

Wyse plans to unveil its strategy for the digital divide market worldwide at a company conference in New York in November. “We will be announcing the names of services providers, infrastructure providers, IT providers, and finance providers who are partnering with us on these initiatives,” Maner said. Besides global companies and organizations, local content and service providers in each of the markets will be part of the consortium, Maner added.

Wyse’s thin client technology is ideal for the hostile rural environments in which these devices will be deployed, said John Kish, president and chief executive officer of Wyse. “Our devices are solid state with no moving parts, and they are best suited to deployment in large numbers and over large geographical areas,” he added.

For the pilot at Anekal, Wyse has teamed up with Comat Technologies, a Bangalore-based provider of technology and services for electronic governance projects, and ICICI Bank, a large private bank in Mumbai, which already offers micro credit and other financial services in India’s rural markets. The consortium has the backing of the International Finance Corp (IFC) in Washington, D.C., and the Poverty Action Lab of the Massachusetts Institute of Technology (MIT) in Cambridge, Massachusetts.

The plan of the consortium is to set up about 5,000 rural business centers (RBCs) in the rest of Karnataka, and thereafter about 30,000 to 50,000 such RBCs in other states in the country, said Ashim Roy, Comat’s business head for North America.

Although Wyse, Comat, and ICICI Bank have invested in the pilot, the aim of the project is to have self-sustaining RBCs, said Ravi Rangan, chief executive officer of Comat.

“We think we can make money by putting together revenue sharing agreements with the services providers like financial services providers and the government,” Rangan said. However until the revenues start kicking in, the consortium expects organizations such as the IFC to help fund the initial investments required to scale up the project, he added.

The objective of the consortium is to have one RBC for every 10 to 15 villages and offer a mix of educational, financial, healthcare, and e-governance services, Rangan said.

A number of multinational companies and local companies have partnered with local government and nongovernmental organizations to run trials of Internet kiosks in rural areas in India, with the aim of bridging the digital divide. The key shortcoming of these projects is that they have not focused on relevant content and services, according to Maner, who added that most of these initiatives have set up kiosks and given an Internet connection, and expect villagers to “Google for the information.”

The consortium is also opposed to an often-tried organizational model: handing over the running of the Internet kiosks to local entrepreneurs in the villages. “Internet centers run by entrepreneurs tend to minimize their investment, and often you will find only one PC without a power backup,” said Rangan. “The system often breaks down or the hard disk crashes because of a virus, and when this happens very often, the villagers lose interest.”

The RBCs will have a number of thin clients, and will not have as many breakdowns because they use centrally managed, thin client technology, Rangan added.

However, organizations interested in offering their services online in rural markets are likely to hedge their bets around a number of alternatives. ICICI Bank, for example, has already partnered with other organizations to offer its services through 2,000 rural Internet kiosks, said Suvalaxmi Chakraborthy, head of rural, micro banking, and agribusiness at ICICI Bank. The RBCs set up by the new consortium will be just another distribution channel into rural markets for the bank, said Chakraborthy, who added that the other kiosks had been effective in delivering the services.

Wyse has also set up a research and engineering center in Bangalore, which will have the digital divide project as one of its key focus areas. By setting up this 142 staff center, Wyse has moved all of its research and engineering from San Jose to Bangalore, Kish said.