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June 29, 2006 4:50 AM   Subscribe

FlexGo™. Microsoft targets emerging markets with pay as you go and subscription models.
posted by davehat (13 comments total)
Sounds like EasyInternet in Europe, except no angry lady shouting at you that it costs five euro to use the toilet. I don't think people will want to pay extra to use a computer in their own homes.

I think there is an opportunity to cut down the amount of usage a computer would get for leisure use in an office if people had to pay for the time they spent on it and therefore knew there was a stopwatch running behind them.

It could theoretically build more creative, off-computer time for the generation of ideas.

Perhaps a corp model could be established where employees are given time amounts for computer and software access over the span of a project, and their bonus for completion would be escalated based on what time they did not use from the allotment.

Bet it would be a great way to pull young people away from MMORGS if they knew there were time constraints added on their usage that were enforced.
posted by parmanparman at 5:35 AM on June 29, 2006

Progress away from the pesky burden of semi-ownership. Glad they got that problem solved. I wonder how Linux will keep up?
posted by 517 at 5:55 AM on June 29, 2006

Remember that Brady Bunch Epi where they solve the high phone bill by getting a pay phone? I wonder if I called Verizon if they'd let me have one. Then I could get a coin washer dryer -- and one of those gas meters like I had in England where I had to walk in the fucking freezing rain to put money on a card to recharge it at some dead-end Pakistani grocery in the middle of the night so there would be some warmth in my hovel and something to heat my tea with. This sounds like just best idea Microsoft has ever put forward.
posted by parmanparman at 6:04 AM on June 29, 2006

Nifty. Seems kind of strange that they haven't released something like this yet. I bet Microsoft Loves the idea of hourly rental of their software, especially in markets where piracy is rampant.

I wonder, though, whether they could work something out where the time you've already spent with the software could credit towards buying a full version of the product.
posted by kdar at 6:06 AM on June 29, 2006

Do I get a dollar back for every time I have to reboot?
posted by Optamystic at 6:44 AM on June 29, 2006

Just like rent-to-own furniture. It's expensive to be poor.

Oh, I know, I'm a cynic; it all depends on the pricing; it might not be extortionate. Possibly. And I guess it isn't necessarily bad for people to have more choices about how they get their computing; even a rented computer is more likely to get someone across the digital divide than no computer. The $100 laptop sounds a lot better for 'emerging markets' than overpriced rentals, though.
posted by ook at 8:47 AM on June 29, 2006

But I don't really understand this - computers are not that expensive. My family has had computers for years, even when we lived in subsidized housing or my mum was unemployed. We didn't always have up-to-date computers - actually, we usually had used ones bought from family or friends. But you can get used ones in a shop for about the price of a tv, and most poor families have tvs.

But it's about knowledge and about budgetting. People budget for tvs, but they aren't willing to for computers. Maybe they don't know that a Windows 95 machine is still just fine for basic word processing, email and non-image intensive web. Or they don't know people with copies of software -- but all these can be had.

Of course, if MS were serious about breaking down the economic barriers to computer usuage, they would be helping put out user friendly open source software like Ubuntu and OpenOffice. But they aren't - they have realised this is a great new opportunity to make money.
posted by jb at 5:40 PM on June 29, 2006

Long ass post, turns into a bit of a rant. Pole sana…

But I don't really understand this - computers are not that expensive

Yes they are. If you live on a dollar a day, $1 is a significant outlay that needs to be budgeted for. $100 is unthinkable, $1000 more than a lifetime's accrued disposable income. Of course, the dollar a day earner is not FlexGo's target. It is pitched at a more affluent group of people in developing technology markets (not fledgling ones). Even so, disposable income and access to credit are factors for this group.

My family has had computers for years, even when we lived in subsidized housing or my mum was unemployed. We didn't always have up-to-date computers - actually, we usually had used ones bought from family or friends.

An interesting quirk in the technology market, here in East Africa at least, is that second hand computers on average cost about as much as a new entry level PC from the UK. This no doubt says a lot about technology costs in the UK, but I think it also demonstrates what happens when there is no abundance of second hand PCs. There are not many old age (PI -PII) let alone medium age (I'm thinking late PIII, early P4) PCs going around over here. In addition to this, there is no native computer manufacture here or in many of the countries where populations are falling behind with regards to real ICT access.

But you can get used ones in a shop for about the price of a tv, and most poor families have tvs.

Despite the fact that we're always told "2 billion people watched this years Superbowl/World Cup/Dwarf tossing championships", I doubt that most of the world's population have TVs. Having said that, despite pretty good google-fu, I can't find any info to back me up here. There don't appear to be stats for worldwide TV set ownership. However, if you do not have mains electricity, it is unlikely that you'd have a TV, let alone a computer. Perhaps if we look at a subset of the worlds poor, those in ‘relative poverty’ (by which I mean a household that has an income below the national average), your assertion is probably true. Notwithstanding your observation, the cost of a second hand computer is not often on a par with that of second hand TV. Outside of large scale, mature, rich consumer markets such as the US/UK/Japan/Australia/Wherever where people ditch their technology on a fairly regular basis, an old TV is probably black and white and 30 years old. A 30 year old computer would be more likely be in a museum.

Sorry if it seems I'm picking on you here, but it appears that you've missed the point that this product is not targeted at western consumers. Moreover, I have developed rather a bee in my bonnet about the rapidly expanding digital divide.

This nitpicking of mine is besides the point with regards to this particular product and what it could do. I didn't want to editorialise my FPP, but here's my two cents, firstly about FlexGo, then about ICT access for the other half of the world’s population.

Much as I thought I would never have time for a Microsoft initiative, I welcome these MS subscription models. As far as I can see, they address specific issues that prevent certain populations from true ICT access. As ook mentions above;

even a rented computer is more likely to get someone across the digital divide than no computer.

I couldn't agree more. Whereas FlexGo certainly is not the answer to all issues surrounding the digital divide, it should help its target market, low/middle income families in Central America/South America/Asia/Eastern Europe, and beyond, as it addresses specific limitations that concern this group:

Until now, people in emerging markets have faced two formidable financial barriers to PC ownership. The first is the high entry cost in markets without widely available consumer credit. The second is the often high fixed-monthly loan payments required to finance a PC combined with uncertain paychecks from month to month. These obstacles have limited the number of households that could purchase a PC.


In many countries around the world, people face two main barriers to owning a PC: the entry cost of buying a computer is too high and the fixed monthly payments associated with traditional financing are beyond their ability to pay- if they can get financing at all. And even in countries where consumer credit is available, many people are reluctant to incur the obligation of fixed monthly payments because they have unpredictable or variable incomes.

The FlexGo initiative, especially the PAYG option, is good because once the initial hurdle of raising capital to purchase hardware has been jumped, the risks involved are reduced since ongoing payment is no longer obligated (fixed payment for loan + interest to third party), merely necessary for ongoing use (flexible payment for access to computer, as needed). This may not sound like a huge difference, but it will no doubt help assuage some of the risks involved in purchase within FlexGo’s target markets. I’d venture that the reduction of financial risk is key to accessing this market. I can also see that this service might help a rash of internet cafes or telecentres switch to genuine MS products; a bit of a bonus for Microsoft, no doubt.

However, as far as I can see, this model does not address barriers that prevent the poorest of people from real ICT access. This group represents about a half of the worlds population, those who according to the World Bank live in either:

Extreme (or absolute) poverty: Living in extreme poverty (less than $1 a day) means not being able to afford the most basic necessities to ensure survival. 8 million people a year die from absolute poverty.


Moderate poverty: Moderate poverty, defined as earning about $1 to $2 a day, enables households to just barely meet their basic needs, but they still must forgo many of the things-education, health care-that many of us take for granted. The smallest misfortune (health issue, job loss, etc.) threatens survival.

As ook mentions, there are strategies in development for enabling the poorest people ICT access, such as the $100 laptop. However, this project is frequently misunderstood.

Unlike FlexGo, the $100 laptop is not being developed as a consumer product. It will not be for sale to the public (at least initially). Primarily, it will be sold at governmental level for distribution to school children:

How will these be marketed?
The laptops will be sold to governments and issued to children by schools on a basis of one laptop per child. Initial discussions have been held with China, India, Brazil, Argentina, Egypt, Nigeria, and Thailand. An additional, modest allocation of machines will be used to seed developer communities in a number of other countries. A commercial version of the machine will be explored in parallel.

With regards to the projects stated biggest hurdle, note the following:

What do you see as the biggest hurdles?
The biggest hurdle will be manufacturing 100 million of anything. This is not just a supply-chain problem, but also a design problem. The scale is daunting, but I find myself amazed at what some companies are proposing to us. It feels as though at least half the problems are being solved by mere resolve.

These two bits of information worry me. Why are these products only for sale to governments? Are they really only concerned with production? Other questions that spring to mind are:

1. How likely is it that governments in developing countries will pre-order 5 million unproven pieces of technology? (5 million is the minimum pre-paid orders needed for the initiative to go ahead)
2. Why are already poor countries being asked to take such a huge risk in such an important area as education?
3. How will the governments get the money to pay for these items, given that many cannot afford textbooks?
4. How will laptop distribution be monitored once they are received by each government?
5. What’s to stop a government buying this subsidised equipment and charging institutions for usage or selling even selling them on at a profit?
6. What’s to stop the cost being passed on from the school to the user?
7. What’s to stop large scale theft of items from schools?
8. What happens if a child loses or is robbed of their equipment?

Some of these questions being asked in this Wiki page, but they are not really being answered thoroughly.

I’m also struck by the profound stupidity of the following statement in the Laptop FAQ under the question about why they are looking exclusively at laptops, not community access centres:

One does not think of community pencils—kids have their own. They are tools to think with, sufficiently inexpensive to be used for work and play, drawing, writing, and mathematics. A computer can be the same, but far more powerful.

This look like wishful thinking to me, a noble abstraction perhaps, but not joined up thinking. Not all kids have pencils. A kid who has a pencil of its own may well create, but an art class has lots of different pencils and people there can help them to develop... If a kid breaks his pencil, s/he will probably be in a position to repair it... If a kid loses his/her pencil, replacing it may be difficult, but not as difficult as replacing a whole computer... Many people sell pencils, none sells the $100 laptop...

I could go on, but you get the picture:


I’d venture that once the following four words were seized upon, “One Laptop Per Child” and the project named accordingly, the developers backed themselves into a corner ideologically. After all, with that name, they aren’t going to develop something that isn’t a laptop or that isn’t on a per person basis, no matter what critical problems they hit, are they?

Given these reservations, I think this project is well meaning, but doomed. However, I would genuinely love to be proved wrong on this. Perhaps one laptop per child should be a looser goal with a longer scale and a more inclusive outlook (what about laptops for kids in non developing countries, eh?).

I think the Ndiyo initiative is a much sounder proposition for large scale worldwide ICT access. Ultra thin client computers and a PC server running UNIX (virtually) ready to use out of the box. It could be school computer lab in a box. Or an Internet cafe in a box. Or a small company's expansion costs reduced dramatically.

As far as I can see, the Ndiyo project can be implemented more quickly, more widely and more effectively than $100 laptops. If MS were to seriously get behind an ultra thin client model for developing countries, they may well grab another 3 billion users, though I doubt they will. Like the four words that bind the $100 laptop initiative to such narrow goals, Microsoft constantly by their original mission, that of a PC in every home, running Microsoft.
posted by davehat at 7:53 AM on June 30, 2006

davehat - you've made some excellent points about computer access for the third world.

that said, are MSN talking about the developing world? I thought that this program was aimed at poor North Americans - and frankly, I think it's a very bad solution to access for poor North Americans. It's like renting furniture, or those places that advertise "no money down!" Or check cashing places that gouge people who don't have enough money to last out the weekend. I've lived in neighbourhoods like this - some of my close relatives have these problems. But it pushes poor money management, and makes them poorer in the end. It's better for them to save the $400 to get a simple computer, than to end up paying $40 a month for 12 months.
posted by jb at 4:38 PM on July 1, 2006

Arse. Browser crashed and I lost a 1500 word post. I'll try again rather more briefly, though I think its just me and you on this thread jb (if you come back to read this, that is).

that said, are MSN talking about the developing world?

From the first line of the first link in the FPP:

Introducing Microsoft® FlexGo™ - an innovative technology that makes it easier for people with modest incomes in emerging markets to buy a full-featured PC for their families.

So, you're correct. They aren't. As I mentioned previously, that is my one of my criticism of the project. I also said the post ends with a rant about another topic entirely, the $100 daydreamLaptop. Having said that, MS state that FlexGo targets Emerging Markets. This pretty much precludes the US. There's a good map (and description) of Emerging Markets here on wikipedia. As you can see, this amounts to large parts of Central/South America, Asia and chunks of Eastern Europe.

But it pushes poor money management, and makes them poorer in the end. It's better for them to save the $400 to get a simple computer, than to end up paying $40 a month for 12 months.

I agree with you that saving for something is one of the most sensible ways to obtain ICT technology, short of it falling out of the sky for free. If it were up to my partner, we'd save the full amount before we bought anything. I (along with a fair few other people) do not work this way. I'm more of a now person. Luckily, I bank in the UK and have a very good consumer credit record, so I’m offered great rates.

If I were an industrial worker in Sao Paulo with a couple of school age kids (a long hop of the imagination for anyone who knows me), I might think about things a little differently. According to the US Department of State, the average monthly wage in urban Brazil (as of 2004) was R$905 (do a search for the phrase "average monthly wage", its a way down the page). The price of an entry level computer for sale at Brazilian retailer is R$1255 (I’m no claiming this is the cheapest). If I were to save 10% of my income every month, I would have to wait about 14 months before I had saved enough to buy this entry level Celeron PC (running linux). Alternatively, I could make monthly payments of R$104.58 take the computer home and own it after 12 months (at the same price, which usually means that those who are buying this technology outright are actually paying a premium for the product). With my western, creditworthy hat on, monthly payment sounds like a good option for me.

However, lets say (with my Sao Paulo worker's hat on) that I work shifts that change on a weekly basis, or that I have bonuses dependant on targets. In a month where I have fewer days work due to shift patterns, I may miss my productivity bonus and so may not be able to meet the cost of my payments that month. Essentially, my new computer becomes a liability over the 12 months it takes for me to pay for it. Moreover, if I fall sick or lose my job, I’m shafted. Bye Bye computer, plus whatever cash I still owe or goods that are recovered to the same value.

FlexGo’s PAYG option might be the right thing for me here. All I have to do now is to save around R$700 up front. This will take me 7 or so months, not immediate gratification, I grant you, but not over a years wait either. Now the key difference is, once I've paid my R$700, the computer is mine.

The PAYG structure allows for different amounts to be spent each month for access, as and when I need it. After I've taken the computer home, if I miss my monthly targets and my pay check is low, I can ration my computer usage for a while. On the other hand, if I excel in any given month and bring home a packet, I can put more towards the computer usage to cover possible lean times ahead.

Flexibility and reduction of financial risk are the key factors here. The computer is no longer a liability, it is an asset. Yes, I have to pay to use it, but I have to pay to use my mobile too, and I'm quite used to budgeting for that.....

There seems to be a fair amount of positive feedback of this sort on the FlexGo site (well, there would be wouldn't there). I'm still looking round for genuine detractors. Comments from MacBook owners browsing the web from the comfort of the local Starbucks don't count, what have Apple ever done about computer ownership in developing markets? Not much as far as I can see.... Anyone want to prove me wrong?

I have to say here that I am not usually an MS advocate. Among other things, I'm currently looking at developing a mobile computer lab so as to give ICT training to rural school children in developing countries. Believe me, I'm not looking at Microsoft for this plan. Their products are too expensive.
posted by davehat at 7:36 AM on July 3, 2006

That definitely makes sense (the Sao Paulo example - and their comments are from Brazil) - but do you think the pricing will work out sensibly? If the pay as you go is much lower than saving and buying outright, then that makes sense.

But my only experience with this sort of thing is in North America and Britain - in North America, most rent to own or pay as you go ends up costing poorer people more money (including renting phones - which people still do). Poor people in North America have incomes that can be just as unstable, and they aren't that credit worthy (one of the reasons I do save for all my purchases is that debt scares me - my income is not regular). A monthly minimum wage in Canada is about $1120 CND; entry level computers are maybe $500-1000 (depending on where you have access to buy, how much knowledge and how much equiptment you need like monitors). So still several months to save - but thinking about what I know about Canadian prices, I would guess that a computer would be offered for maybe between $40-60 CND a month (internet access probably more - but that would be a monthly cost no matter what pricing model). At that price, you can save for 10 months and buy a computer that would last 3 years for the same cost as 10 months of the plan. A computer you own outright is an asset - one that you have to pay for every month is just another bill, and one that gets larger the more that you use it (unlike local phone in North America, or cable tv or something). So when you have a bit more money, you will use it more - and never save and get ahead. Not planning for the future is a terrible thing for the poor (I'm not poor now because my mother did plan and save for the future, unlike some of our friends and relatives, who did things like get cell phones). I don't think buying things on installment are a good idea for poor people either - I really dislike the businesses which advertise no money down and try to get people to spend beyond their means and get trapped in the debt cycle.

In an emerging market like Brazil, it seems like computers are just that much more expensive, more like the equivalent of $2000-3000 CND to a Canadian budget, like a cheap car or expensive living room set. And maybe that much more expensive compared to other goods (like cars or living room sets). So the monthly rental costs or pay as you go could be so low compared to buying outright that they make sense.

But that just makes me think - why aren't manufacturers looking to sell dirt cheap computers (older models perhaps? they still work fine - I word processed, played games and checked email on an Pentium 100 throughout university), in order to get under the competition? What about computers that work with tv sets, like the Vic 20 and Comodore 64 did, so that you don't have to buy a monitor? It seems there would be a market.

I'm curious about your work - what is ICT training?
posted by jb at 4:35 AM on July 4, 2006

That definitely makes sense (the Sao Paulo example - and their comments are from Brazil) - but do you think the pricing will work out sensibly?)

That’s the big question. I guess we’ll have to wait and see. I can’t find any information as to how much the test products were when they went to market. I think that the final price is down to the manufacturers as MS are not actually producing any hardware, as far as I can see.

A computer you own outright is an asset - one that you have to pay for every month is just another bill, and one that gets larger the more that you use it (unlike local phone in North America, or cable tv or something)

This is true. However, a computer is a tool, unlike cable TV. Getting a phone outside of the western world can be a Kafkaesque endeavour. This explains the monumental growth rates that can be seen with mobile phone line ownership. People have learned to budget for mobile phone use, perhaps they will use the same skills for PAYG computer use. We’ll have to wait and see.

why aren't manufacturers looking to sell dirt cheap computers

That's a very good question. I don't know. Dirt cheap would probably mean selling at a loss. The only people trying to address this are the $100 laptop people and Ndiyo. Having said that, it doesn’t matter how cheap you make a computer if half the people in a country can’t afford the electricity to run one. Giving everyone a VIC 20 won’t solve this (though, personally I reckon its something I could get behind. I loved my c64) and it doesn’t really address anything long term. Perhaps this is why the big players see no market for very low cost computers.

I think there is, as long as you stop thinking about PCs.

I'm curious about your work - what is ICT training?

ICT stands for “Information and Communication Technology”

Here in Kenya, the most recent ICT in Education paper (viewable here), provision is made for the stimulation of local PC manufacture, and for large scale reconditioning of donated technology, in order to provide every school in Kenya with a computer lab by. This is an important and necessary goal.

What I don’t see in this paper (yes, I’ve read the whole thing) are strategies to pay for them in the long term. Depending on “donors” is not a good strategy. PPPs (Public/Private Partnerships) are also cited in the paper, however the list of companies involved in decisions/strategy group (the ICT Trust Fund) includes Microsoft, so whatever the plan is, it will probably be PC based, or Microsoft’s interpretation of a “thin-client” (which requires multiple user licenses and has terminals that run even when the servers down… sounds just like a PC to me!).

However, even if a rural school was donated a lab full of reconditioned PCs with the requisite software packages, it might not have mains electricity. If it wanted mains electricity, it would have to pay for the “final mile”; the cost of putting up cabling from the nearest point on the grid. Even if a school does have mains electricity, the cost of running a computer lab would be expensive, electricity ain’t cheap here. This issue is raised in the ICT paper, but it is seemingly not a priority. Nor is provision of computers for primary schools. Its worth noting that mandatory education here in Kenya finishes at Primary level.

An urban school is more likely to have mains electricity. They are also more likely to have a more affluent student base (Not always the case, granted). In the short term, this could lead to urban school children benefiting from the expansion of ICT in education at the expense of rural school children. The rural population stand the distinct possibility of falling behind over the next few years. This is a clear example of a rural/urban digital divide (as opposed the the more widely talked about international digital divide).

I want to do something about this; I want to create a mobile computer lab to travel around rural primary schools delivering ICT classes. It would teach an introductory curriculum encompassing things such as an introduction to computers, how to create a written document/spreadsheet/database/presentation, an introduction to the internet, what is email, hoew to set up an email account, issues in online identity, maybe even blogging and a whole lot more.

All that’s needed (I think) is a coach built truck/coach with an in built classroom or 4X4 + trailer and tent/trestle tables/chairs. This would then carry a generator/solar panels, 25 ultra thin clients and screens, a server and an rBGAN satellite around a certain region. The driver and co-driver would be trained teachers/lab technicians and upon arrival would set up the network. Hey presto, you’ve given a school a fully functioning computer lab with internet access and a couple of teachers to implement a curriculum.

Once the whole school has had its lesson for the day, the service could run for a short period after school and give lessons to the wider community for a minimal fee. Once the month’s lessons have been delivered, off it goes to the next school in the next village, to return the following month.

That’s the idea. There's a bit more (not much) here on my blog. At present, most of the plan is in my head (and increasingly, this thread). Getting any further is the difficult bit, especially as this is not my area of expertise (alas, I only have a sales/marketing background). There are a good few people interested locally and in some major institutions. Unfortunately, no one with cash to burn, as yet.

Its also not what I’m in the country for. Due to visa restrictions (I’m applying for a spousal visa), I’m not supposed to work, I’m here to look after my son whilst my partner studies for her PhD. I'm not really sure if this is work though. Its certainly keeping me thinking whilst I’m looking after my little boy.

If you know anyone who might be interested, my email is in my profile.
posted by davehat at 12:43 AM on July 6, 2006

That is fascinating - and a really good idea. I think I read once about a man in India who took movies around the countryside that way, taking the projector and a generator with him.
posted by jb at 2:55 AM on July 6, 2006

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