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Bringing the Internet To the Whole World

By Jonathan Krim
Washington Post Staff Writer
Friday, April 29, 2005

Over dinner on a spring night in 2000, Hector de Jesus Ruiz, the new chief executive of Advanced Micro Devices Inc., popped an unexpected question to one of his deputies: "Have you ever made a difference in your life?"

As Gino Giannotti pondered, Ruiz suggested that for inspiration he visit Piedras Negras, the Mexican town near the Rio Grande where Ruiz grew up. Ruiz's mother would show him around.

In an odyssey that he says changed his life, Giannotti helped build a computer lab in the grade school that Ruiz attended as a child. Now, Giannotti and Ruiz are aiming to make a difference on a much grander scale and put personal computers in the hands of millions of people in developing countries who have not been able to afford them.

AMD, known mostly as a computer chip maker perennially in the shadow of giant Intel Corp., recently unveiled a pared-down personal computer that costs roughly $200 in an ambitious drive to get computers with Internet access into the hands of 50 percent of the world's population by 2015.

Trying to bridge the digital divide with low-cost computers is neither a new idea nor one that has been particularly successful.

A handheld machine developed in India called Simputer is attracting only a fraction of the users its makers expected. A group at the Massachusetts Institute of Technology is working on creating laptops that would be bought by governments for $100 apiece and given to needy residents, but some analysts question the initiative's viability.

AMD's strategy targets the hundreds of millions of people who earn $5,000 to $10,000 per year. To reach them, the company is challenging the traditional way personal computers are designed and distributed.

Rather than a stand-alone item that users customize with separately purchased software and other features, AMD's Personal Internet Communicator (PIC) is a sealed box, sold through Internet providers in much the same way that cell phones are sold by wireless companies.

"You cannot sell a cellular phone without service," said Enrique Camacho, who heads broadband operations in the Caribbean for Internet provider Cable & Wireless PLC. "Increasingly, you cannot consider a computer without Internet access."

Roughly the size of a thick, hardcover book, the computer is pre-loaded with the same Microsoft Corp. operating system that powers many handheld organizers. It includes programs for Web browsing, e-mail, instant messaging, word processing and spreadsheet calculations.

It has connections to allow any standard monitor (sold separately), a printer, and either dial-up or high-speed Internet access.

But most popular software programs cannot be added, and the operating system does not support games. Some Web sites that rely on advanced interactive graphics won't perform well.

An external drive can be purchased to play music from CDs, and over time the plan is for distributors to be able to install educational or other specialized software aimed at their customers.

The device's limitations are designed to keep its cost down and to ensure that the machine is easy for first-time users to grasp and operate.

The more limited operating system, and the inability to download software and games, make virus and worm attacks less likely. The simplicity of the sealed box reduces customer-support calls, one of the biggest costs borne by PC makers.

"This is not a device for a teenager" interested in gaming, Camacho said.

But he said that in addition to appealing to inexperienced adults, the PIC could be a popular low-cost solution for schools throughout the developing world. In addition to ease of use, the machines are proving rugged and operate with very little power, he said.

AMD officials decline to disclose how many of the machines have been sold since their debut late last year, saying only that the number is in the thousands. Giannotti said there are PICs running in orphanages in Africa as well as in homes in South America and India. And he said that focus groups in China are looking at the computer.

"It's an interesting test," said Martin Reynolds, an emerging technologies consultant for research provider Gartner Inc. who said it is too early to know whether the program will succeed.

Whereas he doubts the MIT program can profitably produce a laptop for $100 over time, Reynolds calls the PIC program "a real business model."

Ruiz, who first came to the United States to attend the University of Texas, said he was driven to develop the PIC in part by his upbringing in a developing country, but he acknowledges that profit is part of his motive.

He said he was inspired by a University of Michigan business professor, C.K. Prahalad, who argued in a book that profits can be made -- and poverty eradicated -- when corporations pay more attention to those who earn $5,000 to $10,000 per year.

"I felt like we really needed to look at low-cost computing, and we couldn't find anyone who had an interest, so we decided to do it ourselves," Ruiz said.

AMD is spending about $160 to make each machine, which is assembled in Mexico by Solectron Corp., using memory provided by Samsung. AMD sells the machines to Internet providers for $185.

Some Internet providers will in turn charge consumers slightly more and earn the difference, while others might break even on the machines and attempt to make money by selling subscriptions to their high-speed Internet services.

Using Internet providers as distributors also lets Ruiz control where the machines are distributed. As a chipmaker whose major customers are computer manufacturers, Ruiz does not want the PIC to compete with their products in places such as the United States.

Despite the broad network of partners and suppliers and generally positive reviews for the machines, Ruiz said the uphill climb will be steep to reach the 2015 target.

"It will take a lot more effort than we probably thought," he said, while reaffirming his commitment to the project.

The biggest hurdle, he said, has been navigating competing agendas of different providers and partners. Moreover, he said, governments in places such as Brazil need to help by lowering taxes on the machines to help make them affordable.

"We haven't found a single formula that works" in all regions, he said.

Gartner's Reynolds said that one challenge will be that users may quickly outgrow the machines. "But that may be half the plan," he said.

For one PIC owner, though, the machine offers a long-term opportunity.

"I'm thinking of starting an Internet cafe," said Elvis Richardson, a computer technician on the island of Tortola in the British Virgin islands. "These could be great for that."

© 2005 The Washington Post Company