1/100th the cost

Faithful readers will recall that two months ago I gave in to years of craving and ditched my BlackBerry for an iPhone.   What I’ve discovered since then is that the iPhone is a Trojan Horse, an uber-device pretending to be a phone.  This is why the “there’s an app for that” campaign makes so much sense.  With a big screen, a fast processor, and a 3G network, this device can perform some amazing tricks.

While I’m not a big app user, I can’t help but crow about an app I just found, called MotionX-GPS Drive.   Quite simply, it delivers the full functionality of a portable GPS device – with turn-by-turn directions, a voice telling you when to make the turn, a map that updates your location in real time, etc. – and you can do all this while still listening to music on your iPod.   For my needs, this does essentially the same thing as a $350 Tom Tom for $2.99.  That’s right, two dollars and ninety nine cents.  It costs 1/100th of the price of the product it aims to displace (plus $2.99/month subscription.).

Outside of being excited that I have an additional $347.01 in my pocket, this got me thinking about disruptive innovations in the nonprofit sector.  CK Prahalad introduced the concept of radically lower costs structures as necessary for creating solutions for the poor that will have massive potential for scale and impact — citing among other things the Jaipur foot, an artificial limb which costs $40 and sets an amputee walking again.  But is there really a world of “1/100th the cost” innovations out there, waiting to be discovered, or are the real gems the 1/2 or 1/3 or 1/6th the cost interventions that, if discovered across multiple sectors – healthcare, housing, water, energy, agriculture, even education – together hold the potential for a radical shift in the livelihoods of millions?

Put another way, is “1/100th” the cost just about the economics of Moore’s law and software development, or would we find many more of these if the right economic incentives were in place?

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2 thoughts on “1/100th the cost

  1. indeed – I had the same experience when I got an iphone a couple of months ago – the ‘holy crap I actually just bought a pocket-top masquerading as a telephone’ realisation.

    I think the radically lower costs and scalability of mobile telephony in developing countries is only just beginning to have its major impact, and will do so over the next 10 years in many ways we’re only fumbling towards now.

    It does require governments to get out of the way though (eg: crappy state owned monopoly telecoms operators, in repressive/autocratic states). So does the question for international actors become even moreso how to facilitate this?

  2. Sasha, enjoyed the site and know others do too I imagine. Biking thru rural China in 1998-’99 I came up with a radically different way of shifting resources to farmers and made it the subject of my thesis @USF. We are now, thanks to advancements in the net able to roll it out. MicroSourcing lets us lower our cost of providing credit to our farmers in the Philippines and radically lower our costs of delivering services as well.

    Again, great article and will source it to our site next month when it is live.

    ~Clint

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