is moving to cut costs through one of its most
radical corporate reorganizations in decades, the company is plowing cash into developing countries.
Santa Clara, Calif.-based Intel, the world's No.1 chipmaker, announced Tuesday that it will invest $1 billion over the next five years in a program meant to spur PC adoption in some of the world's most impoverished regions.
The effort, dubbed the World Ahead Program, is in keeping with other initiatives by tech companies seeking to find new sources of revenue while bridging the so-called digital divide that separates third-world residents from people in more economically-developed nations. And it comes a week after Intel CEO Paul Otellini flagged emerging economies as one of Intel's key growth initiatives going forward.
According to Intel, the program's goal is to extend broadband PC access to the world's next billion people, while training 10 million teachers on how to use technology in education so as to reach an additional billion people.
Intel will promote the development of affordable and full-featured PCs tailored to regional needs as part of the program, as well as cultivating the deployment of WiMAX wireless service.
"While affordability of PCs is crucial, the World Ahead Program goes beyond simple cost to develop the right systems tailored to local needs, drive critical connectivity, cultivate sustainable local capabilities and provide the quality education needed to make a meaningful difference in people's lives," said Otellini in a statement Tuesday.
Intel has tested a multiuser community PC in India. And Otellini recently spoke of a sub-$400 PC for countries like Mexico, to be sold in a cell-phonelike model through telecommunications service providers.
Intel is also donating 100,000 PCs to classrooms in developing nations as part of the new program. Otellini will provide more details of the new program as well as demonstrations of some of the special PCs at a conference in Austin, Texas, on Wednesday.
Advanced Micro Devices
has its own such program which seeks to bring Internet access to half the world's population by 2015. AMD's processors are also at the heart of a separate effort by MIT Media Laboratory co-founder Nicholas Negroponte, which aims to provide a $100 hand-crank powered laptop to children in developing nations.
While the programs are rife with altruistic tones, they are also crucial initiatives for chipmakers and PC vendors scrambling to find new sources of growth as the pool of first-time PC buyers in the U.S. and other mature markets shrinks.
In its spring analyst meeting last week, Intel's Otellini said that 83% of U.S. households have a PC, compared to what he called an "abysmal" 2.8% in emerging nations.
George Shifler, research director of client platforms at industry research firm Gartner, says tech companies probably won't be selling a lot of PCs in emerging nations in the short-term.
"It's probably laying tracks more than anything else," says Shifler. "If you expose people to it and help them realize the value of it in their lives, and more importantly, in their kids' lives, then you're probably laying the foundation for future demand."
Shares of Intel were up 1%, or 19 cents, at $19.68 in midday trading Tuesday.