Barrett Says Time Is Right to Close Digital Divide

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Craig Barrett spent decades using his business skills to make Intel the world's most powerful semiconductor company. He has now turned his attention to an even bigger challenge -- spreading computers and education throughout the developing world.

The Intel chairman, who gave up his CEO title in 2005, was at the Consumer Electronics Show last week to launch the Small Things Challenge, which encourages individuals to take small steps to help bring relief to the world's poorest countries.

The challenge seeks donations to Save The Children's Rewrite the Future program, which provides education for children in war-torn countries. And Intel will donate US$0.05 for each person who simply visits the Web site, up to a maximum $300 million this year.

But for Barrett it's about more than charity. Visitors to the site can also make a "micro loan" to a local entrepreneur through, which displays profiles of people seeking funds to grow their business -- a plumber in Uganda who needs supplies to open a hardware store, for example. It delivers the loans through a local partner and aims to repay them after six to 12 months.

Barrett sat down with IDG News Service at CES to talk about the effort to raise living standards in developing countries, as well as Intel's Classmate PC and whether he misses his day-to-day role managing Intel. Following is an edited transcript of the discussion.

IDG News Service: We've been hearing about efforts to close the digital divide for several years now, but the progress often seems frustratingly slow. You seem to think we're at some sort of tipping point. What makes you so optimistic?

Barrett: There are two reasons. If you simply look at where the growth opportunities are in the ITC market, they happen to be in emerging countries, and if you look at the sheer numbers -- more Internet users in China than the U.S., more cell-phone users in Africa than in the U.S. -- to me this seems to be a tipping point just from bulk numbers.

Secondly, look at the usual sequence of events in developing countries -- first you have nothing, then you have cell phones, then you have Internet penetration. Usually there's a four- or five-year delay between each. The last holdout I thought would be Africa, but I've been pleasantly surprised by what's going on there. Take a simple example -- last year my wife and I were in Tanzania to climb Kilimanjaro. Our guide was talking to his family on a cell phone all the way up the mountain. Not only are you seeing cell-phone penetration in Africa, but you've got three or four submarine fiber cables coming into the country, both in South Africa and East Africa. You've got the possibility to combine those landings with broadband wireless to cover the continent. So I've got to get optimistic that this stuff is happening.

IDGNS: So you think there's enough of an economic incentive now to make wiring poor countries attractive to businesses?

Barrett: Sure. China is the biggest cell-phone market and the second-biggest computer market, and it will be the largest in a couple of years. India is following four to five years behind China, and Africa is four to five years behind India. So this is happening everywhere.

IDGNS: What's the biggest obstacle that remains?

Barrett: It's still the educational opportunities for young people. Not only do you have 75 million kids who don't go to school who should, you still have mandatory school ages in some countries that are relatively modest. I'm a firm believer that if you give every young adult an opportunity -- that's education and economic -- the world's going to be a much better place. If you look at the world's hot spots today, they are places where the young population doesn't have any future, any opportunities. So they say what the hell, let's go blow up somebody.

IDGNS: What's the biggest obstacle from a technology standpoint?

Barrett: It's probably to provide the software and solutions these countries need. India has 14 national languages plus thousands of dialects. South Africa has 11 national languages. So there's a huge business opportunity to create content and software in local languages. We just need to get these things stacked up together once you have the infrastructure in place.

IDGNS: How much does it cost to produce one of your Classmate PCs -- I read about $300?

Barrett: It's a couple of hundred dollars, I'm not going to get specific. The "landed cost" to make it and deliver it someplace depends a lot on taxes and tariffs, but the netbooks themselves -- the XO and the Classmate -- are all in that category, two to three hundred dollars.

IDGNS: Is that low enough to deploy them widely in the poorest countries? How low can you get that price?

Barrett: If you look at any of the trends, the costs are going to come down. Look at Portugal, which at the current cost has committed to doing 500,000 Classmate PCs. Venezuela has committed to buying a million. So it's apparently low enough for countries that are relatively low on the economic ladder to make a big investment.

IDGNS: Portugal's a bit better off than Bangladesh.

Barrett: Yes, but the trend is in the right direction; we're down to a few hundred bucks.

IDGNS: How many Classmates do you have in the field today?

Barrett: There are hundreds of thousands of them out. The Portugal deal by itself is 500,000. Venezuela is a million.

IDGNS: So Portugal is manufacturing these locally?

Barrett: There's a private Portuguese company that's basically manufacturing off the reference design. I thought their approach was very smart. They want every kid to have a PC but decided not to give them all away. They subsidized them on the basis of parental income so there's a sense of ownership. Poor kids get them fully subsidized, medium-income kids pay part of the cost, and well-to-do families buy them. It's produced locally, so it creates economic development with the production and service contracts.

IDGNS: A lot of people say the next few billion people on the planet will experience the Internet through a cell phone or some other device, not a PC. Where does that leave Intel? Do you become less relevant or will you start making wireless chips for cell phones?

Barrett: Clearly the Atom processor and small form-factor devices like netbooks and MIDs [mobile Internet devices] are in that direction. And by the way, I don't necessarily agree with the question. There are three interesting form factors that will continue to exist -- the big screen of the TV, the interactive screen of the PC, and the small screen of simple, limited information-access devices. I see those three screens continuing to exist throughout the world. It's hard to say PCs won't be heavily used in poor countries when you see over 300 million Internet users in China.

IDGNS: How will an MID improve the life of a poor farmer or fisherman?

Barrett: It depends how they use it. If you travel to central China today or even parts of India and see farmers with PCs -- these are standard desktops or laptops -- they're using them to get information about weather and fertilizer and how to be more productive growing their crops, and how to bypass the middleman and sell their crops at the best possible price. They're using them to increase their standard of living by being more productive. The key thing is that it's all local content produced in the local language.

If you drop existing technology into a lot of places in the world today you can create phenomenal results. We've done a couple of examples of this in the Amazon and Brazil, and remote Chinese and Lebanese villages. If you train some teachers and put a broadband connection and some computers in, you can change kids' lives overnight, it's dramatic.

IDGNS: But how do you scale that to reach a significant portion of the developing world?

Barrett: Our role is not to be the volume implementer, it's to say here's what you can do, now you local governments and local people need to take this and run with it. When we went to Parantins in the Amazon, we dropped in a satellite link, put up a WiMax tower and connected some community centers and schools. Then we went to the president of Brazil and his ministers and said, "Look, it's none of our business but we showed you what can happen. It's now up to you."

IDGNS: Some governments can be willfully uncooperative. Have you had any successes in Iran or Pakistan?

Barrett: There's a little bit starting to go into Pakistan. I think there are more governments than not that are excited about this. No matter where you go in the world and talk to government leaders, whether it's a resource-poor country or an oil-rich country, they tell you the same thing -- ultimately, my economy is dependent on my people.

IDGNS: Where are you off to next?

Barrett: My next trip is a fun one, to New Zealand to go helicopter fly-fishing. I'm combining that with the Milford trek in the South Island, where they have these fiords and tropical rain forest. Then it's back to Europe and the Middle East for some work there.

IDGNS: Since you handed the CEO job to Paul Otellini, do you miss having a more hands-on role running Intel?

Barrett: You go through stages. I had nearly 35 years of worrying about the day-to-day problems associated with manufacturing lines and customers. Do I miss that after 30 years? (laughs.) Sometimes you can move to a different place and look at things. So I tell Paul Otellini, "You can worry about the problems and I'll travel for you."

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