Fone +: Connecting Millions Of New Users To The Net

1. Fone+: Connecting Millions Of New Users To The Net Eric Chang Director of Incubation Microsoft Advanced Technology Center Beijing, China

2. Fone+: “A connected computing experience via a cell phone”

3. China – A Tale Of 3 Countries • The China that got left behind • Annual HH income = US$1k • Living off the land, not the global economy • Symbolized by the peasant Total China Household : 368m People : 1298m • The “Glam” China • Top 10 cities – with Beijing, Shanghai and Guangzhou as Top 3 • Annual HH income in Top 10 = US$4k, in Top 3 = US$5.5k • Symbolized by the Pudongskyline Urban Household : 182m People : 543m Rural Household : 186m People : 755m Urban, Top 10 cities Household : 22m People : 49m Urban, Everyone else Household : 160m People : 494m • The “Middle” China, • The “real “ emerging market of China • Annual HH income = US$3k • Symbolized by the moped Source: China National Bureau of Statistics, & Gallup Poll, Dec-2004, inspired by Sen. John Edwards’ “Two Americas”

4. Wide Income Distribution Income differences between urban vs. rural Even within urban, top 10% households make 8X that of bottom 10% USD 000 Source: Gallup Poll, Dec-2004

5. TV and Mobile Phones Are Pervasive Dramatic increase in electronics ownership between 1999 and 2004 …but significant gap between large cities, small towns and rural areas in 2004 % ownership by household % ownership by household, 2004 Source: Gallup Poll, Dec-2004

6. Fone+ Research in Middle China • Recently concluded qualitative research in Henan Province, Middle China; tested reaction to: • Fone+ as a PC alternative • Various applications on Fone+ • Price points, hardware brands • Participants all made between US$100 and US $250 per month, PC literate, owned mobile phones but did not have a PC at home • Different age and life profiles • Young Males 18 – 24 • Young Females 18– 24 • Single 24 – 35 • Parents 35 – 45 • Different geographic areas within Henan • Large metropolitan area (ZhengZhou) • Mid-sized, emerging town (XuChang) • Small town, semi-rural (HuiCounty) • Also conducted quantitative survey of 1146 people across non-rural China (executed by McKinsey)

7. Emerging China: XuChang A sea of mopeds in front of town’s only non-Chinese restaurant But clearly, there is a new bourgeois in town

8. Small Town China: Hui County Pop: ~½ mil HH Income: ~ US$200 per month 1/3 billion Chinese live in towns like Hui County

9. Top User Scenarios

10. Top Scenarios Fully Leverage TV Q: “If you could select just one thing, what would you say appeals to you the most about this idea? % that selected the responses below 23% 22% Top scenarios fully leverage the TV 16% 15% 8% 7% 6% 3% Source: Quantitative Survey of 1146 people aged 13 to 54 across non-rural China

11. demo Please come to DemoFest tomorrow! Eric Chang

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