As you know, I agonise sometimes, Bento, and worry that Technology as a sector really isn’t as “ethical” as one would think. Most tech gadgets are made in China these days, by dormitoried employees in conditions an early Victorian industrialist wouldn’t find unfamiliar. Interestingly one of the worst culprits here is the Hon Hai/Foxconn Group, who do all the assembly for, you guessed it, Apple. Coltan, the black stuff in the capacitors found in circuit boards, is mined in the Congo, in large part by slave labour, and is tremendously lucrative, so much so that control of it is one of the underlying reasons behind the war there over the past few years.
So this article cheered me up no end, reminding me that technology has a huge role to play in development. Forget what you and I think of iPhones and N95s Bento, it’s nothing compared how life-changing the simplest cellphone is in dirt poor countries. It’s a combination of the cheap labour of China, Moore’s law and the incredible scale of the big phone makers like Nokia, which makes it so that unprecedented numbers of people can afford one.
Key bits of the article:
A “just in time” moment afforded by a cellphone looks a lot different to a mother in Uganda who needs to carry a child with malaria three hours to visit the nearest doctor but who would like to know first whether that doctor is even in town. It looks different, too, to the rural Ugandan doctor who, faced with an emergency, is able to request information via text message from a hospital in Kampala. . .
A cheap mobile really makes a difference economically too:
Robert Jensen, an economics professor at Harvard University, tracked fishermen off the coast of Kerala in southern India, finding that when they invested in cellphones and started using them to call around to prospective buyers before they’d even got their catch to shore, their profits went up by an average of 8 percent while consumer prices in the local marketplace went down by 4 percent. A 2005 London Business School study extrapolated the effect even further, concluding that for every additional 10 mobile phones per 100 people, a country’s G.D.P. rises 0.5 percent.
The low end handset market must the biggest in terms of units in all of technology (the overall handset market will sell over 1bn units this year), and it wouldn’t shock me if it was the biggest in terms of value. It’s certainly one of the fastest growing.
It’s the underlying reason why I bought some calls in Nokia just today, for its Q1 report the day after tomorrow, despite worries about a high end handset slowdown. Nokia has the ultra low cost handset market completely sewn up, and I’d guess it has 60% share there. With its mega distribution network, huge scale and abilty to design desirable handsets that sell for $30 and net it a 30% gross margin, it’s a stock you can own to assuage your conscience, and have a chance of makng some serious dosh at the same time. Spinoza would most definitely approve.
But you carry on owning your AAPL, Bento. Remember, Think Different!