Someone once said that if you wanted to make a million dollars, you had two choices:

1. Sell one item to one person or company for $1 million.
2. Sell one item each to a million people for $1.

Of course, both choices have their pros and cons, and there are issues of initial costs, taxes, etc. But the latter option seems to be the aim of companies focusing on global microbusiness. In an InfoWorld.com interview (free registration may be required) with Gartner Fellow Ken McGee, editor-at-large Ephraim Schwartz says that there are “more than 4 billion people who make less than $1,500 per year.” McGee in turn reveals that more than 50% of one American packaged-goods company’s revenue “comes from consumers in China who make less than $500 per year.”

What could they possibly be selling these Chinese workers that they could not already get in China, and probably for less? McGee declined name the company. The interview itself is focused not on micro-business per se but on the fact that IT and services budgets did not increase significantly in size this year for many companies. But several important points are raised:

1. Technology enables micro-business. However, one would think that if you are aiming for the proverbial one million sales at $1 each, it would more along the lines of information products than tangible packaged goods.
2. Technology may demolish the 80/20 rule, which says that 80% of your revenue will come from 20% of your customers, or something along those lines.

Thus so-called “3rd-world” customers - typically the poorest of the poor - are more valuable as a collective than their more wealthy counterparts. But these are not people who need or can afford luxury items or info products. So what exactly are they buying?

Technorati Tags: microbusiness, micro-business, trade relations