India’s $35 PC could chew Apple to a core

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    Feb 16, 2009
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    India’s $35 PC could chew Apple to a core - The National Newspaper

    India’s plan for a US$35 (Dh128) tablet computer threatens to break the stranglehold of US giants such as Microsoft, Apple and Intel.

    In an attempt to bring computing to the teeming masses of the subcontinent, India is to launch a computer early next year retailing at about a tenth of the price of the cheaper portable models on the market. By manufacturing tablet computers at a price not much higher than that of a top-end calculator, the move is set to turn the global computer industry on its head.

    The planned price is so low that it will call for software that is virtually free, potentially putting Microsoft out of the picture. Rather than use a proprietorial operating system such as Microsoft Windows, the new machine is expected to run on the open-source operating system Linux.

    The hardware and chipsets will also have to be manufactured by non-western companies in order to keep costs low enough to meet the $35 price.

    Kapil Sibal, India’s minister for human resource development, says the government is looking for a manufacturer that can work within the price restrictions to make the new device in bulk. The intention is then to drop the price to $20 and then to $10.

    But some analysts believe India is being overambitious in aiming to produce a tablet computer offering features such as video conferencing, web browsing and word processing for such a low price.

    “This price point [$35] looks unlikely if you look at the $47 cost mentioned as per the bill of materials, and consider the fact that the prototype was a co-ordinated effort across various institutes which would have kept the price to an absolute minimum,” says Nishant Singh, an analyst at the research company Ovum in Hyderabad.

    Mr Singh believes the Indian government has underestimated the cost of the computer. “A price point around twice of that is what I would believe to be more plausible,” he says.

    However, Indian manufacturers appear confident they can soon start shipping low-cost tablet computers. AllGo Embedded Systems of Bangalore has unveiled the prototype of a tablet computer that will retail at $50 at a volume of about 10,000 units.

    The device runs on Google’s Android operating system. Based on Linux, Android was specifically designed for mobile devices such as smartphones, netbooks and tablet computers.

    The pricing of AllGo’s prototype suggests the Indian government’s aim to ship $35 computers in bulk may not be too far-fetched. However, even were the Indian tablets to cost double the government’s prediction, the price would still be potentially low enough to cut the ground from under companies such as Microsoft and Intel.

    “Even this could mean a sub-$100 tablet computer. While such a tablet is unlikely to be quite as powerful as the iPad, it nevertheless has the capability to launch a new breed of computer and usher in a new era of low-price computing,” says Mr Singh.

    “Tablets are the next important computing factor,” says Sarah Rotman Epps, an analyst at Forrester Research. “To keep its products front and centre, Microsoft needs a partner to produce a successful Windows tablet that competes with the Apple iPad.

    “At stake is nothing less than the future of the operating system. For Microsoft to remain relevant to consumers, it needs to adapt its operating system to new form factors beyond the traditional PC.”

    Ms Rotman Epps believes that if Microsoft can produce a tablet that, for example, synchronises with its games and video console the Xbox 360, it would be “a killer hub” for the digital home, enabling Microsoft to steal a march on the iPad with back-and-forth streaming of video games.

    She believes the iPad has become the benchmark against which all tablet makers must measure their own products.

    “Consumer product strategists, even those not in direct competition with Apple, should pay attention to the iPad, because it’s defying common assumptions about consumer technology adoption,” says Ms Rotman Epps.

    “Apple sold 3.27 million iPads in the quarter ending June 26. On June 22, it had announced shipping 3 million iPads – that’s 270,000 units in less than one week.”

    But both Microsoft-powered tablet computers and Apple’s iPad will soon face competition from low-priced products from India. If tablet computers can be bought for less than $100 in India, they will also retail in other markets at a similar price.

    Companies such as Microsoft and Apple are tied to the high prices that have been the norm for portable computers for a generation. But, just as calculators once cost the equivalent of today’s portable computers, the price of tablet computers is now set to drop dramatically.

    “If the Indian government is able to pull this through even at a price of $100 or so, this would have the ability to impact the education sector … Netbooks have shown that even in the US and Europe, there is a strong market for a lower-priced device, and such a tablet will undoubtedly be a success in these markets,” says Mr Singh.

    The impact of sub-$100 tablet computers would also be substantial in developing countries such as Egypt, he said. “With around a $100 price point, such a device should hit the sweet spot even in developing markets where the purchasing power is significantly lower. This should push pervasive computing even in these developing markets.”

    Low-priced tablet computers would also encourage the development of applications in local languages.

    “Languages which are widespread, such as Urdu, Arabic or Hindi, should find support both in terms of apps and content or educational courses or materials embedded inside them,” says Mr Singh.

    Microsoft and Intel both refused to comment on the threat low-cost computers pose to their businesses.

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