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Recently, Sahara too
jumped on the sub-10k bandwagon with a 'Bata' pricing of Rs 9,999 only. An
advertisement released by HCL, AMD and Microsoft, after the announcement of the
sub-10k PCs (with Linux as the default OS), said: 'You're not looking at
just an affordable computer, you are looking at India's future.' Is price
the key to the future? I think not. But beyond price, I don't think these
systems will make any difference to India's future or its people. Here's
why?
What sub-10k systems?
Cut the marketing mist and you realize there is nothing called a sub-10k
system. Even the recently announced Rs 9,990 HCL PC, with Linux, would cost over
Rs 12k with taxes, handling charges and onsite warranty. I am not even talking
about other add-ons like UPS (Rs 1.6k) and online connection for net access.
Now, if I add about Rs 3-4k, I would have a latest system from the neighborhood
dealer. I think that vendors are desperately looking to break the sub-10k
barrier, but we are still some time away from a system which is truly sub-10k.
How important are they for vendors?
So far three vendors have announced their versions of sub-10k desktops. As
of 15th Oct, '05, I was surprised to see that two vendors, HCL Infosystem and
Sahara, had no mention of their sub-10k offerings on their website. Xenitis was
the lone ranger with its sub-10k offering right up on the home page. It makes me
wonder, how interested are vendors in selling these low margins products. If it
is a social objective-great! But it remains to be seen if it can merge with
vendors' business objectives.
Will these systems work?
DQ bought systems from Xenitis and HCL, and tested them at the CyberMedia Labs.
The result-vendors need to optimize the systems with Linux offerings. For
example, the HCL Ezeebee Pride 7741 was shipped with a workstation version. No
wonder they are to be sold to 'first time users.'
Who will buy it?
As per our discussion with HCL, the target audience were the first time
users. Maybe, the 'Linux question' can be answered with this one. It does
not really matter to the first time user what OS he is using; he will get used
to it over a period of time. But what is this first time user going to do with a
sub-10k system? Paying about Rs 10k, trying to figure out what a computer is,
maybe type letters or play some games does not seem a good value proposition.
Why? The same first time user can spend, say Rs 1k, and go to a NIIT/Aptech
center and get a basic understanding of computers. Vendors are also talking of
e-gov projects using these systems? Again the same issue as mentioned before.
You start adding a phone line, UPS, etc, etc and the price starts moving
northwards.
Where's the content?
This is a chicken and egg story. Wisdom says that PC penetration will
increase if there is a killer application to seduce people. Well, the
application will happen if application developers see big enough market. And the
debate goes on....So, even if there is a truly sub-10k PC, I still don't see
people buying it.
 I think price is the last thing that will effect penetration.
The best analogy would be of the TV market. The market never took off because
people bought low cost TVs. It boomed because the content took off. Content,
including regional content, saw growth because of a clear business model. While
a clear business model is yet to emerge, some companies are making headways in
that. I pay my phone bills online, book railway tickets online, apart from using
the computer as a productive tool. I will continue to use a PC, irrespective of
the cost of the PC. The same needs to happen at all levels of the economy. For
example, at the village level, ITC eChaupal has made a successful business model
where none existed. The government needs to pitch in seriously in building
content across the semi-urban and rural areas.
Like seasons, which come and go, the din created by the sub-10k
PC will also pass.
Yograj Varma
Associate Editor, Dataquest
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