The three planks for our marketing for Emergic Freedom need to be (i) Cost Savings (ii) Applications Equivalent – that one gets similar apps on Linux and compatibility with MS-Office file markets (iii) other benefits – like virus-free environment, freedom from upgrades, low maintenance (since the client PCs have no moving parts) and lower consumption of power.
In this note, I’ve taken the first element – cost svaings – and discussed it further. What is becoming clear is that we need to think of our Emergic Freedom offering not just as a software solution, but as a hardware-software combo. That there are cost savings in using the solution is apparent. What I have done here is compared the alternatives. (Keep in mind that in India, import duties still account for a quarter or more of the PC cost.)
The two options for the PC usage are (a) as part of a Network (b) as a standalone device. Unless otherwise stated, the PCs need to be part of a network – think of them as PC Terminals.
These are the options for PCs available (1 USD = Rs 50):
Rs 4,000: An old PC (Pentium 1 or 2) without monitor
Rs 6,000: An old PC with an old monitor
Rs 8,000: A new PC (based on Via) with an old monitor
Rs 10,000: A new PC (Via) with a new monitor
Rs 10,000: A new standalone PC (Via, with hard disk, CDROM drive, multimedia)
Rs 12,000: A new standalone PC (Via) with an old monitor
Rs 14,000: A new standalone PC (Via) with a new monitor
Rs 15,000: A new standalone Intel/AMD PC
Rs 19,000: A new standalone Intel/AMD PC (with hard disk, CD-ROM, multimedia) and new monitor (the price assumed is quite low – most branded PCs will sell for Rs 25,000 to Rs 30,000).
The Via PC I have mentioned here is from Via Technologies of Taiwan. They make CPUs, chipsets and motherboards, among other things. Their CPUs are at the heart of the Walmart sub-USD 200 Lindows PCs (excluding monitor).
The above does not include OS costs. There are three OS options:
– Linux in Terminal-Server mode: used for the networked PCs (eg. LTSP)
– Linux in Standalone mode (the existing Linux distributions – Red Hat, Suse, Debian, Mandrake)
– Windows 2000 or XP in Standalone mode
The first two OS options can cost from Rs 0 to Rs 3,000, while Windows will cost between Rs 3,000-6,000 (or even 0, if one is pirating it).
In the event of a PC being used as a networked device, we also need to factor in the server costs. The base server will cost Rs 19,000 (the new standalone Intel/AMD PC with new monitor), with an incremental cost of Rs 1,500 per terminal that needs to be attached to it (for additional memory and faster CPU).
Consider now the Linux Terminal Server option for setting up the network. The first PC (server) will cost Rs 19,000. Each additional PC costs Rs 10,000 for the terminal and Rs 1,500 for the extra loading on the server. Thus, for each additional PC, the saving on hardware costs alone is Rs 7,500 as compared to a new Intel/AMD PC. So, if one is setting up 5 PCs, the saving is Rs 30,000, while for a 40 PC setup the savings can run to Rs 292,000.
On the software cost, the savings depend on whether one is pirating the Windows software or not (I say this because in emerging markets, the piracy levels are extremely high – so the norm is not to pay for software. It is not something that can go on forever but it is a worrisome reality for Microsoft today.) There are four options:
1. Linux (Emergic Freedom): for Rs 2,500 per client (includes OpenOffice)
2. Windows XP: for Rs 0 per client (pirated) and MS Office (pirated) or OpenOffice, both ar Rs 0 per client
3. Windows XP for Rs 5,000 per client (legal) and OpenOffice (legal) for Rs 0 per client
4. Windows XP: for Rs 5,000 per client (legal) and MS Office (legal) for Rs 15,000 per client
As compared to Emergic Freedom, the second option is cheaper by Rs 2,500 per PC, the third option is more expensive by Rs 2,5000 per PC, and the fourth option is more expensive by Rs 17,500 per PC.
Now, it is possible to get a better idea of the cost savings on hardware and software.
For a 5 PC setup, the Via PC Terminal and Emergic Freedom solution is
– cheaper by Rs 17,500 vs an Intel/AMD new PC setup and pirated Windows setup (Rs 30,000 – Rs 12,500)
– cheaper by Rs 42,500 vs an Intel/AMD new PC setup and legal MS Windows and Open Office (Rs 30,000 + Rs 12,500)
– cheaper by Rs 1,17,500 vs an Intel/AMD new PC setup and legal MS Windows and MS Office (Rs 30,000 + Rs 87,500)
For a 40 PC setup, the Via PC Terminal and Emergic Freedom solution is
– cheaper by Rs 192,000 vs an Intel/AMD new PC setup and pirated Windows setup (Rs 292,000 – Rs 100,000)
– cheaper by Rs 392,000 vs an Intel/AMD new PC setup and legal MS Windows and Open Office (Rs 292,000 + Rs 100,000)
– cheaper by Rs 992,000 vs an Intel/AMD new PC setup and legal MS Windows and MS Office (Rs 292,000 + Rs 700,000)
This is what we have to convince prospective buyers of new PCs! I know we have a winner on our hands – the message needs to be communicated in simple terms. For any organisation buying more than 1 PC, the Via PC-Terminal and Emergic Freedom solution will deliver savings.