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TECH TALK: The Rs 5,000 PC Ecosystem: Homes

February 20th, 2003 · No Comments

The question that has puzzled me for some time is as follows: Why arent more people in India buying computers for their homes? I am sure they recognise the importance of computers, especially for their children. And yet, less than a million PCs are being bought for homes. (The number is probably lower: a total of 2 million PCs will be sold in India this year). Availability of cheap consumer financing means that one can take home a PC for Rs 1,000 per month (payable for 36-42 months). And yet, home sales are not skyrocketing.

Why is that? Is it that people find the Rs 1,000 monthly installment high? Or is that there are other factors electricity issues (lack of available of reliable power across India), space issues (where do they keep it in small homes), software issues (where do I get pirate relevant software), Internet access costs (which can run upwards of Rs 500 per month for as little as 30 minutes of daily dial-up access).

My belief is that one of the key issues in this conundrum is the total cost of ownership. Computers are believed to become obsolete in 3-4 years. Which means, that from the home users point of view, the monthly outflow for a connected computer is at least Rs 1,500. This is not a small figure for most Indian families. The price point for mass market adoption is, according to me, no more than Rs 500-700 per month. Or, put another way, the upfront cost should be no more than Rs 5,000 and monthly outflow should be about Rs 250-500 per month. At those price points, it is comparable to the cost of two other networked devices the TV and the cellphone. So, why not apply the same model to the computer to drive mass market adoption?

The Rs 5,000 PC (5KPC) can do just that. It needs a network to come alive and be useful, just like the TV needs the cable network and the cellphone needs the GSM/CDMA network. So, to make the 5KPC an economic reality, it means that the service operator has a three-year revenue base of a minimum of Rs 9,000 (36 months at Rs 250 each month) to provide for the loaded thick server costs, software and wireless connectivity. The thick server loading is about Rs 2,000 per 5KPC in enterprises this will probably be the same homes, since even though usage is not that high, it is likely to be bursty, especially early in morning and late evenings.

Wireless connectivity using WiFi can probably be provided for Rs 3,000 (cost of equipment cards and access point) since there are no spectrum costs. These costs will probably halve in the next year. That leaves a budget of Rs 4,000 for software and operations. Considering that all the software used is going to be open-source and based on Linux, it should be possible to put a solution together within these limits.

What this does not take account is the upside. And that is where the 5KPC scores. The 5KPC desktop can be remotely controlled by the operator, who can now sell icon space to banks and other service companies for a small fee per user. Everytime the home user starts the 5KPC, these icons (and therefore the brands) will be visible. It is akin to how cellphone companies can provide links to value-added services which are one-click away on the cellphone.

In addition, as desktops proliferate at home, it now becomes possible for the nighbourhood stores to set up relationships with consumers in the neighbourhood through RSS (Rich Site Summary) feeds which provide information on whats new. RSS feeds are based on XML and can be automatically picked up by special programs (RSS Aggregators and News Readers), based on the users subscriptions.

For years, people have talked of interactive TV with set-top boxes. That hasnt happened. The computer is the ideal interactive device. In effect, the 5KPC will create a whole new ecosystem of interactive services targeted at home users. The 5KPC is what can make the vision of a connected computer accessible to every family a reality.

Tomorrow: Moreover


TECH TALK The Rs 5,000 PC Ecosystem+T

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