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TECH TALK: The Network Computer: Business Model

October 14th, 2004 · No Comments

The network computer by itself will not make money for its makers. It needs to be part of a wider ecosystem where computing is proffered as a service. From the network computer manufacturer view point, there are two options: to work with a small 10-15% margin, or think of the device itself as a service and make small amounts of money on a monthly basis, just like a utility company does.

I believe the ideal solution lies in offering the network computer for a refundable deposit which covers the cost of the unit, and then charge a small monthly fee. From a customer viewpoint, the network computer is not likely to be purchased as a standalone unit rather it will be used with service (be it at home or at work). Thus, the network computer company of tomorrow is more likely to resemble a utility company than a computer maker. By making computing a utility, users are also being provided with the flexibility of cancelling service anytime something that is not an option when computers are bought on installments. This is possible because the network computer is a device that really does not age and become obsolete other than hardware failure, one has no worries. In other words, the lifetime of a network computer could be as much as double that of a regular computer (which typically has a 3-4 year lifetime).

The magical monthly fee for the computing service should be no more than Rs 700 ($15). Consider the case of the home user. In this situation, Rs 200 would go for the network computer, Rs 350 would go for bandwidth, Rs 100 would go to the grid for the computing and storage facilities along with a wide variety of software and content, and Rs 50 would be available for providing support. In the case of the enterprise user, the bandwidth costs would be lower since they would be amortised over a larger number of users. But an additional cost of a local server may be needed in the event that a two-tier grid (think of this as a grid cache and grid core) is deployed. In this case too, the per user cost would be in ballpark of Rs 700.

Will this model work? I believe it will. A no-commitment Rs 700 per month offer is about 50% higher than what users pay for cellphones in most cities in India. What is on offer is a computer that looks and feels like a regular desktop computer but without some of the hassles associated with it. As a critical mass of these network computers gets deployed, software and content providers will be attracted to this platform since now they have a much more cost-effective way to deliver their offerings to users. This will in turn create a positive feedback loop for adoption.

All previous efforts at network computing have ended in failure. But I firmly believe that the techno-business developments will create the necessary atmosphere for the network computer succeeding this time around. The question that arises is: which of today’s companies will make it happen? Or, will it be a new set of companies?

Tomorrow: Making It Happen


TECH TALK The Network Computer+T

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