TECH TALK: Tech’s 10X Tsunamis: PCs for USD 100: Computers for the Masses

The billionth PC was sold in April, according to Gartner. It also projects that the sale of the next billion PCs will only take 6-7 years more. Considering that there are about 500 million users who can be expected to upgrade once in 3-4 years, Gartners project seems to make sense. Or does it?

Computers have now gotten ahead of what capabilities we need. With processor speeds exceeding 2 Ghz and Moores law still driving a doubling every 18 months, computers are at a point wherein we are using barely a fraction of their power. The Internets protocols and bandwidth has also made server-based computing much more practical. A browser on a PC is now good enough for most people to do all their daily tasks.

What this means is that the existing set of 500 users are unlikely to upgrade their computer more than once in the next 6-7 years. The worlds computer industry is yet to face this impending reality. Yes, a billion PCs can still be sold but this means the industry needs to get 500 million new users. These users are not going to come from the worlds developed markets there, everyone who needs a PC at home or in office already has one. It is countries like India and China which are the new growth markets for the PCs.

But look at Indias statistics from MAIT for the year ended March 2002:

PC sales: 1.67 million (down 11% year-on-year)
Of these: 1.3 million were bought by businesses, of which 47% by SMEs
First-time buyers: 71%
Top 4 metros account for 56% (down from 68%), next 4 for 14% (vs 20%)
Projected PC sales for 2002-03: 1.9 million (up 12%)

Notebooks: 45K, Servers: 51K
Printers 836K, of which: Dotmatrix 345K, Inkjet 428K, Laserjet 61K
Network cards: 1 million, Hubs: 206K, Modems: 470K

All of India (a population of over a billion) bought 1.67 million PCs. This is less than 1.5% of the world PC market. More importantly, PC sales fell compared to the previous year. Is India the future of the worlds PC market? Not with these kind of numbers.

And yet, India has the potential to provide a hundred million new users in the coming years. A clue to the future comes from the <a href="http://www.business2media.com/home/pressrelease.asp
?b2mid=1373″>MAIT press release: “One of the most notable findings of the study this year has been the increased consumption of IT products in smaller towns and cities. 30% of total PC sales was accounted for by Class B and C class cities – a phenomenal growth of 106%. ” Yet, this 30% accounts for just about half a million PCs.

Individuals and businesses in all of India (and not just the metros) should be using computers, because of the power of the PC to leverage intellectual capital, unlocking the capabilities of individuals to succeed and companies to profit,” according to Gartner analyst Martin Reynolds (quoted in News.com).

The computer is, undoubtedly, the most important transformational device and, used appropriately, a great leveller. It has the ability to bridge divides. As Legend, Chinas largest computer company (with sales of nearly 3 million PCs annually) tells its buyers: The computer is your future, the computer is China’s future.

The future will not unravel with PCs costing USD 500-600. PCs need to be priced at what the mass market of users in the worlds developing countries can afford in terms of purchasing power parity. This means looking at a cost of no more than USD 100-150. This is the secret to netting the next 500 million users and changing lives.

Tomorrow: PCs for USD 100 (continued)

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.