Low-Cost PCs

Al Hammond discusses the various alternatives coming up (including Novatium’s solutions) and writes:

Two points to underscore here. First, the majority of firms leading this market are not Western-based. When the first initiatives to dramatically lower the price of PCs were announced in 2000, they were met with a lot of skepticism among the established computer manufacturers. At the time, the base price of most PCs hovered around $1000. Although the first efforts failed to scale, both the number and size of manufacturers tackling the BOP market has expanded significantly, and what they are offering far surpasses the earlier initiatives. Western-based manufacturers initially reluctant to cannibalize their own market by offering cheaper systems may soon find themselves behind the competition when local firms that are producing low-cost systems globalize their operations.

The second thing to take note of is that most of the low-cost PCs discussed use open-source software to reduce their costs. This has implications for both software and hardware manufacturers. When the government of Thailands Peoples PC initiative began selling a subsidized Linux-only PC aimed at the masses, Microsoft dropped the price of its Windows/Office package in the country 85% from nearly US$600 to $37. However, most first-time PC users in Thailand found that the free Linux Thai Language Edition was easier to use than Windows, and the dramatic price cuts were not enough to allow Microsoft to retain a majority share of the market. Moreover, local Linux-only PC manufacturer Laser Computer replaced HP as Thailand’s top PC seller. Microsoft is now competing more strenuously for this market with low-priced, reduced feature, local language versions of Windows XP Home and is testing other products and services for low-income market segments.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.