Mission Impossible: A $100 PC?

By Ram Mohan Rao Published Date
01 - Dec - 2004
| Last Updated
01 - Dec - 2004
Mission Impossible: A $100 PC?

How low will PC prices go? Is a $100 PC a dream? Will computing for the masses ever become a reality? The experts and professionals speak out

If you are reading this, you are probably on the happy side of the Digital Divide—a term that’s been bandied about too long, but which is nevertheless increasing in importance, especially in developing countries such as India. Think about it: on the other side of the Divide, just about five million of India’s 1,200 million people own a PC, and only two million are connected to the Internet. What factors are responsible for these sad figures? Will they change? And what is being done about it?

$100. That’s the price Steve Ballmer’s vision dictates for an affordable computer in poorer countries such as India; and that is supposed to include the $30 for Windows XP Starter Edition. This is well in keeping with Bill Gates’ statement of long ago that hardware would effectively be free at some point. Of course, Starter Edition is crippleware, and one wonders why Microsoft didn’t simply downprice the Home Edition instead of coming up with a new edition altogether—but that is not the issue. The point is, is $70 for the hardware feasible?

As much at issue is the question of what use computers are being put to anyway, whatever the price point.

Bytesforall.org is a portal that discusses, and brings together people interested in, the question of computing for the masses in South Asia. Frederick Noronha, co-founder, is of the opinion that “while PCs and IT have so much power, we’re pushed into using them in entirely wasteful ways and in a manner that hardly addresses basic human problems.” It is a fact that the typical home computer amongst the digitally wealthy is most used for games and other entertainment; next comes communication and Web surfing; and other uses, such as education, rank a distant third. But thinking about those on the other side of the Divide, what use is a PC?

Essentially, communication and education. These are two areas where computers can genuinely empower people. Ashok Jhunjhunwala of IIT-Madras has long had a vision in this direction.

Ashok Jhunjhunwala’s Vision

Going by the figures, we need an urgent solution to the problem of the Divide. Noronha says, “It will not necessarily be in terms of cheaper individual PCs, but in terms of sharable computing, reused computers, whatever.” Revisiting the question of what computers are being, and will be, used for, Noronha says: “People need to be using PCs effectively for their purposes. As of now, we seem to be getting a growing number of computers, and using them highly inefficiently. One example is the Cyberage scheme in Goa, where more than 17,000 students got computers—which are used largely highly inefficiently.”

If Dr Ashok Jhunjhunwala of IIT-Madras had his way, we would see computing based on the STD booth model. Jhunjhunwala’s goal is to providing Internet connectivity and telephony on a commercial basis to some 600,000 villages across India. Jhunjhunwala has long been working with his TeNeT group of IIT-Madras in Chennai to work out the technologies and economic models that make this feasible and sustainable.

Ashok Jhunjhunwala’s corDECT WiLL solution has already been deployed in several countries: Madagascar, Brazil, Fiji, Nigeria, Iran, Egypt, Argentina, Kenya, Yemen, Tunisia, Angola and Nepal.
 In Brazil, the “Computador Popular,” including the monitor, has an estimated price tag of $250 (about Rs 11,200). It was built by academics at the behest of the government, which is anxious to help low-income Brazilians span the Digital Divide. Sergio Vale Aguiar Campos, a professor at south-western Brazil’s Federal University of Minas Gerais, said that the Brazilian government had basically asked, “How low can you go?”
 In China, basic desktop computers powered by V-Dragon CPUs and sufficient to browse the Internet would cost as little as $200. Culturecom Holdings Ltd says its V-Dragon CPU retails for only $15-$30. Co-developed by IBM and based on the Midori Linux OS, the V-Dragon architecture is aimed at the Greater China market. Culturecom is hoping that its CPUs will help to bridge the Digital Divide in China.

At the prevalent rates, telecom is not affordable to more
than two or three per cent of households in India
Dr Ashok Jhunjhunwala
, Professor,
Dept of Electrical Engineering, IIT-Madras

“For its 180 million households, India has about 35 million telephones, eight million mobile and two million Internet connections. The Internet is power, and the country needs 200 million telephone and Internet connections in its cities, small towns and rural areas,” argues Jhunjhunwala. And, he says, subsidies are not going to achieve this.

Dr Ashok Jhunjhunwala of IIT-Madras has a vision for
computing in India based on the STD-booth model

“At the prevalent rates, telecom is not affordable to more than two or three per cent of households in India.” Jhunjhunwala’s solution is to reduce costs. This, he believes, would take phones and the Internet to India’s approximately 650,000 villages and 2,000 very small towns.

State-run BSNL already has 25,000 rural exchanges, of which 70 per cent are connected on fibre. If this is added to a wireless system with a 10-km range, it would cover over 80 per cent of villages in India, he argues. Given India’s population density, this could offer one Net connection for every 500 people, and one to two connections per village.

If optimally utilised, the cost of Jhunjhunwala’s corDECT wireless in local loop (corDECT WiLL) solution makes costs plunge to Rs 10,000. This brings in one 35/70 Kbps Internet connection plus a simultaneous telephone link. If the area is sparsely populated, the cost goes up to Rs 14,000.

“Today, more than 25 per cent of India’s total telephone revenues comes from STD booths, and almost 30 per cent of the population has started to use telephones,” says Jhunjhunwala. He says that the Internet “enables people. It is changing the way we live... those without the Internet will have a tremendous disadvantage as we go on. People with confidence and enabled people can make all the difference. We would like to see that all villages get reasonable speed Internet connection at the earliest.”

The Price Conundrum

Coming back to the question of whether a $70 computer is possible: (also see box “Ravi Pradhan: The Mouthpiece of the Masses?,” page 55) Sanjeev Keskar of AMD India is of the opinion that computers have already almost reached their lowest possible price points, and that a further reduction in costs is not probable or feasible. He says, “The CPU contributes 10 to 15 per cent of the overall desktop. There are other key components such as the motherboard, hard disk, monitor, RAM, CD-ROM… which are the major building blocks for desktops. We have seen for many years that technology is changing very fast in all areas of the desktop building blocks, and that the customer is getting superior technology products; but it is hardly seen that we start getting old technology at lower prices.

“For example, if you used to get a 20 GB hard disk at price x two years ago, last year you got a 40 GB at a similar price point, and tomorrow you will get 80 GB at the price point of today’s 40 GB. But you will not get a 20 GB at a fourth of the price of an 80 GB when the 80 GB becomes mainstream. The same is the case with CPUs … you get a better performing CPU at a particular price point.

“So with the current building blocks, the $100 price point is a dream unless some new revolution comes into existence.”

Since we have been talking about price, let’s put things into perspective. Forget about gamers and graphic designers for a moment. Also forget about flaunt value. How much does the hardware in India cost now, for a computer that most people, including office and home users, need? Here’s a reckoner.

Processor : AMD Sempron 2400 , Rs 3,250
Motherboard with onboard LAN card: Asus KM400, Rs 3,250
RAM: 128 MB DDR-333, Rs 1,100
Hard disk: Seagate / Samsung 80 GB, Rs 3,000
Mouse: Logitech first mouse, Rs 300
Keyboard: Logitech New Touch, Rs 275
Cabinet: HiS, Rs 1,000
CD-ROM: Sony, Rs 750
Floppy drive: Sony, Rs 350
Speakers: Creative SBS15, Rs 450
Monitor: Samsung 15-inch, Rs 4,700
Internal Modem: Rs 450
Total: Rs 18,875

HCL Infosystems’ Rajendra Kumar says the question is not about a “cheap” PC, but of something that means value for money. He cites budget requirements and upgradeability as key factors in pricing, and that HCL strives to cater to every market segment: that every product carries the same high quality that is expected. Asked about whether prices would come down, he says that the trend is there for us to see—home PCs that were typically seen only in metros are now seen in tier-2 and tier-3 cities.

We asked Ravi Pradhan of Via, the chipset and processor manufacturer, what should and could be done to bring the cost of PCs down. Pradhan is passionate about the issue of affordable computing, what people are buying and why they shouldn’t be buying it. He had a lot to say to us:

 We need to bring the duty structure down, which would bring down costs by 30 to 35 per cent.
 There is no $100 PC, and will not be. Even with duty cuts, it would still run up to $200.
 Via is promoting the PC-TV, which has no monitor, but a digital tuner. What’s the difference between a TV and monitor? Nothing but resolution and the inbuilt tuner.  There are 90 million TVs, as against 10 million PCs in India. People will buy TVs anyway for entertainment. The PC-TV concept might really work. It is in the works in various countries such as the US, and across Europe.
 People need to get away from the “GHz concept.” Indeed, Intel dropped the 4 GHz platform.
 When you buy a TV, you never ask about the CPU and what processing power it has. Similar is the case when you purchase a washing machine: so why should you bother so much about the CPU when you buy a computer?
 “The charm of the GHz” is gone by now, and Microsoft, Intel, etc. are looking at other things, like cheap PCs.
 You now have gigabytes of storage on the Net. You can store all your songs on, say, Gmail. When broadband comes in, just stream all your music. Why do you need tons of hard disk space?
 The PC is still an elite product. 0.3 per cent of people in India bought PCs last year, and only 0.1 per cent bought them for personal use—that’s one in a thousand. We don’t want to accept the fact that we (that is, those of us who own personal-use PCs) are in the “elite of the elite,” but that’s the fact.
 I wanted to donate PCs to a school in Kurla, Mumbai. There were 1,600 students, studying four languages, and there is not one telephone line in the school. Where would the connectivity come from?
 There is no system in place in India for rewarding cost-cutting. If a decision-maker spends Rs 3 crore instead of Rs 6 crore on IT—including cheaper PCs—he will not be rewarded for his move. And thus, people go on spending more and more, without questioning suppliers.

The requirements of a user in, say, a tier-3 city, are different from those of a user in a metro, and Kumar says that HCL tries to address these differences. His answer to how a PC can be made more affordable is that there should be PCs at every price point; essentially, that customisability and flexibility are key.

As of now, we seem to be getting a growing number
of computers, and using them highly inefficiently
Frederick Noronha
, Co-founder, bytesforall.org

Kumar issues a word of warning to those who purchase assembled PCs off the grey market, saying that there is always a risk involved - some parts, including hard disks, may be refurbished. Whether or not you get your money’s worth depends on how well the customer is educated, according to Kumar.

Via’s Ravi Pradhan disagrees violently with the idea of delivering superior technology at the same price points. Like Noronha, who says that computers aren’t getting cheaper but only becoming more and more glorified typewriters, Pradhan says that there isn’t sufficient education about what, or rather, “how much,” technology is needed. People and companies have their computer needs dictated to them, he says, instead of the other way round: the user should dictate his requirements. It should depend on the applications, Pradhan says; a typical small business, for example, that uses mostly office applications and the Internet, there is absolutely no need for Pentium 4s running at 3.2 GHz. But such systems keep getting sold, with very few people asking where all the technology is getting applied. With the exception of, say, gamers, and those who do graphics and 3D work, no-one really needs the kind of computers that are being sold today, especially in a country like India.

Pradhan assures us that computers will get cheaper. And Noronha, echoing Pradhan, says, “As long as 995 million people—assuming India has a thousand million, the actual figure is more—are without access to computing, there are bound to be efforts to reduce prices and spread access to more.”
As an aside, Noronha says about the PC industry: “It shouldn’t work with so much planned-obsolescence built into it. It hurts the buyer badly! It will keep computers unaffordable to all but a tiny segment in countries like India, while millions reach the garbage heap.”

AMD’s Personal Internet Communicator

Given that Internet connectivity is one of the prime reasons for wanting to own a PC, AMD’s Personal Internet Communicator (PIC), which was launched in October, deserves special mention.

“The PIC is designed to be an easy-to-use, affordable consumer device that provides managed internet connectivity and basic computing and Internet capabilities such as a browser, e-mail, office tools, and the ability to view images, multimedia files and standard format documents,” AMD’s Sanjeev Keskar says.

The PIC, bundled with Internet services, will be sold to VSNL’s broadband users at between Rs 300 to Rs 1,000 per month, depending on the service. VSNL aims to have two million PIC users in India over the next two years, according to Shashi Kalathil, head of the broadband business of VSNL.

The Affordable Computing Initiative

Pradhan says that the “affordable computing solutions lab,” which got inaugurated in IIT-Bombay in April, is a first step towards the goal of an affordable PC.

People need to get away from the “GHz concept.”
Indeed, Intel dropped the 4 GHz platform
Ravi Pradhan
, Country Manager-India, Via Technologies

Sixty computers of various configurations have been set up at the lab. These can be used by anyone who wants to test their software functionality and hardware requirements. Pradhan’s next goal is to build links and similar centres with other IITs.

If his plans materialise, there will be around 30 such labs across India. “We would like the IITs to give a third-party, honest opinion.” This plan, said Pradhan, could cost “$1 or 2 million” (Rs 4.5 to 9 crore) and take up to two years to implement.

Pradhan is confident that India, where the market is as price-sensitive as it is, would do well to avoid the herd-mentality of getting the fastest and latest processors for tasks that do not require them, such as office applications.

“People say lowering the cost of computers (to Rs 15,000) is achievable in the next two years. Actually that’s not true. It’s here today,” he says.

Each computer—with an 800 MHz processor, 128 megabytes of RAM, a CD-ROM drive, a floppy drive, a 20 GB hard disk, an internal modem, keyboard, mouse and monitor—costs Rs 15,000 plus taxes.

What Microsoft And Intel Are Doing

Rishi Srivastav, Business Group Lead, Windows Client, Microsoft India, has this to say about reaching out to those on the other side of the Divide: “PC penetration in India is less than 2 percent. We are working closely with Government with the mission of enabling digital inclusion and IT opportunity.  For instance, with Windows XP Starter edition, we are working with various state governments on the People’s PC program aimed at bridging the digital divide among people in Indian states through various campaigns, which would encourage larger penetration of PC in the home segment.”

About the $100 PC, Srivastav says, “Microsoft is committed to reach out to governments and geographies with the mission of enabling digital inclusion and IT opportunity.  As evidenced by our recent launch of Windows XP Starter Edition and other digital inclusion initiatives such as the Local Language Program, Partners in Learning and Unlimited Potential, we will continue to explore solutions with government and technology partners to enable digital inclusion and create local social and economic opportunity.”

Microsoft and Intel have for long been attracted by the prospect of the 300 million new users who will buy PCs in the next five years—most of them in countries not on the developed-countries list, such as China and India.

Intel has been quietly trying out a small, low-cost motherboard with an embedded Celeron CPU. The platform has been code-named “Shelton.” Although there have been no official announcements, Shelton has already found its way into products in China.

In The Years To Come

We asked Noronha of bytesforall.org what he thinks the scene will be like a couple of years from now. Will people be buying computers more appropriate to their usage patterns? Will wastage reduce? Will PCs really empower the masses? What will the landscape be like, in general?

Noronha is pessimistic. “More PCs, more power, more PCs in junkyards, more people without access to them, more talk about lower prices, and yet IT going increasingly out of the reach of the common man—especially in the poorer parts of the globe—and the grossly inefficient use of a powerful tool. Sad, but we see little evidence that things are changing for the better. It’s mostly a business-as-usual attitude.”

Ram Mohan RaoRam Mohan Rao