Sunday, October 28, 2012

Most of the low cost devices are good for nothing

If the Centre and state governments convert their stated intentions into actions, an explosion in tablet sales is around the corner. Several governments are lining up huge orders for low-cost tablets to either meet the computing needs of their staff or, in what is seen as a quasi-political statement, to hand out to citizens, mostly children. 

The intention currently visible from various governments adds up to 10 million tablets, according to numbers released by hardware body Manufacturers Association of Information Technology (MAIT). 
Although it is not clear over what period this offtake will materialise, this number is about five times the total sales that research firm IDC expects in India in calendar 2012. "The government is fuelling demand for tablets," says Vishal Tripathi, principal research analyst, Gartner India. 

This January, the Central ministry of rural development bought 600,000 solar-powered tablets from Bharat Electronics at $72 (Rs 3,600) per unit for its staff to conduct the socio-economic and caste census. In the pipeline is a jumbo-sized order of 5.86 million tablets from the ministry of human resources and development, which it plans to give out at a subsidised price of $35 (Rs 1,750). The first phase of this is for 100,000 units of the Aakash tablet, the second version of which is due to be released by Canadian manufacturer Datawind next month. 

Also waiting in the files are significant orders from at least four state governments - Goa, Punjab, Tamil Nadu and Uttar Pradesh - that went to polls in the past two years and whose ruling parties made the free supply of tablets an election promise. UP, for example, has promised free tablets to all students clearing the class 10 exam and Tamil Nadu the same to all students in government schools. 

And then, in what could set a precedent, there's also a plan to procure 795 tablets for Lok Sabha and Rajya Sabha MPs (members of Parliament) to reduce their consumption of paper. 

"In the government's case, it's like a blue ocean," says Gautam Advani, head of mobility, HCL Infosystems, a tablet manufacturer. "Plans are yet to fructify. But if it all comes, the volumes will fuel growth." 

According to IDC, 250,000 tablets were sold in India in calendar 2011, which is expected to increase to 1.74 million in 2012. 

"It (the government) is expanding the personal computer market and there are about 70 tablet makers in the market to meet that demand," says Tripathi of Gartner. Adds Venu Reddy, research director, IDC India: "Tablet price point and functionality (ease of Internet access) have converged to make it the right device for the masses." 

According to Alok Bhardwaj, president, MAIT, most government orders are expected to be for low-cost tablets (below Rs 5,000). "Governments have been trying for long to get a device at an affordable price point. Tablet fills that gap," says Milind Shah, managing director of Wish Tel, a manufacturer. 

The government's appetite for low-cost tablets is birthing manufacturing businesses. For example, Wish Tel, which started in surveillance systems (like security cameras), entered tablet manufacturing in December 2011 with the specific intention of catering to government demand. Shah says the company participated in the HRD ministry's low-cost tablet bid and was the second-lowest bidder, after Datawind. It has invested Rs 70 crore in a unit in Ahmedabad that has the ability to assemble 30,000 tablets every month. 

Pantel, another player, started in February 2012, with an assembly unit in China and Bangalore. The company imports tablets from China and sells half of its 100,000 units outside India. Says Vijendar Singh, managing director, Pantel: "Earlier the (government) slogan was 'one laptop per child'. Now, it's one tablet per child." Even though the government is an attractive customer, not everyone is enthused about this market. Says Tripathi of Gartner: "Most of the low-cost devicesare good for nothing." 

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