Why a $35 Tablet Would Never Succeed in the U.S.
How unfair! India is getting its long-promised $35 tablet, yet we are spending $500 for an iPad.
I have to admit that I am dazzled by the media coverage of the launch of the Aakash, the world's cheapest tablet. It will cost $50 per unit for the Indian government, $60 in retail and possibly as little as $35 once the volume increases. When we are able to contain our jealousy, however, it's easy to see that this tablet is neither a discounted iPad nor a product that could succeed in the Western hemisphere, despite its impressively low price.
More than a year ago, when it was announced that India would be developing a $35 tablet, many of us were quick to question the ability to take such a device from an idea to a commercial product. In the end, we all know what happened to the OLPC, which was supposed to sell for $100 but finally sold for $190. The Aakash took a similar path, as the retail price of the device is now almost twice as high as the original target price.
The Aakash tablet is designed by Canada-based Datawind and comes with a 7-inch 800x480 pixel display, 256 MB of RAM, 2 GB of NAND flash storage and a 366 MHz Connexant processor. There is also an SD expansion slot with two versions. One has Wi-Fi only, whereas the more expensive $60 version has SIM card-based GPRS cellular connectivity.Datawind said that the total price of the base model is $38, but it is actually $50 when additional fees such as local taxes and a replacement warranty are included. The Indian government apparently guaranteed a purchase volume of eight to ten million units by March 31, 2012. The first 100,000 units will be built within the next six weeks in a factory in Hyderabad.
Higher-priced versions of the tablet will be coming to the U.S. in the future. This makes absolutely no sense to me. Would you buy a $35 or... Let's be realistic. Would you buy a $60 tablet that features the specs mentioned above? You may buy one, but I doubt that you would enjoy using it beyond the first few minutes. I need to expand on that.
Without having touched it, I am convinced that the Aakash is one of the best-designed computers I have seen in a long time – at least since Intel's bug-free computer. (That computer was offered in the early 2000s and was designed for rural Africa with features to keep insects out of the case. In addition, it could be connected to a car battery.) The Aakash tablet is a computer with a strong regional and cultural focus that caters exactly to the needs of a very specific group of people.
India has a population of about 1.14 billion people. The latest telecommunication data I could find from the Telecom Regulatory Authority of India indicate that 81 million of them, or 7 percent of the population, access the Internet today via wired or wireless devices. Only 9.45 million, or 0.8 percent of the population, have access to a broadband connection to the Internet. If only 7 percent of the Indian population access the Internet today (actually, the data go back to 2009), then we can conclude that Internet access is still a rarity in India. In comparison, 74.1 percent of people living in the United States access the Internet today and about 37 percent browse via a broadband connection, according to Nielsen.
It is clear that Internet access works differently in the U.S. than it does in India, and India will need, at least for now, different means to provide its population access to the Internet than does the United States. Let's go a little further by looking at wired versus wireless telecommunications in India.
The Telecom Regulatory Authority of India states that there were only 36.2 million wired phone connections in India in 2009. Keep in mind, there are 1.14 billion people – and only 3 percent have a wired telephone. The reason is the extent of rural areas in India, which has given the country a good reason to focus on wireless communications. According to the Telecom Regulatory Authority of India, there are currently 635.5 million active cell phone subscribers in India, which translates to a market penetration of 54 percent. People in India are used to paying way too much for their ability to communicate wirelessly (much more than we think we are paying for our communications). A typical smartphone in India costs about as much as it does in the U.S. – about $600 without a contract. However, the average income per capita in India is just $1,039 per year, which means that advanced communications via a mobile computer that is more than just a feature phone will require people in India to invest more than half of their annual income into such a device. Would you be willing to do that here in the U.S., considering that our current average income is $46,381 per capita?
There is a real need in India for a basic, low cost Internet device that may also serve as a cell phone – one such as the Aakash. An expenditure of $60 is about 6 percent of the annual per capita income in India, which is far more acceptable. It is comparable to about $2,800 here in the U.S. It isn’t cheap, but it’s better than $25,000.
In India, the Aakash almost certainly has a bright future. It perfectly fills a need and provides an affordable way to communicate and access information on the Internet.
In the U.S., it is a different story. You can imagine the first reviews with complaints about a terrible display, lack of storage space, slow processor and cheap materials. We have different expectations, and while it may be cool to own a $35 or $50 tablet initially, it has an older version of Android where you will need a vastly more capable device to run the applications in which you may be interested. There are no such expectations in India. You can't miss what you don't know, and you will be happy with it if it enables you to do more than you could before. The Aakash will enable millions of people in India to access the Internet – people who could not have previously afforded Internet browsing. Also, imagine the new ways of wireless communication it may facilitate.
A $35 or $50 tablet is what India needs today. In the U.S. this tablet would definitely fail.