Stanford Progressive

The Prince and the Pauper: Slowly Growing Closer

By Nik Milanovic, Business Manager, published October, 2010


Just as people lined up around street corners to wait for their $500+ touchscreen iPads in April, in India they will be lining up in anticipation of a similar soon-to-be-released laptop. The difference? The laptop will cost $35 instead of $500.

(Courtesy: Flickr Creative Commons)

How much can you fit in a $35 laptop? According to the Indian government, the device features a built-in word processor, video conferencing, a multimedia player, a searchable PDF reader, and best of all, a web browser with Wi-Fi connectivity. Oh, and it is a touchscreen device, just like the iPad. And it can be charged and run on solar power. It seems that the Indian government has developed a sort of golden bullet to the market barriers for poor entrepreneurs and students.

Much information regarding the laptop still remains a mystery, such as its RAM, the display resolution, the screen size, and the kind of processor it employs. It requires an external storage device, such as a key drive, to store data over 2 gigabytes. Regardless, the Indian government has still managed to develop a personal computer as cheap as the country’s most inexpensive cell phones and cheaper than the $100 model developed by the Massachusetts Institute of Technology that was supposed to lower the hurdle for poor consumers. To put the price in perspective, most graphing calculators run the gambit in price from $50 to $120.

The laptop was developed through the combined efforts of the Indian Institute of Technology in Kanpur, Mumbai, Chennai and Kharagpur, along with the Indian Institute of Science in Bangalore and the government-operated National Mission on Education.

On top of this, the Indian government has opened the field to domestic and international developers and manufacturers to find ways of cutting down the cost of the machine. “If more innovations will emerge, the cost of the gadget might be further reduced to $20 or $10,” said Mamta Varma, a spokeswoman for the Human Resource Development Ministry.

The laptop is being hailed as a solution to allow students in India access to affordable education. The National Mission on Education is working currently to spread internet connectivity to the nation’s schools and 22,000 universities, making India unique among nations in the area and leapfrogging its neighbors in development.

Doing business in India is not the easiest thing in the world. The World Bank and International Finance Corporation rank India 133 out of 183 countries regarding the ease of doing business. India scores the second lowest ranking in southeast Asia alone, scoring last of all countries in facility of starting a business. The other areas in which it scored lowest are dealing with permits, enforcing contracts, and paying taxes.

It is not inexpensive for the average entrepreneur to run a business in India, either. The World Bank estimates the cost of starting a business in India is around $585.32 (27,344 rupees.) However, research by Amarnath Bhide, Glaubinger Professor at Columbia Business School, estimates the cost of a startup in India to be even higher. Bhide discovered that most Indian firms required an average startup capital of about $8,300 (375,000 rupees), whereas the average non-IT US startup only needed about $10,000. This is especially relevant for a country as poor as India with a low purchasing power parity.

With new laptops lowering capital costs for business owners, the possibilities are endless. Imagine a local store in a small town that can now conveniently keep an online or on-file record of its sales and purchases. Imagine a chain business where owners can communicate via wireless web-conferencing. Outside of the academic world, where this achievement is being highlighted the most, the potential of such a laptop is massive.

Even more promising is the spurt of future innovation that this development promises. Designers and developers may improve upon the first model to build not only better models, but also systems to complement these models in an effort to gain access to the giant consumer market for such cheap device. These developments confirm C.K. Pralahad’s assertion in his book, The Fortune at the Bottom of the Pyramid, that innovation paves the way for firms to target the poor not as dependents but as consumers. The laptop, if successfully marketed and introduced in India, will bring with it a host of new demands: for wireless access, for other types of compatible programs such as Excel, and for add-ons and other synchronous systems.

Will this cure inequality and poverty in India? No. But is this a start to lowering the barriers to doing business and providing self-supporting income? Most definitely. As India’s minister for human resource development Kapil Sibal puts it, “This is real, tangible and we will take it forward.”

References:

http://www.headlinerwatch.com/8948/35-laptop-computer-steal-brought-india.htm

http://blogs.wsj.com/indiarealtime/2010/07/23/going-for-cheap-indias-35-laptop/

http://www1.voanews.com/english/news/asia/India-to-Offer-35-Laptop-for-Students-99104579.html

http://www.rediff.com/money/2006/apr/08guest1.htm


2 Comments »

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