Despite Low Price Tag, $35 Laptop Still Inaccessible to Many

A $35 price point for a laptop generates a lot of buzz. The announcement of such a device ready to market in India, with its robust economy and a rapidly growing tech center, is a huge development. India already boasts some 81 million Internet users, but with a population of 1.1 billion that represents a paltry 7.3% Internet penetration rate. This new device could help unlock the other 92.7% of untapped potential.

The $35 question is: Will cheap accessibility mean a group of new computer users who are empowered by the device to take to the internet?

Is a $35 price point low enough?

At $35, it looks cheap by US standards. With an average gross domestic product (GDP) of $46,400, the prototype computer is barely the price of a nice steak dinner.

But given that the average India GDP is $3,100, the price of a new laptop represents about 1% of their annual income.

Is this cheap? Maybe. Is this going to be something everyone is going to rush out to buy? No.

But what if it drops in price as Kapil Sibal, India’s Minister for Human Resource Development, has predicted? Are average citizens going to take to the computer, which is eventually expected to drop to $20 or even $10 once it enters mass production?

What about the practical components?

According to the wire report the laptop, developed by India’s top Information Technology colleges, has no hard disk. It is instead using a memory card, much like a mobile phone, which can run on solar power. It is expected to run the Linux operating system.

The success of such a device relies on cloud computing services like web mail and web storage. It’s unlikely to be able to run applications, unless the device is customized to run applications off its memory a la the Apple iPhones and iPods.

Maybe it’s my bias from using personal computers, but lacking a hard disk or other form of mass storage counts as a disadvantage in my book. Would there be enough functional apps available to be tapped into to make it practical for business or productivity use?

Then there is the issue of red tape

The biggest hurdle to mass adoption has to do with red tape. The various regulations Indian government has put up has historically got in the way of industry growth.

For example, there’s discussion on sites like the PayPal blog about users having difficulty accessing the payment provider to make and receive payment. As some India bloggers have noted, withdrawing funds to a personal bank account is difficult if not outright impossible due to the Reserve Bank of India’s policy requiring some to register their businesses online.  As if to bring the point home PayPal announced today that starting July, 29 2010 users in India will no longer be able to make electronic withdrawals from their PayPal accounts. Withdrawals will only be available by check.

The reason for such an abrupt change by PayPal? Compliance with regulatory redtape. Such problems are hardly conducive to ecommerce.

The final outlook for India’s cheap laptop

Let’s look at the impact of the cheap laptop:

1) Pricing: $35 simply isn’t cheap enough for mass adoption and until it drops to the $10 price point, it will remain out of the fiscal reach of most people in India.

2) Performance: Is cloud computing reliable and scalable? Will there be enough productivity tools? Neither question is clear.

3) Red tape: No amount of tech innovation is going to solve political atrophy. If there are conditions like India’s requirement of business registration to merely buy or sell something online, these laptops might be as useful as pocket calculators or fancy MP3 players.

While the emergence of such a laptop does herald India’s continued growth in the electronics sector as well as their internal commitment to mass adoption of technology, the $35 dollar laptop still has a lot hurdles to overcome. What do you think the $35 laptop’s impact will be?

About Andrew Wee

You can find Andrew Wee on Twitter @andrewwee

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