Tuesday, October 4, 2005

CThe low-cost computer was originally meant for farmers in India or residents of favelas in Brazil. But starting Sunday, U.S. consumers of modest means or those just looking for a good deal can also get a $299 computer.

The Personal Internet Communicator, a brainchild of chip company Advanced Micro Devices, went on sale at Radio Shack over the weekend. The deal is a departure for AMD as it was specifically designed for developing countries. AMD first launched the device in India nearly a year ago.

Along with the product launch, the chip maker has also set a lofty goal of connecting 50 percent of the world?s population to the Internet by 2015. Today, about 15 percent of the planet?s population is connected.

AMD, based in Sunnyvale, California, will add China and Turkey to the list of developing markets that will get its cheap computers in the next few months. And the company is working on selling the PICs in Russia.

But the chip maker decided that maybe, just maybe, there could be a market in the United States. AMD put together the deal with Radio Shack in six weeks. The nation?s largest electronics retailer will sell the device under the brand Presidian.

Billy Edwards, chief innovation officer at AMD, said there?s a domestic demand for PICs for students, seniors, and other consumers. While an average PC from Dell or Hewlett-Packard is built to perform a variety of tasks, many consumers use their computers for word processing and surfing the Internet only.

?People want something simple, durable, and reliable,? Mr. Edwards said.
Hurricane Katrina Donations

AMD also generated some buzz for PICs by donating nearly 400 of them to help people displaced by Hurricane Katrina get in touch with their loved ones and find information. Mr. Edwards said law enforcement officials and relief workers liked the design and size of the PICs.

A PIC is not your typical computer. It?s roughly the size of a lunch box and weighs three pounds. The fan-less device comes with USB ports, a hard disk drive, and headphone/microphone jacks. The computer comes with a mouse and keyboard, but not a monitor.

Run on the Windows CE operating system, the PIC also comes pre-installed with Microsoft?s Internet Explorer and PowerPoint, Macromedia?s Flash Player, and SoftMaker?s word processing and spreadsheet programs.

The PIC is a poor choice for consumers who want photo and video editing and management features, or those who enjoy playing graphics-rich games.

The computers are currently available in India, Brazil, the Caribbean, and Mexico. But they are not sold through retail stores. Instead, AMD teamed up with telecom providers, who bundle the PICs with services and charge a monthly fee.

In Jamaica, for example, Cable and Wireless offers various payment options that start with a $15 monthly fee for the PIC and $29.95 a month for the basic Internet service.

The PICs in those markets also carry the brands created by the operators. AMD, which makes money by selling its Geode processors and software for running the chips, contracts with Solectron of Mexico and FIC of Brazil to manufacture the computers.

Competition With Customers

As much as AMD is loathe to admit it, its low-cost computers will compete with discounted PCs now made by many of its customers.

?PIC is more likely to compete with low-end PCs running Windows,? said Nathan Brookwood, a market analyst with Insight 64, which does consulting work for AMD.

AMD wouldn?t be the first company that peddles devices targeting would-be Internet users. Microsoft sells its MSN TV 2 Internet & Media Player for $199.95 and targets seniors and other technology-shy consumers also.

Other companies also attempted to make and market so-called Internet appliances before but failed when they realized that consumers didn?t want to pay for a gadget that mainly hooks you to the Internet when they could do the same through PCs and other equipment they already own.

?PIC does a lot of different things. It does address a variety of needs,? Mr. Brookwood said.

Neither is AMD unique in making cheap PCs available in developing countries. Its chief rival, Intel, and computer makers all have done the same. Intel has been working with PC makers in countries such as China and India to design specialty computers, such as a heat-resistant one that filters out dust and can run on a car battery for rural residents.

AMD is making profit in the PIC business, but Mr. Edwards declined to provide sales or shipment figures.

Meanwhile, an MIT scientist has plans to develop a $100 PC for children in emerging economies.

Source: Red Herring (link opens in a new window)