Monday, October 17, 2005

US-based semiconductor maker AMD said it would enter a joint venture with an Indian firm to sell personal computers for the same cost as cellphones.

The company said it had joined with local technology firm HCL Infosystems to sell a personal computer for less than 10,000 rupees (220 dollars) to boost ownership in the nation of one-billion plus people with only 15 million users.

That is in line with the cost of cellphones with a camera which retails for about 8,000 rupees in India.

The computer, which uses the open-source Linux operating system, includes a 1.6 GHz processor, a 15-inch monitor and 40 gigabytes of hard drive space.

“Why is it that every Indian doesn’t have a PC on their list of things to get this Diwali but the cellphone is there?” said Ajay M. Marathe, president of the Indian arm of AMD. Diwali, the Indian festival of lights, is traditionally the biggest shopping season in the country.

But among households, personal computer use is still low, though sales jumped about 20 percent in the year to March 2005, said Vinnie Mehta, president of the Manufacturers’ Association for Information Technology, an industry lobby group.

By contrast, China has more than 50 million users and one of its firms, Lenovo, this year bought the personal computer manufacturing arm of IBM.

India’s technology minister said earlier this year that the government wants the number of personal computers to swell to 50 million and has wooed companies to the country to reach the goal.

AMD’s rival, US-based Intel, gained the limelight last week with its plans to market a similarly priced insect-resistant, dust proof computer to rural areas by December.

The Indian company Xenitis was the first to announce plans in March this year to sell a computer that costs less than 10,000 rupees.

But the ready-to-use computers are not the only low-cost options for India.

Chennai-based Novatium has the “thin client,” a computer-like product for 5,000 rupees (110 dollars) which connects to a server to somewhere else that does the actual computing.

India has earned a reputation worldwide for providing software and computer support services to some of the largest companies in the world. The country has more than 64 million cellphone users and adds 2.5 million each month as its telecom industry becomes more open to private firms.

But companies say that the cost of personal computers has to come down to reach India’s growing, but price sensitive middle class, particularly rural residents, variously estimated at 100 million to 250 million people.

“The bottom of the pyramid is where we believe our fortunes lie. That is the underserved market today,” said Ajai Choudhry, chairman of HCL Infosystems.

That is why the focus on price and 10,000 rupees is viewed as the point where Indian consumers are willing to buy a single big-ticket such as televisions or cellphones, Mehta said.

“There’s a lot of learning from the television revolution,” Mehta said.

“In the 1980s prices came crashing down to 10,000 rupees, a plethora of cable networks arrived with channels in local languages — that’s been put to use in the information technology revolution now,” said Mehta.

Mehta added that falling Internet connection prices and financing options like bank loans could do a lot to expand computer ownership in the country.

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