Laptops for a song

SPOTLIGHT: Low prices do not necessarily mean cheap quality, says laptop maker LG Patel of Allied Computers International.

What is common between designing missiles and developing a cheaper version of the ubiquitous lap-top? Nothing, perhaps; but the indefatigable Gujarati entrepreneur's spirit inspired former British Aerospace scientist L G Patel to jump into the untested business of cheap laptops and come out trumps.

Patel launched an under-Rs 30,000 laptop under the brand name Allied Computers International (ACI) last year, just when more and more upwardly mobile Indians were eyeing cheaper Chinese models.

In the last one year, he has managed to sell 10,000 laptops. This year, emboldened by the success of his strategy, Patel has dropped prices further, to less than Rs 20,000.

Patel who has been doing business in India since 2000, reported a turnover of Rs 24 crore in 2005-06 and expects the figure to grow by eight to ten per cent in 2006-07.

"With the kind of capital I had, I couldn't have started a business designing missiles or rockets. But I had been studying the developments in the hardware industry for a long time and was convinced that the time was ripe for launching a low cost laptop in India," says Patel of his foray into the lap-top business in 2004.

By then, he had already been in the business of servicing lap-tops for four years and knew all the suppliers and exactly which corners to cut.

"We source our components from manufacturers who are not known brand names, but who don't compromise on quality. We use Via Processor chips in our lap-tops. Their chips power 90 per cent of the mother boards, but unlike Intel, they are not a known chip-maker. Had we gone with Intel, we would have incurred their overheads too," he says.

"Another reason we can sell cheaper laptops is because Intel users like Del or Toshiba are big names themselves, and have large overheads and brand names to service. Fortunately, we are a small company, so our overheads are also tiny," Patel explains.

"Last but not the least, we can offer laptops at prices way below the market because we have a very strong and vibrant after sales division where we service all brands of lap-tops. A substantial portion of our revenues come from the after sales service division. This has also allowed us to shave off margins further."