Low-cost PCs come a cropper

Precisely a year back, the Indian market was abuzz with the talk of a personal computer (PC) which cost less than Rs 10,000. Newspaper advertisements, hoardings and billboards screamed with messages such as Xenitis' 'apna PC', 'amchi PC' and 'amar PC' and Sahara's 'Dare to Compare'.

The situation is different today. Analysts and vendors agree the sub-Rs 10,000 (sub-10K) PC has hardly made any dent in the Indian consumer market. In fact, the latest IDC report notes the contribution of the sub-10K PCs in the total desktop PC shipments in India has dropped to less than 1 per cent.

In the fourth quarter of 2005 "� i.e. within six months of its launch "� these PCs just accounted for about 2 per cent of the overall PC market shipments in India whereas for the same period the Indian client PC market witnessed a 26 per cent year-on-year growth in unit shipments.

The sub-10K PC actually cost Rs 13,000-14,000 when one included local taxes and delivery charges. Further, the PCs had basic processors powering them "� either Celeron-based or used a VIA processor.

Piyush Pushkal, Assistant Manager, Personal Computing Research, IDC India, notes that those who were offering these PCs, such as Sahara Computers have now completely stopped production of these PCs.

Experiments similar to the sub-10K PC include Wipro's Janata PC and iNabling Technologies' e-mail device or the handheld-device Simputer which met a similar fate.

And Nicholas Negroponte will soon launch his $100-150 (around Rs 4,500-6,000) laptop for students in Thailand, Libya and other developing countries as part of the One Laptop Per Child project in 2007. However, it has a free operating system (Linux) and other basic features and is primarily meant for education in rural areas.

So why do low-priced PCs not have mass appeal? Industry players aver that in the Indian PC market, other than in Tier I cities, brand awareness is very low. Though the announcement of the sub-10K PC itself did not materialise into immediate sales, it did help in increasing footfalls in PC retail outlets.

George Paul, ex Vice-President, HCL Infosystems, says, "While the consumer came to the showroom in response to the new price point, they actually end up buying PCs in the range of Rs 12,000-15,000, which match their specific requirements and offer them a value proposition."

Take for instance Xenitis Group, the Kolkata-based company was one among the few who announced the availability of sub-10K PCs. Though the company denies giving any exact figure of the total sale of these computers, what it does agree to is that the announcement brought them volume business.

Agrees S Das, country manager, Xenitis Group, "We made headway in the market and gave a new dimension to the market. Having said this sub-10K PCs are just one of the many offerings that we have." Their lowest end desktop model is priced at Rs 9,990 which comes with a Cyrix-based chip.

eSys was another company which jumped on the sub-10K bandwagon. Though price is something which the company feels is not the answer for gaining market shares.

But then they were in it just to test the water. "The PCs that were offering were on Cyrix-based platform but then the same offering is not available for the Intel or AMD-based PCs," says Rajeev Bajpai, GM, eSys.

Says George Van Der Merwe, COO, Sahara Computers & Electronics, "The market showed a very positive response to our offering, which we made, by launching 10K PCs in the market. We now plan to launch a range of products to meet the requirement of new customers."

Whatever the case, vendors like Zenith have long argued that for PC penetration to increase, there's no point in trying to keep on lowering prices. What should be done, they argue, is to lower the prices of software "� the operating system and applications.