A $40 Tablet Tries to Compete

A $40 tablet, by selling in places Silicon Valley barely notices, may change the competitive landscape.

The inexpensive device is called a Ubislate 7Ci, made by a London company called Datawind. Its initial market is schools in India. After a rocky start, Datawind's newest device is a fully functioning 7-inch tablet, with a touch screen, Wi-Fi capability, a microphone and camera, a headphone jack and a USB port. In other words, pretty much everything you need to be fully functional on the Internet.

In a test, it sent e-mails, downloaded two books and a first-aid guide, took and sent pictures, and offered several games without difficulty. There is a video that shows it in action, and another that lists its internal specifications.

Every criticism a Western reviewer might have with this tablet (the keyboard is small for big American fingers, the camera resolution is low, the software has lots of ads) must also meet with the riposte, “Yeah, but…it's only $40.” For people who can't dream of owning even a first-generation iPad, it's more than enough.

“The biggest problem we have with this device is that none of the decision makers, the reviewers, or the trend setters are our customer,” said Suneet Singh Tuli, the chief executive of Datawind. “Personal computers caught on in the U.S. when the price got to about 25 percent of the average person's monthly income. In India, where people make $200 a month, that is about $50,” added Mr. Singh, who was born in India and raised in Canada.

In truth, that may not be the biggest problem Datawind faces. An early version of the product was of lesser quality. Datawind accepted more than 2.5 million orders to buy the device when it was announced, and had no capacity to manufacture at that scale. It even took money from some customers and then delayed shipment to them by up to 12 weeks, owing to manufacturing problems. The company was criticized by the media in India.

Mr. Singh says that 80 percent of the prepaid orders have now been delivered, and those customers were given a higher-end unit at no charge. If so, Datawind could regain its credibility. Its next challenge is to meet a government order for 100,000 units, destined for India's schools, by the end of the year. After that, he expects to compete in an order for five million units for schools.

Inexpensive devices are likely to come to the United States and European markets with some of the hardware costs offset by advertising or by content sales through the device. “Google's Nexus 7 tablet is $199 now, but people are saying it will be a $49 device in a year or two,” says Ken Dulaney, an analyst with Gartner. “Content sellers will underwrite hardware costs, so that devices eventually end up being free to consumers.” Stacy Smith, Intel‘s chief financial officer, said his company expected to see such tablets, and will compete for the business.

Mr. Singh say s his cost of assembly for a Ubislate is about $37, and he sells it to the Indian government for $40. He keeps the price low by using Google's free Android operating system and cheap semiconductors found in low-end cellphones. In addition, he says, his company figured out how to make its own touch panel to fit behind the liquid crystal display screen. The LCD is still manufactured by an outside company.

Eventually, he says, the government will equip nearly all of India's 220 million students with a tablet, along with low-cost Internet connections, and that other countries will follow. Printing and distributing books costs about $15 a year even in a poor country, so a device like the Ubislate that lasts just three years and offers a bigger range of possibilities can be competitive.

Those prices are significantly less than the One Laptop per Child computer, which as of 2011 had issued more than two million machines, costing about $200 each, mostly to the developing world. Those laptops, called XO, are manufactured by Quanta Computer of Taiwan.

Big sales to schools can help underwrite the cost of a mass-market product for adults in India and elsewhere, at a slightly higher cost that is offset by ads or possibly things like phone companies offering devices to get people on calling plans.

Mr. Singh is a long way from that level of mass production, but another competitor is likely to flood the rest of the world with cheap tablets soon. That could lead to an explosion of novel applications, similar to the online car sales and recruitment business that are moving into Africa thanks to cloud computing. Datawind has sponsored an applications contest for students, which generated a point-of-sale system for street vendors, who make $100 a month or less.

Any rival would need a cheaper tablet to compete with Mr. Singh, or it could just get used to a lot of ads.

This post has been revised to reflect the following correction :

Correction: October 20, 2012

An earlier version of this post misstated where Datawind's chief executive, Suneet Singh Tuli, was born. He was born in India, not Canada. He was raised in Canada.

Newswallah: Long Reads Edition

ReutersA magazine stand on a railway platform in Mumbai.

In a piece in Tehelka titled “Moment of the Muckraker,” Ashok Malik examines the role of activists like Arvind Kejriwal in Indian public life.  Mr. Malik compares them to the so-called muckrakers who emerged in America a century ago, in response to the excesses of the Gilded Age â€" writers and activists who delivered caustic critiques of corrupt institutions and powerful people.   Such attacks were loathed by the political leadership of the time, but the muckrakers served a purpose by keeping crony capitalism and graft in check.  Mr. Malik poses a timely question: while the allegations made by Arvind Kejriwal and India Against Corruption in the past few months have shed light on various issues, have they served any lasting  purpose?

The author writes:

Indian politics finds itself at an astonishing crossroads. The only choice is an absence of choice. As a decade of high growth and cocky ambitions, of rapacious resource handouts and robber-baron capitalism ends, the mood is somber and angry. Between the docile, enervating and eventually self-defeating slogan of “Ma Maati Manush” and the grasping ferocity of “Zan Zar Zameen,” surely India deserves something better and more enlightened. That something better and more enlightened may not be Arvind Kejriwal and IAC - but if he has triggered a process of fear and loathing, maybe, just maybe, that's what we needed.

In Down To Earth, Jyotika Sood has an in-depth analysis of the battle over the Cauvery River. Farmers in drought-stricken Karnata ka are protesting because water from the river is being diverted to the neighbouring state of Tamil Nadu by order of the Supreme Court. Ms. Sood examines the genesis of the conflict, which she says has its origins in agreements signed in 1892 and 1924 between the Madras Presidency and the state of Mysore.

The problem is exacerbated by the reliance of both states on rice, a water-intensive crop.  While water for agriculture is the main issue, the supply of drinking water is also a source of anxiety, she writes. Looking ahead, the author argues that the issue can only be resolved in the short term if farmers from both states are educated on how to put the available water to the best use.

This week in Open, a piece titled “Opposition in Snooze Mode” analyzes the failures of the Bharatiya Janata Party in Maharashtra. The writer, Haima Deshpande, argues that the party's two key leaders in the state, Eknath Khadse in the legislative assembly and Vinod Tawde in the council, should be working to best  the government but are letting the opportunity slip. With the next election coming up in 2014, the two  leaders are unlikely to topple the Democratic Front, an alliance of the Congress and the Nationalist Congress Party, she writes.

The author writes: Over a decade of occupying opposition benches seems to have deadened the instincts of the saffron combine. At a time when both the Congress and NCP are faced with corruption scandals, reportedly due to the dubious dealings of state cabinet ministers, the opposition is fumbling for a strategy to gain a political advantage.

The Shiv Sena, the BJP's ally in Maharashtra, has lost its power, Ms. Deshpande argues, and the opposition alliance itself is fractured, with leaders from each of the two parties vying for the position of chief minister.  The opposition is unable to hold the government to account or change its course, she says, and unless it produces new leaders, the Democrat ic Front is likely to remain in power.