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| Suneet Tuli, CEO of Datawind, holds up the commercial version of his company's new Aakash 2 tablet |
By Christopher Mims
Suneet Tuli, the 44-year-old CEO of UK/Canadian/Indian startup Datawind, is
having a taxing day. “I’m underwater,” he says as he struggles to find a cell
signal outside a restaurant in Mumbai. Two days from then, on Sunday Nov. 11,
the president of India, Pranab Mukherjee, will have unveiled the seven-inch
Aakash 2 tablet computer Tuli’s company is selling to the government for
distribution to 100,000 university students and professors. (If things go well,
the government plans to order as many as 5.86 million.) In the
meantime, Tuli is deluged with calls from reporters, and every day his company
receives thousands of new orders for the commercial version of the Aakash 2.
Already, he’s facing a backlog of four million unfulfilled pre-orders.
We’re speaking over the same overtaxed cellular networks that he hopes will
enable Datawind to educate every schoolchild in India through the world’s
cheapest functional tablet computer. But it’s a losing battle, as his
connection to one of the 13 separate cell carriers in Mumbai buckles under too
much competing traffic. He has to repeat himself when he tells me the ultimate
price university students will pay for his tablet, after half its cost has been
subsidized by the Indian government.
In India, that’s a quarter the cost of competing tablets with identical
specifications. Similar tablets in China, the world champion in low-cost
components and manufacturing, go for $45 and up, wholesale.
Which means the Aakash 2 isn’t just the cheapest fully functional tablet PC on
the planet because the Indian government has decided it should be—it’s the
cheapest, period.
In the developing world, and especially in India, a country where one billion
people have a monthly income less than $200, every rupee matters. Aakash means
“blue sky” in Hindi, and that’s a fair description of Datawind’s goals for the
tablet. Ultimately, says Tuli, the government would like to distribute one to
each of India’s 220 million students. India has 900 million cell phone
subscriptions, but in a country where smartphones are rare, 95% of Indians have no
computing device. Which means the Aakash, or something like it, could
become the sole computer for hundreds of millions of people in India, not to
mention elsewhere in the developing world.
Unlike the failed Aakash 1, which was
supposed to roll out in 2011 but which was so under-powered that it was virtually unusable, the Aakash 2
is no toy. Even jaded US gadget reviewers have found it as usable
as tablets costing many times more. It has a processor as powerful as the first
iPad and twice as much RAM memory. It uses Google’s Android operating system,
which now runs on three
out of four smartphones and four
out of 10 tablets shipped worldwide. Its LCD touchscreen displays
full-screen video without hiccups, it browses the web, and it even holds up
when playing videogames. If you’re a student with no other computing device,
attaching a keyboard to it transforms it into a serviceable replacement for a
traditional PC.
Disrupting the world’s largest tech companies
“The revolution will come from the developing world to the US,” says Vivek
Wadhwa, an entrepreneur and academic. “These tablets
will kill the markets for high-end players—for Microsoft in particular.”
Wadhwa knows Tuli and has become the Aakash 2′s champion stateside, writing about the
device and getting it into the hands of executives. He
believes that the $40 price of the tablet could drop to $25 within a year. “I
showed a Google executive [this] tablet. He suddenly realized that his $99
tablet isn’t going to stand up to the $25 tablet from India.”
Many in Silicon Valley are suddenly fixated on cheap tablets. “I see a lot
of the PC makers and hardware companies here [in the US] are going to build a
tablet strategy,” says Jay Goldberg, a financial analyst who was surprised to
discover on his last trip to China just how cheap functional 7″ tablets
have become. “But if there are already $45 tablets out there,
even that second-tier strategy [of replacing lost PC sales with tablets] is
going to fail.”
Everyone I interviewed for this piece thought that Apple, as a company that
differentiates itself by being a high-end brand, would survive the coming of
cheap tablets. But Goldberg and Wadhwa agreed that other manufacturers of
Android-based tablets, even Samsung, would have a hard time staying in the hardware
market.
Educating the “ignored billion”
“Our effort in all of this,” says Tuli, “Was to use technology to fight
poverty. What happens when you try to make it affordable at this level?”
Every year, the Indian government spends $13 per student just to ship them
textbooks. In primary schools, all texts are based on a standardized, public
domain curriculum that is easily transformed into free ebooks. The government
is considering paying the full cost of the tablet when handing them out to
primary-school-age children. In that case, the $40 the government pays Datawind
for each tablet could be recouped over the projected three-year life of one of
these tablets, says Tuli.
But the Aakash 2 isn’t just about replacing textbooks: It’s about bringing
the full-fledged Internet to users who have never touched it before. In India,
competition for wireless connectivity is so cutthroat that it’s possible to get
an unlimited prepaid mobile data plan for $2 a month. The basic Aakash 2 has
wifi, but an upgraded model, available commercially for 3,500 rupees, or about
$70, includes SIM cards and the radio required to communicate with a cellphone
network. As costs fall the company will incorporate these features into the
base model.
In India there is little 3G wireless connectivity, and data speeds are
slow, using on an older technology, GPRS. Normally, browsing the web over GPRS
would be nearly impossible. So Datawind developed a compression and
acceleration technology that, it says, makes web pages load in three seconds instead
of 15 to 20.
The Indian government is already connecting 600 universities and
1,200 collegeswith broadband and wifi, in addition to an effort to connect 250,000
villages with fiber-optic internet in the next two years,
at a cost of $4.5 billion. Even so, says
Tuli, almost all connectivity to individual devices—the so called “last mile”
connection of the internet—will be achieved through cellphone networks.
The world’s isolated, rural and impoverished places are just the sort of
locations where Tuli sees tablets acting as an educational supplement. In a
recent experiment in Ethiopia, Nicholas Negroponte, founder of the original
“One Laptop Per Child” project, gave Android-powered tablets to children in an
isolated village. Despite having never had any previous contact with
high technology, within months children had used the tablets to teach
themselves the English alphabet. Negroponte’s ultimate goal is to see whether
or not the children, who have no teachers, can use the tablets to learn to
read.
There are a number of reasons Aakash 2 could succeed where the original
OLPC project failed. For one, Aakash is for the most part a home-grown solution
to problems identified in advance by the Indian government, where the OLPC was
initiated by western funders who lacked sufficient
knowledge of local conditions and needs. At a
price that never fell below $100, OLPC devices were also significantly more
expensive than the Aakash 2, limiting its reach. And as a mature ecosystem,
Android has many orders of magnitude more apps available for it than the OLPC
could ever command–consumers are much more likely to embrace devices that can
already run huge catalogs of videogames, media and other applications.
Free tablets and ubiquitous computing
“[In the US,] you will see tablets everywhere,” says Wadhwa. “They will
become disposable, and you will see thousands of new applications within a
short period of time.”
Tuli thinks he can eventually bring the Aakash 2 to the US at a $50 retail
price, and if trends continue, that price will continue to fall.
It doesn’t take much imagination to think of applications for devices that
cheap. “If I were to start a company today, I’d say what kind of a business can
I build if the hardware is almost disposable?” says Goldberg. “In a restaurant,
if every waiter or maitre d’ has a tablet, now someone can go build a good
restaurant automation tool that links tablets to the chef station.”
At some point, too, any company that can squeeze enough ads onto this class
of tablets will start giving the tablet away for free. (Remember when USB thumb
drives became inescapable promotional giveaways?) The commercial version of the
Aakash 2, the $70 Ubislate, affords Datawind almost no profit margin at all.
But, like Amazon and Google, which have adopted a business model of selling
their hardware at cost and making money on
content instead (Amazon by selling e-books, and Google by
selling ads), Datawind is using Yahoo’s ad marketplace to sell advertisements
on the toolbar of apps on the Ubislate.
At home, there are plenty of reasons tablets could end up in every room.
They might control the thermostat or a home energy management system. Stuck on
a fridge, they could help keep track of the contents, saving on food buying and
trips to the grocery store. (Samsung already offers a
refrigerator with a built-in touchscreen tablet.)
The too-many-tablets problem would accelerate the trend of people keeping
all their personal data “in the cloud”, accessed the same way from any screen.
That’s the vision of Google’s web-based operating system, Chrome OS; Amazon’s
streaming video and music libraries; and Apple’s iCloud, which lets you use the
same music, films and apps across multiple Apple devices. People might find themselves
dedicating tablets to specific functions or locations, and seamlessly
continuing tasks on one screen that were begun on another.
“I was at Intel this week, and like other companies in the Valley, they’re
trying to figure out what consumers really use tablets for,” says Goldberg. “I
think most people agree we’re not going to have three laptops at home in the
future. We’re going to have a bunch of tablets and one desktop or media
server.”
From the poor in the developing world, to the poor everywhere
“Over the weekend I was at a cocktail party,” says Goldberg. “Someone said,
‘I was just on the Silk Road in China, in a no-name restaurant, and everyone
had tablets. No menus, just tablets. What we may see is, it comes from emerging
markets first.”
One of the reasons these tablets are so cheap in China and India, where
they are made, is that production costs have now fallen so far that shipping,
distribution and customs duties have become a significant part of their price
in the rich world. (Devices comparable to the Aakash 2 or the generic 7″
tablets of China cost $99 and up in the US.)
This means that to make technology disposable, manufacturing needs to
move. The Aakash 2, for example, is currently assembled in Amritsar, a
city in the far north of India, near the border with Pakistan. But, says Tuli,
“We don’t rule out assembly done in the US. Labor is not a big component to
this, so if it costs me $1.50 extra and I can put a ‘made in USA’ label on it,
then it’s something we will seriously consider.”
Inevitably, tablets will become ubiquitous in education. Already, wealthy
schools are abandoning textbooks
in favor of iPads. “I get school boards and schools from the US and
Canada regularly calling us up, asking for devices,” says Tuli. “Inner-city
schools say to us, ‘It’s not just a problem over there—40% of our kids don’t
have access to PCs and the internet.”
Why poor countries might take up tablets even faster than rich ones
In the US, smartphone adoption has only just crossed the 50%
mark. Some of that has to do with price–even “free”
smartphones are attached to plans with recurring monthly charges–but it’s also
behavioral. Meanwhile, China is projected to overtake the US by the
end of 2012 by share of smartphones purchased, and by 2016
India will be in third place.
“It’s taken the [digital video recorder] 13 years to reach about 50%
penetration,” says Rakesh Agrawal, who advises
technology companies on product strategy. “Consumer behavior just takes a long
time to change. Even if the price point is there, it will take a while unless
something is completely revolutionary.”
In other words, people will start buying something in large numbers if it
solves a big problem for them. But most first-world problems—needing an easier
way to record your favorite TV programs or keep track of what’s in your
fridge—just aren’t that pressing. In developing countries, on the other hand,
technology can transform lives.
For example, to avoid racking up cellphone charges, the poorest communicate
with one another by calling and allowing the recipient’s phone to ring a given
number of times–one ring for “come home” and two for “I’m fine,” for example.
Cell phones help husbands and wives, separated by the migration to cities for
work, keep in touch.
“Now, not only can they hear each other, they could Skype each other,” says
Wadhwa. “They could send money electronically. There’s ecommerce developing in
India. They can go online to check the price of products, the weather forecast,
local newspapers. This is going to be revolutionary for the developing world.
We don’t understand in the West what a dramatic change lies ahead because of
this connectivity. It’s going to boost the growth of the developing countries
for sure.”
Enabling that revolution will require many more manufacturers than
Datawind. The company is scrambling to meet its current obligations, and Tuli
says that in six to nine months Datawind will be making 500,000 tablets per
month—half again as many units as Google’s hit Nexus 7 tablet has been shipping every month. China’s
unbranded 7-inch tablets are widely available, but bringing them to other
countries at a price comparable to the Aakash will require setting up factories
and supply chains in every country in which tablets will be sold.
“You will see regional tablets,” says Wadhwa. “There’s no magic here—you
can buy components all over world and build locally, and voilà, you
have a tablet.” Eventually, in other words, we might think as much about the
maker of our tablets as we think about the printers of our books or the
manufacturers of our paper. As a medium, tablets and their successors could
become the ultimate commodity.
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