The Age of Low Cost

 

NEW SCHOOL: A classroom at NIIT Delhi, where students carry netbooks, not textbooks. NIIT has migrated the entire courseware for its three-year technology training programme, GNIIT, to netbooks. NIIT will discontinue textbooks and offer all its courses on tablets and netbooks. 

 

The first wave of low cost computers never really took off. Now, a new bunch of such devices are flooding the market. This time a lot of new applications, software, content and delivery methods are enabling consumers to do what they earlier couldn’t – put the devices to good use for education and livelihood, writes Shelley Singh

Apuroop Sethupathy is now quite used to juggling between the HP Laptop in his bag, the iPad in his hand and an Android smart phone in his p.ocket. The 19-year old sophomore at the National Institute of Technology in Rourkela pursuing biomedical engineering uses the three gadgets for studying, entertainment and connecting with the world. They pretty much meet his needs. Yet, he's visibly excited about the 1,750 tablet, recently launched by the government and the slew of new computing devices Asus, Samsung, HCL, Reliance and others have rolled out in the last two months. Almost all of them are available around the 10,000 price point. "They are good for a web based lifestyle," he says. Sonali Garg, 19, a Chandigarh based Commerce student who shares a laptop with two other siblings is also eyeing these new devices. "We can buy tablets with saved up pocket money," she says. At far away Agartala, 20-year-old Bishnesh Das fancies them too. "These gadgets will do to computing what sub 3,000 phones did to mobile communications," he says. Similar attempts at building low cost computers undertaken about five to seven years ago flopped here. Remember India's own Simputer? Or Nicholoas Negroponte's One Laptop Per Child (OLPC) project? Intel, the world's largest chipmaker flew in anthropologists to create a device that's not only light on the pocket, but rugged enough to be used in the hinterland. In 2005 AMD joined hands with HCL to launch a 10,000 PC. The devices were low on cost and high on promise, but they failed to get buyers. The devices were minimalistic (low on memory, hard disk, RAM, processing speeds) and didn't offer internet connectivity. They failed. So why should things be any different this time around? Seven years later, the devices available now come with better technology and performance. Not only are they lowcost, but they also offer more value for every rupee paid. But more than that, what's changed the equation now is a whole bunch of new applications, software, content and delivery methods that are now enabling consumers to do what they earlier couldn't - put the devices to good use for education, livelihood and entertainment. It took the country three decades after the first PC was launched to get to an installed base of about 50 million computers. The next 50 million devices could get added in only 3-4 years if the new wave of applications and content marry well with the new low-cost devices. Even then, India with a base of 50 million personal computers now would lag behind China (300 million) and the US (394 million). There is still plenty for room to grow.
 

THE APPLICATIONS WAVE Netbooks for text books - that's the switch technology training company NIIT has done in the last six months for all students in its premier GNIIT course. In the next six months it will migrate all its courseware onto netbooks and tablets. "Students won't carry books, but tablets to class," says Vijay Thadani, CEO, NIIT. NIIT has also invested 200 man-years of work generating digital content for the curriculum for classes 4 to 12. Says Thadani: "The devices add richness to static content. For instance, Rani Ki Jhansi can come alive on tablets via video. Graphs will be more dynamic. There's a tremendous opportunity to create a revolution with tablets." NIIT courseware is available in 14 languages. Educomp, another education services provider, also plans to migrate course content to tablets. About 500 people are working on converting its content into digital formats. It already uses a combination of projectors and electronic white boards to deliver classes in 7,200 schools across the country. "Now, we will give each student a tablet," says Shantanu Prakash, founder-CEO, Educomp Solutions. School students, even from poorer sections, could be big consumers of low-cost tablets. The government is offering DataWind's Aakash, a 7-inch tablet, to students at a subsidised price of 1,750. "Specs of Aakash look ok for use by students," says Prakash. Subho Ray, president, Internet and Mobile Association of India (IAMAI) says that the device will catalyse the market if it finds its way into 5-6 lakh schools. "There was a vision earlier, but low cost computers were never given away to target communities. At least now the government is giving away the tablets to students to try out," he says. Its not just schools, but tablets could make a difference to India's farm lands too. S Sivakumar, chief executive, agri business, says crop management advice can be personalized to individual farmers, if they can video or photo shoot the field conditions and transmit to experts via tablets. "Through use of video/photo transmission, price negotiation process can be instant and more effective. Order aggregation for farm inputs will help in streamlining logistics and reduce costs," he adds. Mass adoption, says Tuli of Datawind, will happen when such devices help users generate business. "Today a phone is a commerce tool for all segments of users. Same will happen with computers. When mobile phones hit the market no one thought your neighbourhood small merchant or a rickshaw puller will buy them. Today they all do."
 

LOW COST GAME More applications and content will make low-cost computing more relevant to consumers. But cost is crucial too. Many expect Mukesh Ambani to be a game changer. ET recently reported that Reliance Industries will unveil a new range of 4G-enabled tablets at 3,000. Such a price point would have been ridiculously low even one year ago. But prices of components like the hard disk, RAM etc have come down enabling manufacturers to come out with innovative offerings. Says NIIT's Thadani: "The real breakthrough has come from Moore's Law: processor power doubles every 18 months and costs come down. There's more power packed in each new generation of computers." Alok Bharadwaj, the president of , Manufacturers Association of Information Technology (MAIT) attributes low cost computers to economies of scale and an average decline of 15% a year in component prices. Adds Apratim Sharma, country product manager, Asus India: "We observe 15-20% yearly drop in cost of same hardware'. You can get a hard disk that went into high end laptops 2-3 years back at lower costs in netbooks or tablets now, he adds. Asus just launched a 10 inch net book at 9,999 with a 250 GB hard disk, 1GB RAM, web cam, WiFi and Bluetooth. "Three years ago a similar device would have cost double," he adds. NIIT's Thadani still remembers the first PC they bought back in the 1990s. It cost 1.5 lakh. It had 10 MB hard disk and 5 MB RAM. "Now, you get a far more richer device for less than 10,000," he adds. Last week HCL Infosystems launched a 10,490 tablet complete with a touch screen, 1 Ghz processor, 2 MP camera and 512 MB storage. Says Harsh Chitale, its CEO: "Now, with more value at lower costs computing in India will take off in the next 12-18 months. Tablets could do to computing what sub- 5,000 phones did to telecom." Computer penetration in India is very low and tablets account for just 2% of PC sales. "Once you have a device priced at six to eight weeks of annual income, computer adoption will take off," says Prashanth Adiraju, director, new platform business group, Intel Technology India. "We are at that stage now." He believes that 90 million households in India can now afford buy a computer with less than a month's income. Ten thousand rupees is emerging as the new price point for netbooks. But tablets are becoming available at even lower costs. A typical low cost tablet would come with a 7 or 10 inch touch screen, a free operating system, fast processors, graphic cards and internet connectivity. Datawind, a Canada based company that launched the $35 (about 1,750) Aakash tablet (subsidised by the government for students), says the actual cost is $49. Datawind has been able to get it at this price point due to cheaper hardware and free OS, Google's Android 2.2. Google gives the OS free and makes money via user downloads. Says Suneet Singh Tuli, CEO, Datawind: "Prices have come down due to open processor architecture. Earlier it was an Intel-AMD monopoly." At present the screen is the most expensive part-about 22-25% of the cost. Though costs may not decline further, performance could improve a lot more. "It's like a 100 meter race. After hitting these levels ($35) there's very little room for further price cuts," says Rachna Nath, executive director, PricewaterhouseCoopers (PwC). "But each new version will come with better hardware at similar or lower costs." Adds ITC's Sivakumar: "Functionality of today's devices is far superior to the options available earlier." And this will only get better. "Telecom backbone is also more evolved today."
 

NUMBERS BUILDING UP About 9.3 million computing devices were sold in India in FY11, according to MAIT. While desktop sales are growing just 10%, Net book sales are growing at 100% this year. Tablet sales have really started only this financial year, and already more than 100,000 units have been sold so far. "We expect the fastest growth in the smaller devices," says Bharadwaj. HCL expects that the market shore of low cost netbooks and tablets will grow from two per cent of all PCs sold to 30%-40% of total computer sales in just a couple of years. Such devices are invariably the best selling tablet in the portfolio of any company. Samsung N100, a 12,000 net book launched on August 15, is the company's `rock star' product. About a third of the N100 sales are in small towns like Patiala and Nagpur. Ecommerce is also helping push sales of computers in smaller towns. For example, about half of the sales of online retailers come from remote locations where customers. Two problems remain. First, these devices should not only be cheap, but also useful. That means a whole bunch of locally relevant applications needs to be built in order to improve the utility of such devices. "There's an expectation that all people are literate to use a computer. Tablets will definitely add mobility, but are there relevant programs or native language applications?" quips Jesse Paul, CEO, Paul Writer, a marketing advisory firm. Paul says that unless such devices help a taxi driver make a booking it won't be too relevant for him. Or can a small merchant do accounting on it? She points out that application developers don't come from a bottom of pyramid background. Hence, they may not quite know what will work for the masses. Adds Sivakumar of ITC, which is experimenting with tablet applications for farmers: "Because of lower education levels and poor infrastructure (for mass roll out) these devices need features like multimedia, video and photo shoot and transmission, battery time and ruggedness. An eco-system that supports solutions will help in adopting computers." Education, where industry sources expect high demand for low-cost devices, will be a big testing ground. "They (low-cost tablets) will benefit only a small percentage of overall schooling in the country -- only 4-5% of 1.5 million schools," says Anurag Behar, CEO, Azim Premji Foundation. "For mass education computers are irrelevant, unaffordable and unusable." The Premji Foundation works in teacher training and developing curriculum and impacts 2.5 million children. It developed school course in 175 CDs in 15 languages between 2002 and 2007. About 25,000 schools in 10 states use this. However the foundation has discontinued converting courseware to digital formats. "The process of learning does not happen via computer but via good teachers. But computers can be great for teacher education and adult education," says Behar. Second, manufacturers earn profit margins of only 3%-4% from the computers they make. It is even lower (2-3%) for low cost devices. "Companies will need massive volumes to sustain. Only companies with nationwide sales and services play might succeed," says Vishal Tripathi, senior research analyst, Gartner India. While R&D has worked hard to get all frills computers at low costs, some of the business and user models might take longer to emerge. Mass computing may not happen in a jiffy, but users are closer to it than five years back.
shelley.singh@timesgroup.com

 

Merchandising Sets the Pace Ahead of Race

Brand merchandising is at an all-time high, thanks to the country's first ever Formula One race. Shirts, jackets and even pillow covers inspired by F1 are selling like hot cakes, especially among youth. “Since the launch of the latest F1 collection, we have received a positive response from our consumers and we are already seeing a growth in sales. In fact, the collection is already one of the bestsellers at our online shop, www.shop4reebok.com,” said Sajid Shamim, brand director Reebok India.
Sports merchandising is not a new concept in India. Brands have tapped the market big time by associating with cricketand fans love to imitate their favourite stars in terms of clothes, shoes and other products. In fact, lately, youngsters have been buying up football merchandise as well. However, this is F1's debut in the country and Reebok India, Puma and Party Hunterz and Inkfruit.com are happy with the encouraging response to their associated products.
To tap the F1 craze — brands are offering a variety of things from shirts, jackets, caps, trousers to household products like sofa covers and pillows. The Indian F1, called Airtel Grand Prix, is being held from October 28 to 30 at the Buddh International Circuit. Being an official sportswear partner for Force India, Reebok has dedicated a collection of apparel and accessories inspired by the Force India F1 team.
Shamim admits that F1 has always been a niche sport in the country, but he feels it is fast catching up among youth and, therefore, they plan to cash in on the trend by launching something different in March. “Yes, we have a dedicated Force India collection and we will be coming out with a new collection next season. The collection will, of course, express the F1 spirit through new and interesting designs and the collection will reach the markets by March 2012,” he added.
Another sports major Puma, an official licensing partner for Ferrari and the supplier of team and race wear for Scuderia Ferrari, too has come up with a line of apparel, footwear and accessories.
“We are the official licensees for Ferrari and the Ferrari range is one of our most aspirational and best moving lines. We have seen a lot of interest from consumers because it allows them to own a little bit of the Indian F1 action and support the biggest motor-sporting event that our country has seen till date,” Rajiv Mehta, MD, PUMA India, said. Sports merchandise is going through an exciting phase and Mehta says, “Next year, you will see a range of Mercedes GP merchandise available at our stores.” Thanks to the metro-sexual look, accessories have become an important part of youngsters’ wardrobe. Party Hunterz, a onestop shop for party accessories, has launched a variety of products — chequered flags, wigs, drinking helmets and air horns.

‘Google Considers Financing Offer to Acquire Yahoo!’

NO RUNNING AWAY FROM DEAL 

 

 Google is considering providing financing for an acquisition of Yahoo! by another company or a group of bidders, according to a person who has been briefed on the matter. The company may opt not to take part in any offer and hasn't engaged in serious discussions with would-be partners, said the person, who asked not to be identified because the deliberations are private.
Yahoo is weighing strategic options after firing former chief executive officer Carol Bartz, in part for her failure to keep pace with Google in the online advertising market. Google, which is under regulatory scrutiny from governments around the world, may lend its financial support to preserve Yahoo as a rival and bolster competition in the Internet industry, said Greg Sterling, an analyst at Opus Research in San Francisco.
“If competition dissipates or diminishes, then the hand of regulators is strengthened,” Sterling said. “If competition is diminished or marginalized, then all the arguments about Google being a monopoly ring more true.”
Google, which has $42.6 billion in cash and short-term investments, is considering helping finance other bidders, rather than trying to acquire Yahoo outright, the person said. The US Federal Trade Commission began a review of Google's business practices, including search and advertising, the company said in a regulatory filing in June. The European Union and the state of Texas also have begun investigations of the company's leadership in search and advertising markets.
Potential financing by Google for a bid for rival Yahoo has parallels with the $150 investment that Microsoft made in competitor Apple in 1997 to help preserve competition in the computer market, Sterling said. Still, regulators might scrutinize any Yahoo acquisition effort that involves Google. The US government threatened to challenge an earlier proposal by Google to place ads on Yahoo's site, causing Google to abandon the effort in 2008.
Representatives of Sunnyvale, California-based Yahoo and Mountain View, California-based Google declined to comment.

Bright Cosmetic Boom

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Retailers Show 100% Interest in 0% EMIs

 

 

Counter slowdown by encouraging shoppers to buy higher-value products

WRITANKAR MUKHERJEE, ATMADIP RAY & PRAMUGDHA MAMGAIN
KOLKATA/NEW DELHI

    Retailers are countering the economic slowdown by offering interest-free equated monthly instalment (EMI) schemes, which they say are not only helping them pull customers into stores but also encouraging shoppers to buy higher value products.
Such EMI-based sales promotions have staged a big comeback at a time near double-digit inflation has put a heavy strain on household budgets, making people defer non-urgent and big-ticket purchases even on credit because of hardening interest rates. But transactions carrying zero percent financing have grown more than 50% over the past year, say retailers and bankers.
From apparel sellers such as Arvind Brand’s MegaMart and Fabindia to multi-product retailers such as Future Group, Lifestyle and Godrej, firms reckon that zero-interest EMI options are the most effective discounts they can offer.
While retailers end up bearing the interest for the duration of the credit extended, they see it as an acceptable cost of keeping the sales register ticking during the downturn.
“EMI schemes are removing inhibitions and inducing consumers to splurge on big-ticket items,” says Himanshu Chakrawarti, chief executive of Essar Group’s Mobile Store, the country’s largest mobile phone retailer. He says consumers going for six-month EMIs are buying handsets priced twice than they had initially planned and those going for nine-month to 12-month schemes are tripling their size of transaction. Almost a third of the high-end mobile phones, such as the iPhone and the latest models of Blackberry and Android-based phones, sold at the Mobile Store are paid for through instalments. The company, which rolled out EMI schemes at its 1,200 stores across the country over the past couple of months, recently became India’s largest seller of Black-Berry smartphones.
Instant approval of loans and minimal documentation help speed up EMI-based transactions, says Parag Rao, senior executive VP, HDFC Bank. He says the bank has seen a more than 100% spurt in this loan category over the past year with an average transaction of . 30,000. “Since the amounts are much smaller compared to home or car loan, the EMIs don’t pinch much,” he says.
Consumer durables and jewellery sellers were the first to offer such sales schemes, but now retailers across product categories are betting on interest-free instalment schemes. For consumers, this spells the return of consumer financing schemes, which had dried up during the global meltdown in 2008 and 2009 when banks turned away from most unsecured lending schemes.
But the return of such schemes is becoming a major motivator at a time when studies are showing consumers are searching for the best deals and discounts like never before. A latest study by NM Incite, a Nielsen-McKinsey Company, shows that conversations about deals and discounts account for 50% of all conversations in social media forums this Diwali.
“Deals are becoming the primary motivators to consider purchases. This more than anything will decide which brands will win a greater share of wallet this season,” says Adrian Terron, Head, NM Incite India.
From apparel and mobile phone sellers to furniture and computer stores, retailers across the board are reporting a jump of 10% in sales on average driven by deals like EMI schemes. They say the average bill size has also grown simultaneously by 10% to 15%.
EMI-based sales have doubled for consumer electronics during this festive season, retailers say. In the case of products such as LCD and LED televisions, nearly 15%-17% of all purchases are being made through such schemes, says Devang Mody, business head (sales finance) at Bajaj Finserv Lending.
The lender has tied up with manufacturers such as LG, Samsung, Sony and Panasonic and durable retailers including Croma, Vijay Sales and Reliance. It expects the festive season to generate EMI-based sales worth . 750 crore.
For jewellery retailers, hit by the double whammy of inflation and appreciating gold prices, interest-free instalment schemes have become a veritable lifeline.
Furniture retailers, staring at halving of growth to 10%, are finding a much-needed growth driver in zero-interest EMI schemes. “With inflation kicking in and discretionary spending capability of households going down, EMI schemes will become more relevant as these facilitate consumer instant gratification while paying in easy instalments later,” says Lifestyle International managing director Kabir Lumba.
Future Group’s Home Town is similarly offering products on interestfree EMIs, as is Style Spa, which joined the bandwagon a fortnight ago. Fabindia launched an EMI scheme this month on purchases of . 50,000 and above, which covers apparel and other products. “We intend to tap the burgeoning professional class through this scheme,” the company spokeswoman said.
Analysts say retailers stand to gain even as they absorb the interest component when they offer zero-percent EMI schemes. “While such schemes may impact their margins, the interest gets accounted as a cost they need to bear to generate sales,” says Devangshu Dutta, CEO of retail consultancy Third Eyesight. 

Allen Solly Looks to Double Turnover in Three Years

NEW DELHI Aditya Birla Nuvo Ltd's Madura Fashion & Lifestyle is looking to double revenues from its apparel brand Allen Solly in the next three years on the back of wider distribution, new marketing initiatives and focus on women's range. For Allen Solly, the company registered sales of Rs 500 crore at retail price for the year ended March 2011. “In the next three years, we are targeting to double Allen Solly brand's revenue with a CAGR of 30%,” said Allen Solly Brand Head Sooraj Bhat. He said in the last three years, the brand's revenue has grown three times with a Compound Annual Growth Rate (CAGR) of 40%. The targetted growth will come on the back of store expansion, new marketing initiatives and more revenues from women's wear range, Bhat said. He said, currently Allen Solly range is sold at 100 exclusive stores (a mix of franchise-owned and company-owned) across India, and the plan is to add 40-50 new stores each year.

Five Ways To... Quit Your Job with Elegance

AVOID ANTAGONISING PEOPLE at the time of leaving a job. You are bound to run into your co-workers and bosses in the future too. Keep your departure understated, says Shreya Biswas.  

 

1 Shun Bad-mouthing Two years ago, a director of an MNC resigned after a tussle with the management over his career progression. He left abruptly. Once out, he openly talked about his bad experience and ill treatment, which closed all doors for him to return. Six months later, the firm went through restructuring and another head put in his papers. He discussed his exit with his bosses and served the notice period. Today, he attends alumni meetings and the company, in turn, counts him as one of the probables for a higher leadership role when opportunities arise. “These are two cases that show what resigning with elegance can do to ones career,” says Atul Sharma, director HR, Monsanto, India.  

2 Carry on Relationship Don’t snap ties with people and the company. Leave with dignity. Be honest and candid, share your concern, if any, and also appreciate the help from colleagues. No person can grow if he is deprived of the support of an organization and its people. “Give real and well-observed feedback and the company might try bettering itself with your inputs. Your ideas will be valued even when you are leaving,” says Shekhar Arora, executive director, HR, Ashok Leyland. 

 3 Don’t Resign Abruptly If you are in a critical role, give the management time to find your replacement. Follow the exit processes. This will help you later both outside the company and in keeping relationships intact. "...If you are reasonable today, people will be reasonable to you in the future," says Arora. 

 4 Work till Last Day Stay committed till the last day of your notice period. “This way you will convey the message that you still care for employer’s interest and they will care for you. Professionalism, competence, and efficiency are always rewarded,” says Sharma.  

5 Don't Settle Scores Trying to take revenge is the biggest mistake. Exit interviews should never be utilized to take out grudges or frustrations about people. Be objective about your assessment of the organisation. “If you have faced problems with your boss or any other individual, you can suggest ways to improve interpersonal skills to retain employees. You will not only provide meaningful suggestions, but also help in bettering certain conditions,” adds Sharma.