Did you know that you can buy a tablet for the price of an iPhone case? Recently, Indian President Pranab Mukherjee announced the launch of the $20 (or $40 without government subsidy) Android-powered Aakash 2, produced by Datawind. In a recent interview with Quartz, Datawind CEO Suneet Tuli lauded the Aakash 2’s affordability as the tipping point for many Indian consumers to gain internet access. Yet despite all of the fanfare, there is still some cause for doubt. This is not the first time the Indian government has praised a nationally-made device as the future of technology in the country. It was just over 10 years ago when the Indian government hailed the Simputer as the low-cost solution that would bring technology to the masses. But despite the lofty expectations for the $200 handheld computer, sales never took off. Only 2,000 of the estimated 50,000 units were actually sold, and only 10% of those sales actually went to the rural areas for which the device was intended.
Much of Simputer’s failure can be attributed to the sudden availability of cheaper computing devices. When the idea for the Simputer was first realized, a desktop computer sold for $1,140. But by the time production was underway, affordable mobile phones and PCs had gained significant traction. The $200 selling point was no longer compelling enough.
Tuli admits that similar concerns already exist for the Aakash 2. Factories are currently being built in China which will, in all likelihood, be able to produce an identical Android-powered tablet at an even cheaper price. He says:
There’s 50 guys in China right now setting up fabs to make [LCD touch panels like Datawind's]. In the next six to nine months they’re going to come online. And the moment they start coming online, pricing is going to tank.
There are already signs of this development in the smartphone market. Chinese manufacturers have been cranking out Android-powered smartphones, available on e-commerce sites such as Alibaba.com, that undercut the price of any other smartphone on the market. The Hero H600, for example, is an Android powered, dual-sim, touchscreen, 3G-enabled smartphone that sells for as low as $40 today, and will likely drop to under $25 over the next 12 -18 months.
In fact, Tuli and Datawind have come under fire in the past few weeks amidst claims that the Aakash 2 tablet is itself manufactured in China, and not an object of Indian national manufacturing pride. The company denied the report, but admitted that much of the production on the first 10,000 tablets was subcontracted out to Chinese facilities “for expediency sake.” The circuit boards, however, were built in Hyderabad, and the final assembly and programming of the product was done in India.
So far, the Canadian company has done an admirable job of deflecting the skepticism surrounding the Aakash 2. But the looming issue of Chinese competitors still remains. A comprehensive supply chain, located entirely in China will undoubtedly produce a cheaper, comparable product.
This is by no means an indictment of these new cheap Android tablets. What inexpensive Android-powered tablets can provide to India and other emerging markets is nothing short of spectacular. The availability of a truly affordable web-enabled computing device like the Aakash 2 could do wonders for emerging market consumers. Having already leapfrogged landline phones and desktop PCs for cellphones and mobile web, these tablets could provide hundreds of millions of consumers in developing nations with access to the internet significantly sooner than anticipated.
It is important, however, to take a realistic view of the buzz surrounding the Aakash 2. The Indian government could easily withdraw subsidies and orders for the tablet at any time. The Aakash 1, Datawind’s first attempt at an affordable Android tablet, was met with similarly high expectations. However, underwhelming performance and an inability to fulfill orders for the tablet doomed the product for failure. Even with a better product than the first go-round, the Indian government could easily withdraw subsidies and orders for the tablet at any time. Datawind has already lost a similar contract from the Philippine government, which instead accepted tablets from the Chinese government, manufactured, of course, in China. Tuli has set his sights high, aiming past the 220 million Indian school children to similar deals in Bangladesh, Greece, Turkey, and beyond. But once Chinese manufacturers have perfected the supply chain, Datawind will have serious competition, and the Aakash 2 might go the way of the Simputer.