Aakash 2 tablet's cost advantage sees rivals Micromax, Pantel and Wish Tel crying foul [Hardware] [Times of India]
(Times of India Via Acquire Media NewsEdge) NEW DELHI: It's a Rs 1,500 divide that will shape how a Rs 1,300-crore government order for low-cost tablets pans out. DataWind is supplying 100,000 Aakash-2 tablets, launched on November 11, to the government at a price of Rs 2,263 per piece, about Rs 1,500 cheaper than the base manufacturing cost of low-cost rivals like Micromax, Pantel and Wish Tel.
In the months to come, the government will decide on whether Aakash-2 makes the cut, after its first version, launched about a year ago, fizzled out and sent DataWind back to the drawing board.
With that assessment being crucial in deciding the modalities of the government's follow-on order of 5.86 million tablets, expected in early 2013, this Rs 1,500 divide is where the debate -- pivoting on the tradeoff between price and performance -- will run. The first salvos are being fired. "It is not possible to give a tablet below $50 (about Rs 2,700)," says Vijender Singh, managing director, Pantel Technologies, a rival manufacturer.
"I'm not bothered what rivals say," retorts Suneet Singh Tuli, chief executive of DataWind. He said his company is not only giving a tablet at $40, but is also making a "gross margin of 10%" on it. Tuli, 44, attributes his cost advantage, in virtually every component of a tablet, to clever design, in-house manufacturing of the LCD screen and right sourcing of components.
Main savings from Aakash-2 design
"I have a perfectly functioning tablet, at a lower cost than what the competition sells with the same specs," says Tuli, who last week was named by Forbes magazine as one of the "15 education innovators" using disruptive technologies to reinvent education for students and teachers globally.
According to Tuli, the main savings come from the Aakash-2 design, which aims to integrate several components, thus saving on the cost of connectors used to stitch up the parts. He cites the example of the printed circuit board, which comes embedded with a chip, RAM, flash memory, power circuits and the WiFi module. So, while his peers pay $30 for all this, Tuli says his cost works out to $16.50.
Admitting that design can influence cost, Milind Shah, managing director of Wish Tel, points out that it also determines performance, especially in supporting multiple applications.
"Two tablets with the same chip can perform differently, and this gap is due to design. The system will hang if not designed well," says Shah, whose company was the second-lowest bidder in the government's low-cost computer project and lost out to DataWind. Entry-level models of Wish Tel and Pantel sell at Rs 5,000 and Rs 4,000, respectively.
By comparison, DataWind is selling Aakash-2 to the government for Rs 2,263. The government, in turn, is giving Aakash-2 to students at Rs 1,130, after providing a subsidy of Rs 1,133.
DataWind sells the same model in the open market, under the brand name UbiSlate, for Rs 3,499. The difference in sale price is partly because Aakash-2 enjoys two big tax waivers: namely 12.5% customs duty on imported components, mostly from China, and 6% excise duty on the final product.
Also, since the government is buying all the 100,000 tablets in the first lot and giving them to students, DataWind does not have to incur any sales or marketing expense on Aakash-2 "That knocks off about one-fourth in costs," says Tuli.
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