Low-Cost Tablets Fuel "Post-PC" Debate

A technophile walks into a bar. The bartender says, "Have you heard the one about the new laptop that costs a fraction of the price of the real thing, but with all the bells an' whistles?" The techie chuckles and says, "Yeah, I've heard it - it's a good one. In fact, I hear it every year."

One recent installment in the cheap, revolutionary laptop field comes from India, where Datawind announced a $35 tablet with Android 2.2, 256 MB of RAM and 2 GB of flash memory. The announcement followed the established pattern - developers stoke demand by unveiling a prototype that looks and behaves just like higher priced machines. Tech blogs dutifully report the announcement, then pose questions and comments about the fate of the PC in a world full of handhelds, smart phones and tablet PCs that anybody can afford. One tech observer went so far as to suggest that the device will make India the first true "post-PC" country - borrowing a term from the ongoing debate everywhere from the Consumer Electronics Show (CES) to the Economist over whether PCs have been effectively replaced by smart phones, tablets and laptops.

But the technophile in the bar knows that the devil is in the details. According to Datawind's CEO, Suneet Tuli, the $35 price can only be reached when annual volume reaches 2-3 million units. In the meantime, the Indian government's initial order costs $50 per unit. And Datawind is hoping to save money by "componentizing" the manufacturing process, and make money from their own app store. The company should be commended for re-tooling the standard business model, but multinational technology firms are not obliged to take the "post-PC" bait. While it's true that iPads outsold top-selling traditional computers last quarter, and a fully loaded PC isn't needed just to send emails or surf the Web, students and office workers will balk at creating reports with a 7" digital keypad. Consumers (and many common software applications) demand more processing power and memory than most low-cost machines can offer.

The only tech companies that should worry about a "post-PC" world are those that have not diversified to feed the insatiable global demand for mobile devices - and there are few of those (though their mobile market share may be smaller and less defensible). The rise of cheap tablets and app-filled smart phones is an opportunity for traditional hardware, software and component companies. The "Annual Low-cost Challenger" will need more than just large government orders; they will need distribution channels, marketing savvy, production partners and many other advantages to sustain their business. Supporting new entrants (formally or informally) may bring more customers into the technology market, leading them along the path to more sophisticated devices. And that's no joke.