Breaking the affordability barrier:

The power of the internet is unquestionable. For many of us, over the last twenty years, it’s become an ubiquitous and integral part of our lives. The positive impact of internet access is even more evident across the developing world. The Arab spring illustrated the power of social networking in helping overthrow a dictator. Remote learning tools are helping deliver quality education to students in rural India, where teacher absenteeism has reached epidemic proportions. Online education at home offers girls in certain regions of Afghanistan a safe environment to learn, until security can be restored allowing access to schools. In contradiction to its benefits, the penetration of internet users in Asia, Africa and South/Central America is dismally small. For example, in India, a country of over 1.2 billion people, less than 15 million broadband connections exist, and less than 10 percent of its population has any access to the internet, may it be at home, the office or internet cafes.

The lack of internet penetration is often blamed on the lack of electricity, or the lack of network access and even the perceived complexity of computers as a barrier that keeps over 70% of the world’s population off the web. Over the last few years, the broad penetration of mobile phones, casts doubt on some of these arguments. Globally over 5 billion people today utilize 6 billion mobile phone connections, while a billion internet connections are accessed by 2 billion people. This three billion person gap between mobile phone users and internet users refutes the arguments of lack of electricity or network access. Those three billion that use mobile phones, but not the internet, have figured out some means of accessing electricity to charge their phones, and eliminated that as a barrier. Even where they don’t have home access to electricity, charging stations that have become common place across Africa and the growing adoption of pay-per-use solar panels is driving availability of power even further. Those three billion that use mobiles phones, but not the internet, obviously also have access to networks for connectivity. Network optimization technologies, similar to those deployed by DataWind deliver the internet across even highly congested 2.5G mobile networks across the developing world, without the need for network operators to make new investments in infrastructure or purchase additional wireless spectrum.

Those of us that started using computers in the 1970s do understand the long learning curves that existed for computer users 30 years ago. But these learning curves have been eliminated by the rich graphical user interfaces and intuitive touch screens common to tablet computers. In fact, it’s become common place with young parents to utilize tablets as a means of calming a toddler. Some have even referred to them as electronic pacifiers. We’ve seen the fast adoption of such devices by ‘Fruit Walas’ (sellers of fruits and vegetables on mobile carts) in experiments in India, where those users may have had low levels of literacy, but the economic benefits to their business became the overriding motivator. The complexity of computers is no longer the barrier to internet adoption.

We are of the firm belief that affordability is the key barrier to the digital divide. Our analysis showed that mass adoption of computers in the U.S. was enabled with the drop in prices below $1,000, which at the time reflected less than a week of salary for the target American customer. In India, that would have to mean devices that can be purchased for under $50. The challenge of building a capable tablet computer, which can be delivered to the consumer for under $50, required more than making lower cost hardware. It required, innovating a new business model and disrupting traditional distribution models.

To make lower cost hardware, we focused on the ‘Innovation of the Good Enough’. Instead of designing for features, by designing products for price, while maintaining sufficient capability that would be considered Good Enough by the target customer, a more economical choice of features and product design is achieved. To further impact hardware cost, we focused on key components with the highest gross margins and developed the technology necessary to make them internally and pass on the savings to consumers. This specifically applied to multi-touch projective capacitive touch screen with feather light user interfaces.

While traditional hardware manufacturers burden the consumer with their full profits at the point of sale, the realization that significant revenues are generated over the life of the product, a new business model was developed to shift the burden of margins over the product’s life. The ability to sell content such as e-books, music, movies and a broad range of applications generates revenue opportunities even after the sale of the hardware. The ability to run advertising on many of the applications and the web browser produces another strong source of recurring revenues. For accessing the internet, wireless operators become great beneficiaries of service revenues, against which a share of the revenue can be negotiated. The realization of these numerous recurring revenue streams, allows a reduction in margins allocated to hardware, making devices more affordable and hence accessible to a large range of customers.

Education should not be about survival of the fittest, it should be about ‘no child left behind’. Computing and internet access can help empower both students and teachers to respectively access and deliver higher quality of education. Cost shouldn’t be a determinant on the quality of education we deliver. Methodologies described above can be described as frugal innovation, while some refer to them as the disruption of the ‘good enough’. These are no longer small scale experiments, the impact of these efforts have resulted in the world’s lowest cost tablet computers and allowed the tablet market in India to grow by a factor of more than ten times, and will exceed the size of the PC market by next year. The next billion internet users are coming on board fast and furious, and the resulting positive impact on empowered humanity can’t be underestimated.

Suneet Singh Tuli
CEO, DataWind