Why Price Does Matter

Every few years, a pricing event shakes up the market. It happened over a
year ago when laptops breached the Rs 50k level.

A surge often follows. Not for that entry product...but it opens up a market:
people who wouldn't have considered that category. So a desktop buyer spending
25k can get a laptop for a bit more. Once she goes to shop, the dealer up-sells:
just 2k more for 256 MB, 3k for wireless ...and she ends up with a 40k laptop.

So the sweet spot is rarely the entry product if there's enough choice.
There are 30k laptops, but the 60k models sell. There are 12k desktops, but
people buy the 20k PCs.

For desktop PCs in India, the holy grail was the 10k mark. Every now and
then, we hear rumors about it being breached. This year, they're getting
there. Kolkata-based PC maker Xenitis launched a '10k PC', followed by top
PC vendor HCL.

So our own CIO, pockets full of cash, went shopping incognito in Delhi's
tech super-market, Nehru Place for all the sub-10k PCs he could buy.

As you'll read in this issue's special report: he didn't find any. He
forked out 11.6k (with VAT) for each of two PCs, including over 1k for so-called
delivery and installation-read, dealer margin. He managed to buy the HCL
system quickly, while the Xenitis PC took some time and came sans OS. (Some
dealers forced additional bundles, such as a UPS, at 13k.)

So it's not quite the 10k mark. If you think I'm splitting hairs, well,
our lab tests also suggest that these PCs are not really usable for most home or
office apps. And then, desktop Linux remains a barrier for most users.

Yet you could run on such a system light, dedicated apps: such as a SAP
client on Linux, or the command-line reservation that the airlines use, or other
specific business apps. What you can't do easily is run graphics, multimedia,
and the like.

So neither CIOs nor home users are likely to flock to '10k PCs' now.

But having announced their 10k intent, vendors need to rapidly and really get
there. They need to drop the base price to a level where the end price is 10k;
discourage hidden costs like 'delivery and installation', or forced bundling
or up-selling ("This not so good, but the 15k PC..."); and give
product-specific dealer incentives to make up for the slim margins...

For now, the '10k PC' (which ships with VIA chips, and Linux-or no OS)
is a challenge for other PC vendors-and for Intel, AMD, Microsoft, and
possibly even for Red Hat et al, in different ways. And an opportunity.

Prasanto K Roy