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| Suneet Singh Tuli |
-Nandagopal Rajan Montreal-based company Datawind designed and developed the $35 Aakash tablet that was launched earlier this month. In this Idea Exchange on Campus held at Delhi Technological University, Suneet Singh Tuli, CEO of Datawind, explains how Aakash “serves the purpose of a phone, a computer and an entertainment device”. This session was moderated by Senior Assistant Editor Nandagopal RajanMukul Dutt (MBA, Ist year): Aakash, the $35 tablet you designed for students, is a great product. But there are places in India where students or their teachers don’t know computers. So how can they cope with this technology? And do you have some training programme planned for them?
There are two things to be kept in mind. First, where is the government positioning these first units? Despite all the excitement about the rural areas, they are not sending the tablets to the rural areas right now. The government is procuring one crore units to give to every college or university student. The goal is that over the next 12-15 months, every student should have a device. The idea is that any student in college or university has enough basic knowledge of the Internet and computing that it won’t be difficult implementing it at that level. The second tier is classes 9 to 12 and as they implement at that level, they are going to run into the kind of issues that you described. But let me suggest a couple of things. First, if you look at the Indian market, in a country with 1.2 billion people, we have 18 million Internet subscribers and 120 million Internet users. This gap between subscribers and users is that of affordability, people who can’t afford to buy computers, laptops and Internet access.
Are we there yet for the village that has no electricity? No, but then there are still 900 million people in this country who use mobile phones. They are the second-tier customers. They have access to electricity, they can afford to buy a mobile phone, they can afford a top-up. The biggest criticism we have received is that the tablet has a battery life of only three hours. Well, tell me about a laptop that lasts more than three hours. When we are ready for that rural customer, I agree, we need to have a much better battery life. But today, with the customer the government has decided on, they decided the device should have a battery life of three hours.
The idea of training people to use it is, I think, misplaced in the market. Let me explain why. The kind of applications today, especially in a touch user interface, don’t require a lot of training. You don’t need to use a manual. You turn it on, you press a button and you are there. The user interface, the application software is already there.
Tanya Singh (MBA, Ist year): You were talking about the first and second tiers of your customer base in India—university students and then, classes 9 to 12. Why not target the second tier initially itself and capture the first tier by making a mobile phone that offers that extra capability of connectivity? Students would rather go in for a mobile phone than a tablet, even if it is very affordable.
The government’s tender was for units with WiFi capability only. The unit that we launched in the market at Rs 3,000 will have a GPRS module and mobile phone functionality. So the device is thinking of the customer—and that customer isn’t just the college student. My team laughs at me every time I start discussions with the rickshaw wallah and they ask, “Will you sell an Internet device to the rickshaw wallah?” But if I can convince the rickshaw wallah, everybody else is easy game. For us, the functionality was very important from two aspects—the first was that for Internet connectivity, you can’t be limited to WiFi. Yes, for these units that are going to colleges and universities, the government has established WiFi, but outside of these colleges, where is WiFi? Those 900 million customers that I talked about, people who use mobile phones, you have got to do GPRS.
Then we discovered something else too. In India, the customs excise duty is 14 per cent for a computer and 2 per cent for a mobile phone. So the government has been providing an incentive for mobile phones and not for computers. So, the tax structure makes it more feasible if it’s a phone. It makes a lot of sense. Give GPRS connectivity, make it a phone, allow internet, multimedia video and audio and so on. And along with the rest of the range of applications that you can get on the Android platform, allow games and Word processing and spreadsheets and e-books. But just the simple ability of plugging your pen drive and watching movies, just the simple ability of using it as a phone, takes it from people who are looking for computers to another range of customer that may or may not care about the computer.
Do you position this as a tablet, as a computer, as a mobile phone? Before the launch of this product, we were expecting 250,000 units to be sold in India over the next 12 months. Now, we are sitting on 120,000 pre-bookings, apart from the government order. And if you add institutions and enterprises and others, that adds up to about 2.3 million units. If I ask my driver and I say “aapko tablet milti hai” at a certain price, he won’t know what a tablet is. If I tell him you are getting a computer for Rs 2,500-3,000, that’s a different scenario. So, we want to make sure that when we pitch this to the masses, they understand that this serves the purpose of a phone, a computer, an entertainment device. And best of all, if it can help educate their kids, help level the playing field, that’s the biggest motivator in this country.
Tanya Singh: People relate price to quality. Most of them say, if it is cheap, then it must be of poor quality. So, how do you convince them into buying this tablet?
That kind of positioning, where you relate price to quality, works when there is a 20-30 per cent price variable. But here, the price differential is three to four times. I don’t expect the iPad customer to react positively. Actually, I don’t expect most technology reviewers to give it a very positive feedback. They’ll say, “Oh, it’s a resistive screen, it’s not a capacitive screen, it doesn’t have a camera, my iPad lasts 10 hours and this only lasts three hours. I would rather buy an iPad.”
If you look at what happened to the mobile phone market in India, the inflection point happened when the price of phones hit Rs 2,500 and below. And what that means is that a customer with a Rs 10,000 salary could finally afford a cellphone. That customer won’t say let me spend a little more because I’ll get better quality. Similarly, for a tablet in the Rs 2,500-Rs 3,000 price point, he will say, “I want quality, a tablet with a capacity screen and a built-in cellular modem. In India, (such a tablet) is for around Rs 10,000. If that’s your salary and you spend Rs 4,000-5,000 on food every month, you will not spend Rs 10,000 on a tablet. A computer starts at around Rs 15,000 and is not an option. Will he get a smart phone in that price range? At Rs 5,000, you can get a 2.3 inch Android 1.6 resistive screen smartphone. But if you want the Internet, you want to watch movies, you want to take advantage of all of those, there is nothing in that price range. Nobody wants to address the customer base that I’m going after. I realise quality impacts perception and Apple has always priced its products at a premium so that you relate it with quality. How many of you don’t use Google because its free and pay for a search engine?
Sumit Bhutani (MBA, IInd year): You once said that if this product had been made in China, the cost would have reduced by 20-30 per cent. What if a company in China makes a product similar to this and launches it in India? What will your USP be?
The cheap tablets in China primarily are WiFi right now. There are two types of companies in China that will compete with this. One is companies like Huawei and ZTE, multi-billion dollar companies, the size of Samsung and LG and so on. These guys make their own LCDs, screens and microprocessors. So they are very vertically integrated and they can compete with us at any level. When I met the other bidders for the tablet at IIT Rajasthan, I asked, why doesn’t somebody like Samsung bid on this? Samsung makes $70 million every week or more than that by selling smart phones. Why would they kill that market? Because they want to sell it to the rickshaw wallah? They don’t care.
So what is the market opportunity in India? Assume 300 million families. How many people in this country have broadband? Ten million families. The remaining 290 million don’t. The question is, what do you offer to those 290 million? That means you have to be able to deliver Internet to them with the best network that’s available there. The only network that exists, that 900 million Indians use, is GPRS. If you are going to do a product, you have to compete on price and at the end of the day, you also have to deliver performance. The Chinese products will come in and they will only confuse the market.
Archna Shukla: If you actually target those 290 million families without a broadband connection, then you are soon going to be a billionaire if you are not one already.
I am not a billionaire, not even close. The fun part would be, what if I could change society? But I can’t afford to go bankrupt doing this, I have to make money. My target is the 900 million people who use mobile phones. Can I sell 900 million? I don’t know. But if I sell a few million a year, it will get others to sell at that price. Right now, looking at the reaction (Aakash) has generated, we are forecasting a quarter billion dollars in revenue in India for the next 12-18 months. What’s happening is that the masses are reacting to it, which is fantastic. For the first time ever, Indians are proud of a Made-in-India product. There will be people who will trash it—for political reasons or because they promote other products. That’s fine. But if that rickshaw wallah thinks that this can help educate his child, and it actually helps educate his child, I think it’s a big deal. With regard to billions, that’s a fantastic number. But you know what, there are 1,200 billionaires in this world. I’ll be the 1,201th billionaire. Who cares?
Rishi Kataria, (DSM, Ist year): Steve Jobs has left us with a phrase called ‘connecting the dots’. How do the dots connect for you when you look back?
After I took my first company public, I remember coming to India on vacation and they were auctioning mobile phone spectrum. We were sitting on $10-15 million and we thought, I should use this money to buy spectrum. I thought we won’t be able to buy in bigger cities like Mumbai, but let’s buy spectrum in smaller towns, let’s go to Amritsar, Bathinda. Everybody I talked to laughed at me. They said these are products intended for the rich in Delhi and Mumbai. Nobody else needs mobile phones. And so we didn’t buy any spectrum. But if we had, we would have been in a different scenario today. Today, when people tell me the masses in India are illiterate and will not need mobile phones, they will not need the Internet, I disagree. A few years from now, everybody will be using Internet.
Gurmesh Vij (MBA, Ist year): What would your promotional strategy be?
I am going to focus on the price first. Quality is important. The perception that quality is better because I double the price and charge you more money is not true. Two years ago, Nokia had a 65 per cent share of the Indian mobile phone market. Today, its share is 30-35 per cent. Has the Indian market halved in two years? No. So who took this difference? Micromax, Karbonn, Lava and others. I’m not saying quality is not important, but if your salary is Rs 10,000, you won’t say this is not as flashy as the iPad or that I’ll take six months of my salary or three years of my savings to buy the iPad. Quality is all about meeting expectations and going beyond expectations. The expectation at Rs 3,000 will be so low, that it is very easy to beat.
Prerna (MBA, Ist year): Are you planning to launch this tablet in the global market? And will your strategy be any different then?
The strategy is going to be similar in some ways. The product features may be different for different markets. Our core market was the UK. There was a report that said 27 per cent of UK’s adult population does not use the Internet. To me, it is an astonishingly high number. So the opportunity exists everywhere. The Ministry of Education in Thailand invited us because they want to implement something like this. We received a personal invitation from the president of Sri Lanka and we will pitch this opportunity there. Turkey is launching a similar product. The whole world realises that for very little money, they can digitally empower their masses. India is very important for us for obvious reasons, but the intent is to enable this for as many countries as possible.
Ankur Arora (MBA, Ist year): You are targeting the customer segment that earns around Rs 10,000 a month. But are they really familiar with this technology?
Five years ago, if you saw a rickshaw wallah with a mobile phone, you would be surprised. A month ago, my children were here on vacation and we were at a friend’s house. We asked a rickshaw wallah to take these kids around the block. After the ride, he gave me a business card with his phone number on it. And he gave me another Indian concept. He said, “Sir, give me a missed call, main yahan par hi hota hoon.” The cellphone today is not a communication tool alone; it’s a commerce tool. If you allow the poor man the utility, the opportunity, he will create wonders that you cannot imagine. Five years ago, we would have been surprised if we saw a rickshaw wallah with a mobile phone. Today, we are surprised if we see him with a business card. Tomorrow we will be surprised if we see him with a website. Just watch—he will take advantage of the Internet as a commerce tool.
