Wednesday, January 23, 2008


Low cost computing and the Tata Nano

A recent editorial in the Hindu, Why not a Rs 5000 computer?,
triggered by the launch of the Tata Nano, the world's lowest-cost
production car, got me thinking about why there is so much focus on
this notion of `low-cost'. There is frenzied media attention
heralding the arrival of this car, and the debate about its pros and
cons rage on. The Tata Nano is a car and hence it is obvious what its
owner will do - drive his family from point A to point B, happily ever
after. When we step back and look at the broader picture, many
questions arise - How low is low cost? Can everyone in India buy a car
now? Is the ultimate goal of India to enable every citizen to own a
car? Is that feasible? What are the alternatives? What is the impact
of such a vision on oil prices? On infrastructure? On the environment?

Now to expect Mr. Tata to answer all these questions is unfair. He
runs a well established automobile manufacturing company that aims at
making and selling as many vehicles as possible, as any automobile
company would. He has simply identified the need for a car at a price
of Rs 1 lakh, just as he has identified that there is a market for
cars like the Jaguar. Unfortunately, Mr. Tata has put himself in a
situation of having to face the above questions; by invoking his dream
of putting the common Indian family on four wheels. This in itself has
unearthed tougher questions - Why is it a given that personal
transportation is preferable to public transport? Why not apply the
innovative machinery of the company to bring fantastic public
transportation vehicles to the market?

Back to the question of low cost computing. The situation here is a
lot sketchier. The car, obviously, has a clear function that is well
known to all. However, very few people are clear about what a computer
is for, especially a computer in every child's hand. The OLPC has held
worldwide media attention for the past two years with its promise of a
US\$ 100 `one lap top per child' program. Apparently, it is now
available for sale in the US for something like US $180. Not to be
left behind, Intel has announced a low cost laptop called the
Classmate, which is being marketed in India and elsewhere. HCL and AMD
have come up with sub-10,000 rupee desktop PCs as well.

The major difference between the Tata Nano and these low-cost
computers is that it is not clear what the owner of one of these, (in
this case a school child in a developing country), will do with his or
her possession. Let us do a thought experiment: Assume that some
company with a magic wand produces a US $1 laptop. Obviously, every
child across the planet (even at this price, many countries will need
assistance from donor countries, but I quibble) will manage to get his
or her own laptop. The first school day of this golden era dawns and all the kids
march into their class with their own laptops. What next? Let us pause
and ponder.

Will these kids spend six to seven hours of school time with the
laptops? What do they do with the laptops? is there a clear plan
or vision in anybody's minds of how one laptop per child will be
used in classrooms (where they actually exist) across the poor
and marginal countries of the world?

If pushed on this question, technology companies like Intel and AMD
will say, that they merely technology companies, and not educators. The
only thing they can do is to bring out better and better machines at
lower and lower prices. It is up to educators and governments to use
these marvelous enabling technologies. Of course the same fall back
is not avaialble to the OLPC project. The US $100 price-tag doesn't include costs of set-up, maintenance, training of teachers, or connectivity. How then, can the OLPC project, or anyone else for that matter, claim to know that a laptop in the hands of every child will eradicate illiteracy and poverty? (It is another story that they carefully avoided targeting developed country markets for their wares).

The media needs to take a significant part of the blame for the current
situation. By not asking the right questions, by not being sceptical
of claims made by technologists, by conjuring images of a glorious
technological utopia, they mislead the general pubic - making it seem like we are on the brink of imminent technological nirvana.

There are books like `The Flickering Mind: The False Promise of
Technology in the Classroom and How Learning Can Be Saved' by Todd
Oppenheimer, which report painstakingly detailed studies conducted
across American public schools. The title reflects the conclusion that
at best, there is no conclusive evidence to show that hundreds of
millions of dollars spent on computing technologies in schools has
created any real benefits to school education, and at worst, that it is a
misdirected waste of scarce public resources. The blog world is full
of experienced people who question the claimed benefits of these
low-cost technologies in education. However, such reports and
discussions are not given any visibility in the mainstream media, and if
at all, they are dismissed as Luddite ravings.

So what is the relevance of computing, if not low-cost computing, for
countries like India? There are many examples in India where mobile
computer technology has benefited the general public. In Karnataka,
more than 10,000 buses of the state road transport corporation (KSRTC)
run with conductors who are equipped with mobile ticketing machines.
These machines have transformed the working life of conductors,
increased the revenues of the corporation, reduced pilferage and inefficiency, and reduced the overall convenience of the travelling public.
Another quiet revolution has taken place in utility billing. Again, handheld
terminals with printers have ensured reliable and efficient billing of
electricity and water utilities across the southern states. These devices
number in the tens of thousands.
Neither of these have found much coverage in the media. Here the traditional question of `How low is the cost of these machines?' is the wrong question to ask. The right question is, `What is the return on the investments made in technology for the corporations involved?'
Clearly, these corporations will be able to quantify increase in revenues. For the ticketing and billing machines,
the returns have been consistently high and hence these are being
expanded to cover more regions and States.
But in a domain like education, there is clearly a paucity of measurable
quantities. The standard measures used are test scores and exams, and
even here, no study has established any correlation between the use of
computers and performance. Hence, governments, industry, educators
and the general public are focussed on a quantity that everyone can
grasp - the price of these computers.

Reverting to the Tata Nano, the broader questions that media should
focus on are the following: Why is so much prestige attached to
personal ownership of cars? Why is there so little thought and
attention given to public transportation and its improvement? For computers, the relevant questions are similar. Why is there so
much prestige attached to `computers'? The general perception, stoked
by countless marketing dollars and the media, is that anyone dealing with computers is someone who has `arrived'. Hence the fond wish of millions of middle
class parents that one of their children will get into the field of
`computers', and the unproven corollary that owning a computer somehow
makes the owner move up the proverbial ladder.

Let us extend the earlier thought experiment a bit and assume that now
everyone can get a PC free. (Who would have thought even in the
nineties that a state government could give free colour TV sets to poor
households?) What will an average household do with it? I can't think
of anything worthwhile without having data connectivity. With the Internet, there is e-mail, IM, social networks, Second Life, and downloadable movies and songs, all for free (except of course, bandwidth costs bite at the end of the month). Diligent students can benefit from sites
like the MIT Open Courseware. But is there a comprehensive way to measure the
impact on the household because of the presence of the PC?
If we step back, and again, look at the larger picture - with hundreds of millions of people accessing the Internet - the issues of how to provide bandwidth to meet all these requirements and the costs of such bandwidth need to be considered. Will the focus then shift from low-cost PCs to low-cost bandwidth? There is a phrase made popular by
the late Dewang Mehta - Is it Roti, Kapada, Makkan aur Bandwidth?

One political luminary has already demanded that Tata give
away 10 lakh Nanos free in return for the subsidised land acquired
for their car plant. This will presumably be followed by another demand
for free petrol. Otherwise how will these 10 lakh newly endowed
citizens drive their Nanos? These will certainly be real scenarios
unless all of us - industry, academia, government and the media - start
focusing on real benefits of technology rather than on the
costs of a few glamorous manifestations like cars or computers.
This obsession with `low-cost' is an enormous red herring.

The same Hindu editorial had this to say about the exploding mobile phone market in India. ``... the right devices with a good value proposition are assured of success".
This statement shows a glimmer of the right approach to looking at
computers. `Why not a Rs 5000 computer?' is the wrong question to
ask. The right question is, `What is the value proposition of the OLPC
or the Simputer or your favourite computing device?' Or more
specifically, `What is the value proposition of these devices to primary
schools in rural Karnataka?' Such questions will then direct attention
to the output, the benefits of computing, rather than the input, the
price of the computers. The price of the device eventually says nothing of relevance about the usefulness of the device.
For a cell phone, the use (and the value proposition) is crystal
clear - the cost per call, the value of making the call to the calling and receiving
individual, and the relative inconvenience of alternate options to the call (letters, registered
post, physical travel, etc.) The end user has all the information (despite attempts by telcos to obfuscate the pricing details)
to understand and evaluate the value proposition. Hence the explosion of the mobile phone in India.
The value proposition of the Tata Nano will emerge as users find out
all the details of owning and using the Nano - fuel efficiency, ride
comfort, ease of driving, cost of maintenance, cost of spare parts,
quality of service, the time taken for reaching a destination in a Nano
compared to a two-wheeler, the safety of a Nano compared to a two-wheeler, the cool
factor of driving the latest two-wheeled sensation rather than a cheap car, and so on. These factors will be worked out by the consumer who will then arrive at the Nano's value proposition. The sticker price of Rs 1 lakh may have very little to do with it at that point.

Similarly, unless the general public can evaluate the value proposition
of computing, any amount of hype surrounding any low-cost technology,
indigenous or imported, is merely a distraction. Unless this is recognised by
the general population, the notion of low-cost computing will serve
only to keep the media, and writers like this one, busy.

Dear Manohar,

The issue I think, only few innovators actually think of "realistic" value propositions for their products while making it while others will arm twist themselves and try to get the consumers believed. It's foolishness.

One should think a lot on the consumer value proposition before even trying to conceptualize the product, be it in technology or in automobile.

Ratan may not win over the youth with his Nano as it still a cheap car! A Honda 700cc fancy bike with a sticker price of 1.2 lakhs may beat Nano if introduced!

- Vasudevan
I thought that was a well-written analysis of the phenomenon. Since last penned about, the Tata Nano bug has spread: Bajaj-Renault-Nissan, and (apparently) GM are considering a low-cost buggy. I wonder if *competition* is also cause for multiple companies to take the (possibly misguided) plunge.
hello Sir

I didn't know this was your blog. I am reading your other posts too.

Great thoughts. Especially on this post.

We do get lost in the media hype and don't look at value propositions. Tata Nano isn't such a great value proposition in a crowded city with increasing fuel prices.

Maybe if tata had brought out a similar small electric car like REVA (how come media doesn't give as much attention to that?) it would have made sense. But even then this would be following the western model of a development cycle.

I don't understand why our government follows a western development cycle of constructing BIG roads with flyovers etc. These cannot satisfy the needs of a large population like ours.

If every Indian family starts having two cars like in the west, we won't have place to drive no matter how many roads are there! The government should be focusing on basic stuff like providing PUBLIC transport instead. :)

As a nation we can jump 30-40 years in the development cycle by implementing such common sense solutions!

Do keep posting.

Abhijit Bera
I think, focusing on low cost technology is not all that bad. low-cost technology generates chain reactions, to achieve a bigger objective. These are only small steps towards a bigger goal. One person thinks of a low cost laptop, another thinks of a low cost data plan and eventually, some body will think of a digital class room. Hence, addressing the real problem. low-cost technology might not solve the real problem, but it definitely creates an environment for that.

Well.. thats only an opinion. I could be wrong though :)
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