$35 PC from India

A couple of weeks ago the Indian government showcased the debut of a new $35 dollar computer (http://www.pcworld.com/businesscenter/article/201769/indias_35_pc_is_the_future_of_computing.html?tk=hp_pop ). This computer seems like it does most of the functions expected of a PC such as web browsing, word processing, and video-conferencing. The target price for this product is $10 once mass production starts. One can thus forgive PC World magazine when it calls this new product “the future of computing”.

This ‘frugal innovation’ is in line with what Indian organizations have been doing for a while now. The drastic drop in pricing is not simply due to locational advantages but is driven by a fundamental change in the way products are designed and delivered (this PC can use solar power too). At the 2008 Strategic Management Society special conference held in Hyderabad, India, the late Professor CK Prahalad talked about the costs associated with EMRI, which handles emergency calls (such as those made to 911 in the United States) in the state of Andhra Pradesh at a cost which is about 2% of the costs associated with similar services in the US, at comparable quality levels.

There is an increased awareness in India that marginal reductions in product cost are not going to help Indians continue to grow GDP at the 8-9% that they have recently gotten accustomed to. While product ideas typically continue to be generated by firms outside of India, there is urgency in reverse engineering these products and making them available at a fraction of the original cost – but doing so by going beyond the original product’s promise. This appeals to the concept of ‘jukaad’ that most Indians innately understand. Jukaad represents concepts partially captured by words such as ‘somehow’; ‘make-do’; ‘can-do’. What it means is that “okay given that I know what I want – I need to make it happen, no matter what the obstacles are”. This entrepreneurial yet frugal mindset has been a hallmark of key business people from India.

What has changed in recent times is the collaborative nature of the public / private entities; along with policy changes necessary to make it happen. India has had the advantage of superb engineering colleges such as the famed Indian Institutes of Technology (IIT); their graduates populate many of the firms of the west. What is happening now is the IITs are now encouraged to collaborate with private entities to develop products that will be sold not just in India but beyond. It is important to note that this product was launched by the government of India and not by an individual firm. The government of India (HRD ministry and Department of Science & Technology) is starting to take a more active role in innovation, which resembles what MITI did in Japan, in its focus on garnering requisite resources for innovation rather than focus on allocating resources for production.

So what does this mean for India and perhaps the world? Kapil Sibal, the Indian HRD minister who launched this product has suggested that the goal is for the “the solutions for tomorrow” to emerge from India," (http://www.bbc.co.uk/news/world-south-asia-10740817 ). The median age in India is a little over 25 years and about a third of the population is below the age of 15 (https://www.cia.gov/library/publications/the-world-factbook/geos/in.html ). Handing this group of young people a tool that can unleash creativity can only be good for world welfare – which may not be the same as the short term welfare of firms competing in the same product spaces. The option of not taking this building crescendo of frugal innovation (from India and other countries) seriously is one that managers everywhere take at their own (and their shareholders) peril.