Is this really low cost?

Low cost PC for the Indian rural markets… the ultimate elixir still being searched by everyone in the consumer electronics business. Every now and then we find one company popping out to say they have the cheapest one, this time it is HCL. Earlier there have been some noteworthy attempts like Wipro’s Janata PC, iNabling Technology’s iStation or bangalore’s own Simputer. Brilliant concepts which haven’t yet worked commercially.

Meanwhile i had recently met a Kolkata based PC manufacturer, Xenitis Group which had launched its ‘Aapna PC’, a low cost PC at Rs.9,990, raising eyebrows in the industry. Apart from the extremely low prices, they are also offering a range of PCs and laptops in funky designs and shocking colours in the price range of Rs.25,000-50,000. The basic model comes packed with a 128 MB RAM, 30GB HDD, 15 inch colour monitor, keyboard, mouse and Linux operating system.

Everything seems to be perfect, but then at this unbelievable price, how is the company going to make any profits? David Nair, CEO, Xenitis says, “We have a tie-up with Unitek, a chinese manufacturer who would supply 70% of our components. Later as volumes grow, we are setting up a 2,00,000 sq. ft first state-of-the-art manufacturing unit in West Bengal, to produce 20,000 units per month. The low cost PC is actually for entry level buyers and when they see other models, they would surely go for it.”

But then the low cost PC’s street price is actually Rs.12,240 including taxes. Doesn’t that take the shine of the price advantage… David clarifies, “No, anyone who buys a product knows that the local sales tax is extra. If your state is adding 12.5% tax on our own product, what can we do…” But then 12.5% tax adds up only Rs.1250, what about the rest of additional charges… “That’s the installation charges!” So finally after all the drama, we get a Chinese PC in funky colours with hidden costs. Let’s wait and watch how the market reacts to this low cost PC.