7iDigital

This post is based on our experience in trying to arrange low cost laptops for the Indian market, and we think some of the challenges will still apply in other markets, except in China, Hong Kong, Taiwan - which are truly the hubs of hardware innovation.

Getting an affordable laptop/notebook to end-customers/users is a challenging project, and needs a lot of coordination. It can be broken down into 3 over simplified stages:

1. Create a laptop notebook configuration that addresses the expressed needs of a large section of users
2. Supply chain management for ensuring manufacturing / assembly of the laptops
3. Manage logistics to ensure delivery and post-delivery support for the laptops

For us at 7iDigital, the first stage has been relatively simple because we are connected to the market ground realities/ market-demand through our 7to9 Retail business under 7Avenues.  Also, most of us have a corporate past which has helped us with this stage.

The third stage is also simple since it required us to mobilise our own network and this stage has been largely within our own control.

The biggest challenges come from the second stage. Component level prices for computer parts have been decreasing for quite some time. Below are a few examples of this trend:

a) Permanent storage media (laptop hard drives and flash drives) are now available at a fraction of price compared to a few years ago. Just the other day I saw a 16GB flash drive for a sale price of less than Rs.
2000/-. For comparison, a 2GB flash drive was avaialble around the same price almost exactly one year ago.

b) Prices of laptop processors with a good level of performance (more than 1GHz) have also decreased substantially since the launch of these processors.

Such a price trend should, in normal circumstances, make it easier to innovate with a given set of specifications and create a truely amazing and affordable laptop for the end users.

But an almost total lack of manufacturing capability in India, so far as laptops notebooks are concerned, makes innovations in this phase a really daunting task. While there are some companies that do component level design and development for Desktop PCs, there is virtually no-one (with a possible exception of an OEM in Kolkata) that undertakes design and manufacturing of components that are made specifically for laptop notebooks, and their demands for lead-times can break your business case.

There are many companies that claim to be “OEMs/ manufacturers of laptop notebook components” who actually just do repair or original spare parts for expensive branded laptops, and therefore their profit margin expectations don’t allow them to participate in low-cost laptop notebook.

To understand this state of affairs, let’s understand a few technical things related to laptop design (as against Desktop PCs).

First and foremost, the laptop motherboard and base chassis have to co-develop. This is hard requirements since the jacks and external interfaces, such as audio ports, USB ports, power socket etc, provided by the motherboard need to be exposed through the base chassis. This design also must provide for a safe housing for the HDD, Memory slots, and Optical drive that need to be accessible from outside the body without completely opening up the laptop chassis. All these components should typically make up a square base - which is the typical form a laptop base chassis makes.

Secondly, the design of laptop base chassis needs to consider the heat that gets generated during operation of laptops. Temperatures above 40 degrees celsius are normal but the system may get damaged if proper outlet for heat is not provided.

These factors, in addition to the precision design required for the LCD panel connectivity with the base chassis, make the task of laptop design an extreme precision job as against the design for a desktop PC chassis where none of the form-factor considerations play a role.

Technical aspects aside, there are also some business considerations that lead to this situation.

Hardware design and manufacturing is capital intensive and typically breaks-even in a longer time period (compared to other fields associated with computing). Also, the shelf life of these products is generally low because of quick update cycles for the products which requires vendors to periodically invest in their operations to keep their products refreshed.

The above in a nutshell provides an overview of hardware manufacturing (and constraints) in India - and we want to change some parts of this picture through our venture. Stay tuned and register at http://www.7idigital.com for updates and offers as we go live in the very near future!