Amazon's new low-cost tablets aren't the answer, but we're almost there, argues Vivek Wadhwa.
MENLO PARK, Calif.--Vivek Wadhwa bubbles -- not like a fountain but like water in a pot coming to boil.
He's was bubbling when he showed up the other day at a Starbucks here, running a little late and offering apologies.
He jumps right into it: "I seem to be finding trouble these days!"
There's the guy whose magazine article seemed suspiciously Wadhwa-like in its discourse on immigration. (Wadhwa has a heart-to-heart with him). Then there was the Washington Post, whose editors called him the night before looking for a piece about Amazon's new low-priced tablets.
He agreed, finally, and "banged something out." It's another tremor in the ceaseless series of micro-quakes we're feeling across the innovation landscape.
When magic happens
Boiling it down, Wadhwa's take is that tablets really won't take off until the price point sinks below $100. That's the tipping point at which mobile phones hockey-sticked up and to the right.
"The technology already exists to create sub-$100 tablets, but without the high-definition retina displays, superfast processors, and other bells and whistles that Amazon, Google, and Apple are constantly hyping. I would argue that, for most applications, such as the ones I mentioned above, you don’t need these advanced features."
He points to the Aakash tablet project in India. Outsourced to a company called Datawind, the initial version targeted a $35 price point. In Wadhwa's view, it was flimsy and had a few other drawbacks. The second version, he says, will feature an ARM Cortex A8, feature Wi-Fi and cellular radios and run Android. Price? $63. (He's promised me one, so stay tuned).
At these prices, Wadhwa says, "magic starts to happen." (At this point, he bubbles up again about electronics, software and social impact and an amazing future.)
Right now you're thinking, "Fantastic! We're pricing ourselves out of existence as electronics designers."
In reality, not really. Cost reduction and the reformation of the electronics design and supply has been underway since the day the first semiconductors came to market.
Race to the bottom?
In the future, if you make a low-cost device at 10 percent or lower margin and make it up on billions in volume, you've got a business. The analog and passives guys know this.
If you make a low-cost device that sells for $50 and you make it up by bolting on to it an ongoing software service, you've got a business. Apple's managed to make high-margin electronics AND services.
Often it just takes looking at a problem from a different angle. The MIT-led One Laptop Per Child project targeted India as well, but from the more expensive PC context. It flopped.
Companies like Aakash approach the problem from the cell phone paradigm.
It's a different way of thinking about our world, which has churned like a mighty engine for more than 50 years and will continue to do so with some new approaches and different thinking from people like Wadhwa, who challenge the conventional wisdom.
The Apple I cost $666. The current iPad is only slightly less, but with vastly greater functionality. If there is a race to the bottom, it has been moving at very low speed. Smart to draw a distinction between highly functional consumer electronics and low-cost, minimalist gadgetry. Also smart to be aware of pricing conditions in different markets.
Dan, thanks for your comment and good point.
It's tricky to value these things... For instance at those 1976 levels, the Apple 1 would cost more than $2,600 today and today's low-end iPad 2 would have cost about $100 in 1976. Clearly the functionality is orders of magnitude different.
An amazing achievement.