Indian companies slim cost of IT with thin clients

Indian companies slim cost of IT with thin clients

What does a developing country like India do when plans to accelerate the adoption of computers by businesses and consumers have to overcome the high price of computing hardware and software?

It builds a computer that doesn’t use costly products from Microsoft Corp. or Intel Corp., and seeks out cheaper alternatives that can get the job done, said Deepak Phatak, a professor at the Indian Institute of Technology Bombay.

“Affordability is the key to making IT happen in developing countries,” Phatak said.

The problem is that existing notions of affordable prices for IT products, such as PCs and software applications, have been defined by the Western world and do not match what developing nations can afford, he said.

“This leaves only two choices. One, if you can’t afford it, well, don’t use IT: use paper and pencil and continue to lag behind. Or two, build your own affordable solutions,” Phatak said.

For India, this means finding a cheaper alternative to the PC for local companies, he said.

The country currently has just seven PCs for every 1,000 people, far behind the 37 PCs per 1,000 people in China, Phatak said. And while India is on a drive to accelerate the adoption of computers by business and consumers, there is a lot of ground to cover before it can match China’s PC penetration rates, let alone those of developed nations in the West.

Meanwhile, the gap between India and other countries continues to widen. Desktop PC sales in India are expected to reach 2.6 million in 2003, according to Kitty Fok, the director of personal systems research at IDC Asia-Pacific. That pales in comparison to China where desktop PC sales are predicted to reach 12.9 million this year, she said.

The problem, as Phatak sees it, is that PC prices are too high for Indian companies to afford.

“The PC costs are not coming down below 35,000 rupees (US$763),” Phatak said.

To overcome this obstacle and spur the wider adoption of computers in India, Phatak is pushing for increased investment in IT and lower prices for hardware and software.

“I’m telling the government, the large companies, small companies, ‘Quadruple your investments. Invest four times as much as you are investing.’ And to IT companies I am saying, ‘Give me solutions at one-quarter the total cost of ownership,'” Phatak said.

“They call me mad for that,” he said.

To help bring down the cost of computers, Phatak is promoting the adoption of a low-cost thin client based on Via Technologies Inc.’s 800MHz C3 processor, rather than a more expensive chip from Intel, and Linux applications that run on a PC server.

Opting for a thin client instead of a desktop PC saves money in two ways. Thin clients don’t require a hard disk and the 800MHz C3, which costs US$22 in 1,000-unit quantities, is cheaper than processors from both Intel and Advanced Micro Devices Inc (AMD), he said. The cheapest desktop Celeron processor listed on Intel’s Web site is a 2.1GHz version of the chip, which is priced at US$69 in 1,000-unit quantities.

The lower price of the C3 helps bring down the cost of the thin client – which includes a 15-inch CRT (cathode ray tube) monitor – to 14,000 rupees, Phatak said. That price may fall to around 10,000 rupees next March if the Indian government follows through on an expected cut in tariffs on computer components, he said.

When it comes to software for the thin clients, Phatak has chosen Linux and other open-source software. This provides an alternative to software from companies like Microsoft, which require expensive software licenses, he said.

“We touched base with Microsoft in this regard. But Microsoft’s pricing for the operating system and applications, and the application infrastructure, still proved to be too costly and that is why we have chosen the open-source route,” Phatak said.

Linux and open-source software may currently be seen as the most affordable route for India’s push to expand the use of IT by local businesses, but Phatak is no open-source ideologue. His goal is to see the price of building an IT infrastructure become affordable to IT companies, regardless of the specific software or hardware involved.

“We have picked up open-source software as the base today because it happens to be affordable. If something else becomes affordable, we … do not play favourites with either technologies or products,” he said. “We are innovators and we’ll innovate on whatever is available.”

Phatak’s vision of thin clients running open-source applications is starting to take hold.

Life Insurance Corp. of India, the country’s largest financing company, will roll out 10,000 of these thin clients in 2,000 offices across the country between now and the end of this year, said Tim Goldring, the chief executive officer of VXL Instruments Ltd., which is manufacturing the thin clients in Bangalore, India.

In addition, the Maharashtra State Police will put these thin clients in 900 offices in the Indian state of Maharashtra and the State Bank of India plans to deploy them at 10,000 branches across the country, Phatak said.

“I would expect the growth (in thin client shipments) to be exponential,” Phatak said. “I believe in the first year the numbers could be as few as 100,000, but the fourth-year and fifth-year numbers should go up.””My ambition is that we should sell 20 million PCs every year, for the next five years at least,” he said.