The $100 Un-PC

In a humble residential neighborhood in the south Indian city of Chennai, Hema Malini--a quiet 13-year-old girl whose hair was braided with jasmine flowers--switched on the family television and a curious new device called Nova NetTV that was connected to the TV and a keyboard. In a few seconds, the Microsoft Windows logo appeared, and suddenly her TV was transformed into a PC. With her mother looking on proudly, Hema fired up encyclopedia software, checked her e-mail and Googled for a site that offers free versions of Nintendo's Mario Bros. games.

If Rajesh Jain is successful, the NetTV, which hooks up to any television, could be the first in a family of devices that connect the next billion people to the Internet. Jain, 39, is cofounder and chairman of Novatium, the Chennai-based company that makes NetTV and NetPC, a similar product that uses a normal computer monitor. Both are based on cheap cell-phone chips and come without the hard-disk drive, extensive memory and prepackaged software thatadd hundreds of dollars to the cost of regular PCs. Instead, they are little more than a keyboard, a screen and a couple of USB ports--and use a central network server to run software applications and store data. Novatium already sells the NetPC for only $100--just within reach of India's growing middle class--and Jain believes he can soon drive the price down to $70.

Entrepreneurs, philanthropists and established computer firms have for the better part of a decade invested millions of dollars to lower the cost of a desktop PC and develop cheaper alternatives. Intel has made its Eduwise laptop; AMD, a Personal Internet Communicator; Microsoft, the FonePlus. MIT computer guru Nicholas Negroponte's Children's Machine, now called the XO, is the most publicized recent attempt at converting the poor into computer users. But Negroponte's idea is to spread computers to the poor, with the help of heavy subsidies from private and public philanthropy. His price is still about $140, too high for India. Indeed India rejected Negroponte's offer of a million for cost reasons. Jain's motive is different: he wants to make money.

And he knows India. Despite the country's rise as an outsourcing hub, PCs are selling slowly--far more slowly than mobile phones or motorbikes--because they are too expensive, too complicated to use and too difficult to maintain. What people have been waiting for, some experts think, is a new approach to computing that boils the essence of Internet access down to its lowest cost--and lowest risk. Jain plans to offer all this in lease deals that include easy-to-use hardware, Internet connection, application software and service--for $10 a month.

This formula could provide a long-sought bridge over the digital divide--and may just change the way the average person thinks of computing. The solution would open up a huge new market for Internet service providers, starting in India but possibly spreading to other emerging markets, a possibility that is already attracting the attention of the world's biggest computer companies. It would become a target for innovation on a global scale, forged by immense competition for new customers, and that would have a big impact on the PC world in the West. And if the winning formula turns out to be Jain's, or something like it, it could kill the PC altogether.

Google's push into web-hosted software and Web-based data storage is already prompting the world's software makers (including Microsoft) to rethink a business built on selling copies of software for installation on hard drives. As a consequence, the compulsion to upgrade to a more powerful PC every few years is gradually disappearing. As PC sales slow, hardware makers are looking to the developing world as the source of future profits. But if Novatium or a similar competitor succeeds, that market won't ever materialize. Dell, Hewlett-Packard, Compaq and the rest will have to phase out PCs and concentrate on devices that are similar in concept to Novatium's NetPC. The hardware business will be dead. The real money will be in providing the network, applications, data storage and other elements that are even now becoming synonymous with computing. Compaq will have to become more like Comcast.