The $100 Un-PC

The difference between Jain's approach and Negroponte's is stark. Negroponte is world famous, and teamed up with Rupert Murdoch at Davos to promote One Laptop per Child (OLPC), a program to get computers into the hands of poor, rural users. Negroponte's XO laptop is truly innovative in its own right: it has no moving parts--it uses flash memory instead of a spinning hard disk--because they are prone to failure and overheating, and it uses so little power that it can run for hours on a car battery and can be charged by hand in a pinch. To extend Internet access, it uses "mesh networking" technology that turns each device into a relay that bounces the network onward.

But the XO also needs help. Though Negroponte promises he'll meet the $100 mark by the end of 2008, today each XO costs about $140, even with subsidized parts. AMD, for instance, offer its processors and Chi Lin Technology supplies screens at prices below what they charge for-profit companies. So OLPC is dependent on the kindness of wealthy partners, and does not get great reviews for performance--at least from rivals in the for-profit business. Microsoft's Bill Gates has disparaged the machine as an underpowered and obsolete PC, and Intel executives call it a "100-dollar gadget."

Novatium's approach has been to completely redesign the computer, slashing costs while keeping the form and functions typical of a top-end PC. Once it's set up, it doesn't look all that different from a conventional PC--the basic box plus a keyboard and monitor. It installs and operates as simply as a television--you plug it in and switch it on. And the money doesn't come from government budgets or philanthropic largesse, but from Jain's profit-oriented business model. "We do want to serve people, but we want to be profitable first," says Novatium CEO Alok Singh, who was hired for his experience bringing new products to market at Cummins Auto Services Ltd.

Negroponte is critical of Novatium's approach. For one thing, he argues that reliable networks aren't available in the rural areas where his target users live. He's adamant that the XO's approach, in which software resides on the PC, is better suited to India's needs. "The [Novatium] thin-client approach is not suited for the poor or developing [countries], because it leads to a metering economic model and presumes a stable, omnipresent, broadband network," he said in an e-mail. It's "a bit like buses versus bicycles. I would recommend the bicycle for daily use."

The Novatium team makes no apologies. It is not targeting the deeply poor rural farmers that Negroponte sees as his market. It is looking first to make money on the urban middle class, where many people are too poor to buy PCs but have ready access to cable and telecommunications networks. Taking inspiration from University of Michigan management expert C. K. Prahalad, author of "The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits," Jain says that in India's PC market there are 10 million relatively wealthy Indians at the "top of the pyramid" who buy computers just like consumers in developed countries. There are an additional 30 million urban Indians at the "middle of the pyramid" and 100 million very poor Indians at the "bottom of the pyramid." "What we are saying is how can you dramatically bring down the entry levels for computing in this country and make it accessible to the middle of the pyramid?" he says. "This is the sweet spot."

Novatium, of course, has a long way to go. It needs to build a network along the lines of those run by India's mobile and Internet service providers. For that, the company will need to partner with telecom or cable companies that are pushing broadband Internet access. (It is working to line up a contract with a few small cable companies, which if successful could lead to deals with larger broadband firms like Airtel, Hathway, Sify, Tata Indicom and state-owned BSNL and MTNL.) Success will bring competition from Western firms such as San Jose, Calif. -based Wyse, which already sells some network PCs to India's IT firms. But Wyse and the others aren't yet interested in the home market. And Novatium has licensed its technology to Sun Microsystems for the enterprise and education markets so Novatium can focus on selling to home users. Jain is hoping that that head start plus a rich offering of features--such as streaming video, video-on-demand and voice-over-IP, which other low-cost thin-client PCs don't offer--will give Novatium an edge for at least a few years.