A notebook for a song

As the notebook market burgeons, vendors are innovating furiously. The latest salvo in the war to increase notebook penetration is ACi’s sub-30K Ethos V. Akhtar Pasha comments on the prospects of a notebook that sells for the price of a desktop

Notebook PCs aren’t for everyone. They have remained a luxury in India, even for business users. While the situation isn’t expected to change drastically anytime soon, there is cause for cheer—unbelievable as it may sound, you can now buy a notebook PC in India for under Rs 30,000.

ACi (Allied Computers International) Asia has just launched the ACi Ethos V, based on a VIA processor, at a price point of Rs 29,999. This is roughly Rs 15,000 less than the cheapest MNC branded notebook retailed for in the past Given this, the company hopes to sell 60,000 units of the Ethos V by March 2005.

ACi wasn’t the first vendor off the starting blocks with a sub-30K notebook. That honour belongs to Kobian, which introduced a sub-Rs 30,000 notebook (G320) based on a VIA processor in early 2004. Kobian went in for a soft launch and it has sold units to banks, educational institutions and manufacturers, shipping about 1,000 units through its distributor Mega Net. Says Sunil Sharma, managing director, Kobian India, “We had a soft launch of the G320 in India; we wanted to set up support centres before we marketed the product. We’ve now set up 15 service centres in key locations, including a toll-free number for assistance. Sales will be in full swing from June 2004.” Between these two vendors, the entry-level notebook has been redefined for good.

How the numbers stack up

While Kobian is easing into the notebook market, ACi has gone all out and sold 800 units (valued at Rs 2.4 crore) of the Ethos V in April, the first month of its launch. In May, the company more than doubled sales to tot up 1,800 units valued at Rs 5.4 crore. Says Sanjeev Sharma, regional sales manager, ACi (Asia) , “Between June and July, when admissions to management institutes begin, we plan to sell 4,000 units.”

Sanjeev Sharma says that [as part of its notebook strategy] ACi wants to have 500 channel partners by the end of this year and will spend Rs 7 crore in setting up operations, marketing and training channel partners

Amit Rakhecha, proprietor, Nucleus Technologies, [ACi’s sole distributor for Karnataka] says, “We have sold 100 units of the ACi Ethos V since its launch and we not received any complaints from our customers. Currently, the Ethos V is in short supply. We are delivering within ten days of order confirmation because of the heavy rush for this notebook model.”

Let’s not go by figures trotted out by the company. Instead, take a look at the customers who bought the Ethos V. The list includes blue chips such as ITC, Goodlass Nerolac and WIDIA India, IT companies such as Hexaware and several management institutes including the Indian Institute of Information Technology (IIIT) Bangalore and Hyderabad.

Says Sanjit Sinha, head, Hardware & Channel Research, IDC India, “The notebook market is expected to grow to 116,000 units in 2004 up from 84,000 in 2003. The impact of entry-level notebooks such as those from ACi and Kobian on overall notebook sales is something we need to watch in the April-June and July-September quarters before we take another look at the projected growth [figures].” He adds that although selling large volumes is easy, countrywide customer support will play a critical role. Industry pundits say that if ACi’s plans work, entry-level notebook sales will give the overall notebook market a 20 percent boost.

According to Prof S Sadagopan, director, IIIT-B, a notebook for less than Rs 30,000 is a steal. “The high price was the entry barrier that discouraged institutions from investing in notebooks. This is going to change with the entry of low-end notebooks from ACi. There’s a significant market for such notebooks— I foresee an annual market of 100,000 units. An important market for these notebooks will be management institutes and business schools that are making it mandatory for students to possess a notebook computer,” he says.

Sadagopan points out that notebooks let students take notes while listening to seminars and allow them to participate in online discussions. Since students don’t normally need to run high-end applications, the configuration offered by ACi will suffice. Furthermore, as the shelf life of a notebook is just two to three years (which also happens to be the average duration of a management school course), students continue to benefit even after they leave the institute and they can take their notebooks home.

Support is the key

In the first phase of implementing its go-to-market plan, ACi has set up sales and support centres at Delhi, Kolkata, Bhubaneswar, Bangalore, Hyderabad, Ahmedabad and Pune. In phase two, it plans to open sales and support offices in Goa, Chennai and Indore. This will happen by mid-2004. Says Sharma, “We want to have 500 channel partners by the end of this year. We will spend Rs 7 crore in setting up operations, marketing and training channel partners.”

ACi is offering a choice of ‘PC Protect’ plans; these are annual service packages designed for notebook users that provide comprehensive insurance against both normal and accidental breakdown, loss and theft protecting users from the high service costs that are normally associated with notebooks. For this, ACi has formed an alliance with Oriental India Insurance. Says Sharma, “Customers can avail of this option by making a one-time payment of Rs 3,000 to get an insurance cover and warranty support for three years.” This option is available on all ACi notebooks. Normally, customers have to shell out 10 to 12 percent of the cost of a notebook just for the annual AMC (annual maintenance contract). Kobian does not offer insurance or extended warranty support to its customers.

Casting the net far & wide

ACi has tied up with IDEA Cellular to tap a larger audience. An alliance with ICICI bank is on the anvil, it should fructify soon. Says Hirji Patel, chairman, ACi (Asia), “The tie-up with ICICI and IDEA gives us access to 30 lakh customers of ICICI Bank and 5 lakh customers of IDEA Cellular respectively. An ICICI or IDEA customer will get an Ethos V at a subsidised rate ranging from 15 to 20 percent off on the MRP (Maximum Retail Price) under the PC Protect plan.” The company is expecting a big chunk of its sales to come through these alliances.

Made in Mumbai—the new credo

ACi intends to shift its manufacturing base from London to Vasai in Mumbai. Says Patel, “We’re moving our manufacturing base to Mumbai because the labour cost in India is a fifth of what it is in the UK. Manufact- uring in Mumbai will let us further reduce prices. It will also help us expand into other markets from India.” ACi’s plant in Mumbai will have the capacity to manufacture 20,000 units a month. The company is planning to get an STP license for export incentives. It will be interesting to see how H2 2004 shapes up, as ACi’s sub-30K notebook shakes up the notebook scene.

The status quo remains

While the entry-level notebook has been redefined with Kobian and ACi’s sub-30K models, there’s still a large market for performance-driven notebooks and there, the status quo remains. Sanjeev Keskar, country manager, AMD Far East (India), says, “AMD Athlon XP-M based mobile platforms are available from Acer, Fujitsu and HP-Compaq today, offering the best value for money in the performance bracket.”

Meanwhile Intel is offering the building blocks of a notebook to local OEMs. These notebook assembling partners are known as Mobile Channel Leaders (MCL). They use Intel’s base platform to create their own notebook brands. G B Kumar, director-Sales, South Asia, Intel says, “MCLs are selling Celeron-based notebooks at sub-Rs 40,000 price points. These are fully functional notebooks and we are finding takers in both SMBs and universities.” Kumar doesn’t see a possibility of reducing the price of Centrino-based notebooks beyond what has already been accomplished.

ACi's clientele for the Ethos V
Customers	Units purchased
ITC	2,000
International Business Division of ITC	400
Goodlass Nerolac Paints	110
Simplex Concrete Piles (India) Ltd	145
Hexaware	100
IIIT-Hyderabad	400
IIIT-Bangalore	300
SIDVIN College	140
Kalinga Institute of Industrial Technologies	400
Source: ACi (Asia)

akhtar@expresscomputeronline.com