The Hindu Business Line : Competing on low price, energy use

Stephen A Dukker brings more than 30 years of experience in computer manufacturing and retailing to NComputing, a company that offers low-cost computers and competes with One Laptop Per Child's X-O and Intel's Classmate PC.

NComputing's products are based on a simple yet rarely realised fact - today's PCs are so powerful that the vast majority of applications only use a small fraction of the computer's capacity. This is where NComputing's virtualisation software and hardware tap the unused capacity. This allows the capacity to be simultaneously shared by multiple users. Each user's monitor, keyboard, and mouse connect to the shared PC through a small access device. The access device itself has no CPU, memory, or moving parts - but that is why it is easy to deploy and maintain, claims NComputing.

Now the company is bringing its products to India. "The Central and State governments are working hard to bring the power of computerisation to the larger population and we understand and appreciate the cost and complexity of the task. Can you imagine the impact that 10 million computers running every day across India's schools will have on the power shortage issue? It will take several large power plants!" believes Dukker, Chairman and CEO. NComputing.

In an exclusive e-mail interaction with eWorld, he shares his thoughts. Read on.

First, a brief narrative on how the company was born, and what its mission is.

The company was founded by Klaus Maier from Germany based on 12 years of research in virtualisation technologies and Young Song, who worked with me at eMachines, a pioneer in bringing affordable computing to the masses. NComputing's mission is "to bring affordable computing to the next billion people." According to research firm Gartner, there are a billion potential users in the world who want computing access, but can't afford it at current prices. We aim to bring the cost of computing down so that these people can get access to computing and join the Digital Age.

We have, in the recent past, come across various models of the `network computer' whose hardware design uses components designed and developed for advanced electronic and digital devices. How are NComputing's products different from those concepts?

Different approaches to "thin computing" have been tried in the past - mostly focused on large companies (such as banks or retail) where the user is a task-worker doing the same thing over and over again (like a bank teller or a check-out clerk).

The key limitation of these approaches, however, has been the complexity of setting up and running them and the limited graphics capability.

We have leveraged 12 years of R&D in virtualisation and data transmission protocols to create a simple solution to install and maintain with near-PC-graphics quality. That we have over 15,000 customers and 6,00,000 units deployed in just last two years is proof of the rapid uptake of the solution. A large part of our customer base is school systems, which rarely have the kind of IT personnel and infrastructure that large companies can afford.

What would you say is NComputing's USP in this space?

Our closest "competition" would be buying a traditional dedicated PC. Even organisations that can afford to buy dedicated PCs are moving to our model because they only have to manage a fraction of the computer equipment (install, support, upgrade, replace). Our unique selling points are low acquisition price, ultra-low energy use, simplicity of use and lower on-going support costs (fewer PCs to manage).

We already have network computers in India, designed on a completely new hardware platform without using any of the typical PC or thin client components, costing just Rs 5,000 each, and also providing Internet connectivity as well as a range of software at a minimum monthly cost. How do your products provide more value for money?

The network computing devices you reference are 100 per cent Internet-dependent, so one has to be sure that Internet access will always be available at the highest speeds, otherwise the user will have either no service or excruciatingly slow service. With power shortages and black-outs, this usage model may work for some home users who are not dependent on the computer but use it as a hobby.

These network devices also have limited graphics capability since the graphics are generated on the central server and transmitted to the user. Our solution can, of course, connect to the Internet, but is not dependent on it. The host PC runs all of the software (any commercial software) and the graphics are generated locally.

You have been successful in helping Macedonia achieve the 1:1 ratio, the first in the world. What have been the takeaways from the project?

The key takeaway is that States and countries can use disruptive technologies to leapfrog their people and economies into the 21st century. We see that in India with mobile phones - remember when it used to take five years to get a landline? Now you can walk into a store and get a mobile in an instant. India has more cell-phones than landlines - and this happened in less than five years.

The same can happen with computer access. Macedonia wanted to joint the European economy and knew that the key was an educated and computer literate workforce - and it knew it had to start at the school level. If Macedonia can do it, why not India?

That would be our next question. How can NComputing affect India?

India has a tremendous passion for learning and computers. It is already the envy of the world when it comes to its IT talent. The central and state governments are working hard to bring the power of computerisation to the larger population and we understand and appreciate the cost and complexity of the task. We believe we are a great fit not just because we reduce the cost of computing but are also the most energy-efficient solution. Can you imagine the impact that 10 million computers running every day across India's schools will have on the power shortage issue? It will take several large power plants!

What are your plans for this year?

We are growing rapidly worldwide, mostly in developing nations such as India, Brazil and China. In India, our plan is to aggressively grow in the education and business sectors. We are seeing great success with school systems throughout India and in the business sector, such as manufacturing, healthcare, small/medium business, and call centres.

Does disruptive technology such as yours meet with stiff resistance from the established players in the industry? What have been such experiences, in your case, and how have you been handling the same?

Anytime there is a disruptive technology, there are winners and losers. The winners are usually those that see the real potential of how the technology benefits the user and adjust their business model accordingly. The customer is always right and the disruptive technology will always reach them. The losers are those that nervously defend their model and lose sight of the customer need. In India, since the computerisation drive is still in full swing, there has been little resistance from partners to take up our solution and actively partner with us.

Just wondering. A major benefit that you offer, apart from the saving on the initial hardware cost, is that on saving electricity spend. Does that make you eligible for carbon credit?

That's a great point. Our technology lowers electrical consumption by 90 per cent or more and this is critical in India due to the shortage and cost of power. Of course, the energy savings translate into environmental benefit as well since most electricity is generated with coal-fired plants that spew pollutants and carbon dioxide.

The carbon credits are actually available for the schools and business that use the technology. In fact, there is a school in Canada that changed its entire computer lab to be carbon-neutral by installing NComputing and planting 100 trees to offset the limited CO2 emissions. It was awarded the Green School award.

Does the fact that your product profile has only two offerings limit the scope for innovation in the enterprise?

One should not confuse the number of offerings with the level of innovation. In fact, it is usually the inverse effect - if you have too many products, the R&D effort gets dispersed too thinly.

Our X series is perfect for schools and any place where people work closely (call centres, business offices, and banks).

Our L series is perfect for uses where the PC may not be within 10 metres from the user (factory floors). We spend a considerable amount of time and resource continually refining and improving the product and the core virtualisation software.

What is the future shape of computing, as NComputing sees it, over the next about five years?

Over the next five years, the growth of computing will be in the emerging markets and underserved markets. Emerging markets are well known - these are the countries where PC penetration is still less than 300 per 1,000 population - countries such as India, China, Brazil, the Philippines, and Russia. What is also interesting (and often overlooked) are what we call "underserved" markets. For example, in the US, most public schools only have one PC per five students. So there is still a large need for additional computing - if only the cost was more affordable. So we see tremendous opportunity to bring affordable computing to the next billion people around the world.

Can you tell us about some of the innovative applications of your product?

It is amazing to hear the stories about how our products are deployed around the world. We literally could write a book! Let me give you a few. In Mexico, an entrepreneur outfitted a mobile trailer with a few PCs and NComputing and created a mobile learning centre/Cybercaf‚. He drives the trailer into a village, connects up to electricity and the Internet, and provides computer training and communications. Two weeks later he moves it to the next village. He has been so successful that he now has five of these mobile trailers. Think of the impact on the village!

In India, Jindal Steel Works has a social call centre for the wives of the steel workers. The call centre is providing additional source of income and bringing computer education and training to an often forgotten group - poor, rural women.

In Germany, a lumber mill is using NComputing because the dust, water, vibration of the mill would tear apart traditional PCs. Now they have NComputing devices that are encased (doesn't draw in dust, uses very little electricity) and connecting them to a few PCs that are located in the office area. There are many such interesting and inspiring stories.

Considering that NComputing cuts the hardware investment, what are the economics of a self-employed person setting up a cybercafe?

We believe NComputing is a great solution for cybercaf‚s because it cuts the acquisition and electrical/maintenance costs dramatically. For example, a 14-seat cyber caf‚ could be set up with two PCs, four X300 kits (each kit has three access devices), and 14 sets of monitor/keyboards/mouse. Of course, there are all the other costs of managing a cybercaf‚ (personnel and rent). We plan to approach this sector in 2009 as an expansion opportunity.

dmurali@thehindu.co.in

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Competing on low price, energy use