Suneet Singh Tuli, CEO of Datawind, is convinced that he finally has a proposition that will disrupt the telecommunications space. While its Aakash range of tablets had created a lot of buzz, it had also attracted its share of controversies. But since then Datawind has risen to become the third largest tablet player in the country with low costs devices under ₹5,000. Taking the next step in this strategy, Datawind is launching two smartphones, called pocketsurfer, priced between ₹2,000 and ₹3,000 bundled with one-year of free internet service. Tuli spoke with BusinessLine on the launch plans.
What is the thought process behind the new launch?
The big issue with internet has been that the cost barrier has not been broken. The cost of the phones dropped fast, for many years now you could get sub-₹1,000 phones. The cost of computers dropped to ₹15,000 but that was it. You can’t get a sub-₹5,000 or a ₹2,000 computer. Breaking that price barrier now will drive internet adoption and really create a different kind of revolution. Studies have showed that on a monthly basis about 22 million mobile phones get sold in India. About 15 million of those are still feature phones. Smartphones are out of reach for that target market.
The difficulty in those models is that they are asking the operator to bear the cost. The operator is saying I spent on the spectrum, the infrastructure, the customer acquisition, all the maintenance and everything else and you want me to be a dumb pipe and give all of that access away for free. What we are saying is we can create a model where the operator does not offer anything for free. We pay the operator for all the usage.
How do you do this on a device priced at ₹2,000?
We have received 18 US patents on this technology, where we reduce band consumption by almost 30 times. So not only does it go through faster but the cost of data too is low. If you use a normal Android browser, it uses about 14-15 MB/ hour of data consumption. Opera mini is around 6 MB and we are 1.5 MB. That reduction is so significant that I can recover the cost of data on a ₹2,000 device.
What targets have you set in terms of number of units?
We are targeting about 5 million units in the next 12 months. We are not putting forecasts per say. But that’s the challenge for our team.
But you would need a strong distribution in Tier-II and -III cities to achieve such targets.
By the March-end, we will have 3,500 shops (from 1,300-1,400 modern trade locations currently). Every quarter we need to double or triple that. In the last 4-5 months, we have hired 100 people in the field. I think service will be easier as the product gets made in India. About 90 per cent of the devices will be assembled in India.
Where are you going to manufacture?
We are talking to different States. Part of our difficulty is the different sales tax structures. My ramp up to get started is not very long. If in the next 30 days I can finalise location, I don’t need to build a building. I need to rent space, hire and train people. After 60 days after that we will be full steam. Our forecast is about a 1,000 manufacturing jobs in the next year. We will probably do this with sub-contract manufacturers.
You feel free internet is the way forward?
It is at least as a stepping stone for basic Internet.
Because if the consumer has to pay for it, he is not sure. If he has it for free, he will try.