Nathan / Jon / Louis - thank you for responding.
I have actually been in touch with the CEO of Datawind. They basically
source their tablets from China. The quotation that he gave me would
obviously have included their own margins on top of whatever price is being
quoted to them by their Chinese manufacturer. That's one of the reasons we
are thinking of sourcing our tablets directly from China so that we can
avoid having to pay a middleman who, as far as I can see, won't be adding
that much value.
I do have one of the Aakash tablets with me, and it works ok. It's slow and
the touchscreen isn't extremely responsive, but it gets the job done and
one can't expect anything more for that price. What I need to figure out is
whether I can expect such tablets to last for at least 2 years in the hot,
humid and dusty environments that one encounters in villages and slums in
India and especially when these tablets are being used by kids.
Unfortunately, I don't have any expertise in the testing of electronic
hardware.
Just to give you a little bit of additional background, one of our goals is
to make our business model work without any grant funding in order to make
the project financially self-sustaining and scalable.
With that in mind, we did some market research surveys among our target
customer group to figure out whether they might be willing to buy such a
tablet from us and how much they can possibly pay for such a tablet. What
we concluded from that survey is that we *may* have a viable business model
IF we offer a rental payment model to our customers where they pay no more
than $4 or so per month along with a small initial setup fee of around $10.
And then, IF the tablets last for at least 2 years on average, we may earn
enough revenue from each tablet to offset the cost of purchasing the
tablet, as well as other costs like marketing, distribution, product
replacements, after-sales support, game developer salaries, overheads,
interest payments etc.
Therefore, the challenge for us is two-fold:
1) We have to keep our tablet sourcing cost to around $40 or so, in order
to leave enough margins for covering the other costs.
2) We have to ensure that these tablets last for at least 2 years or so on
average.
Nathan - I completely agree with you about the need to balance the initial
low-cost solution with the costs down the road of having to replace
defective products, after-sales support, bad reputation etc.
So it is possible that we may end up concluding that it is simply not
possible right now to acquire a tablet at $40 that lasts for 2 years on
average. In that case, our fallback strategy will probably be to go with a
tablet like the Nexus 7 like you had suggested and initially only target
families with somewhat higher incomes who have the ability to pay more. And
then, wait until Moore's law kicks in enough so that a tablet with the same
quality as the Nexus 7 is available at our target price, after which we can
then get back to our original objective of targeting the really low-income
families.
Another fallback possibility that we are considering is to see if we can
purchase used / refurbished / outdated models of tablets with good builds.
The drawback of that strategy is that I am not sure whether we can acquire
enough of those tablets at scale (say a few thousand per month).
If any of you have any additional thoughts on any of this (or if you know
any person who has experience in accelerated testing of electronic products
or sourcing electronics from China), please let me know.
Thanks.
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