Cheap Tablets: Could We Really See $20 Tablets?

by Brad Moon | March 27, 2014 11:24 am

Every year, MIT Technology Review puts out a list of the “50 Smartest Companies” in the technology industry that recognizes innovation. The 2014 edition of the list[1] includes some big players you’d expect to see, such as Google (GOOG[2]) and Amazon (AMZN[3]) and some up-and-comers like LED lighting pioneer[4] Cree (CREE[5]).

It also includes a company you’ve likely never heard of that could shake up the computing industry by pumping out unthinkably cheap tablets.

Canadian firm Datawind[6] earned a spot on such a prestigious list by closing in on the seemingly impossible goal of a $20 tablet.

Datawind: King of Cheap Tablets

Datawind first hit the news in 2010 with the Aakash, designed to be the leader in a wave of cheap tablets that would be made available to schools in India.

The second generation of that device, the Aakash 2, is being offered for sale in the U.S. as the UbiSlate 7Ci[7]. With a $37.99 price tag, it sets the bar pretty high (well, and low) for cheap tablets.

Even Amazon — infamous for its willingness to forgo profit on hardware in hope of selling digital products and services later — counts a circa 2011, refurbished Kindle Fire at $79 as the most affordable among its selection of cheap tablets.

So if Datawind is charing $38 for a new tablet, and expecting to make a profit while doing so, it must be cutting corners ferociously.

A $20 tablet? C’mon. That’s almost unimaginable. And certainly laughable compared to, say, a $399 iPad Mini with Retina Display.

And that’s true. While it’s not as terrible as you might think (the UbiSlate 7Ci runs Android Ice Cream Sandwich, has a 7-inch, 800 x 480 touchscreen display, Wi-Fi, MicroSD card memory expansion and can access Google Play), its performance, display quality and battery life quickly reveal it’s the cheapest of cheap tablets, not a flagship device.

However, in a review of the Datawind tablet[8], PCMag noted the UbiSlate 7Ci had no problem playing video — including streaming titles from Netflix (NFLX[9]) — casual games were playable, basic web browsing is passable and it’s equipped for online video chatting.

To understand the potential threat cheap tablets like this pose to the current tablet market, look back to fall 2011. Apple’s iPad (starting at $499) still dominated the tablet market with a near 70% share. Frustrated competitors took a new approach, guessing there was huge untapped demand for cheaper tablets, even if they weren’t quite as polished as the iPad. They went smaller, adopted Android[10], and instead of trying to compete head-on with the full-sized iPad, attacked that demand for cheaper tablets.

The result of devices like the Kindle Fire, Barnes & Noble (BKS[11]) Nook Color and later Google’s Nexus 7 was a rapid erosion of Apple’s tablet market share. By Q4 2012, iPad’s share had dropped to under 44%[12]. In the most recent data — despite Apple’s effort to fight back with cheap tablets of its own (previous generation iPads and the iPad Mini line) — its share of the market has dropped to just more than one-third[13].

This market disruption didn’t happen because of a demand for small tablets or Android tablets so much as a simple demand for cheap tablets.

In a world where even a $79 refurbished Kindle Fire is expensive (remember, the tablet market is global, and most countries do not enjoy U.S. income levels), a $38 tablet that will get you online and do pretty much anything you need while running a relatively current operating system suddenly makes tablet ownership a reality for a lot more people.

Datawind’s stated goal is to “empower the next 3 billion people with computing and Internet access,”[14] and the company is confident it can drive the price of its entry-level product low enough that it can offer a $20 tablet within two years[15].

That’s the kind of equation that could shake up the global tablet market the way those relatively cheap tablets from Amazon and Google did when they hit the iPad.

Bottom Line

Being on the MIT “50 Smartest Companies” list shows that technology industry researchers take Datawind and its cheap tablets seriously.

Sure, the UbiSlate 7Ci might pale in comparison to an iPad Mini or Nexus 7. But as of October, Apple had sold 170 million iPads all-time[16] — and there are still billions of potential customers out there, including some in the U.S., who would never pay $499, $399 or even $79 for a tablet.

A $20 tablet could have billions of takers. And when those people have the means to upgrade to better hardware, Datawind is there with a series of improved models – -that are still cheap tablets in comparison to the market leaders.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2014/03/cheap-tablets-datawind/

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