Telecom operator Reliance Communications has announced a strategic alliance with laptop companies Acer, Asus, HCL, Intel and Lenovo, to offer a laptop free with a two year “unlimited” subscription to its Internet data card service Reliance Netconnect. The specifications of the laptops aren’t mentioned, but with a lock-in of 2 years, the customers will pay a total of Rs. 36,000 and service tax over and above that.
Perhaps the laptop manufacturers are offering the laptops to RCom with reduced margins, hoping for an improved topline growth. In case of RCom, this may be a means of acquiring a subscriber base for wireless Internet services – one that they can later upgrade to higher speeds when 3G and/or WiMax services are eventually launched. Remember that BSNL has something of a head start here, with EVDO services already operational. I’m a Reliance NetConnect subscriber, and I can tell you that at an inconsistent speed of 2-14 kBps, it’s anything but Hi-speed; While typing this post, the NetConnect connection got disconnected thrice (thankfully, Wordpress has an auto-save function) and I lost one version when I clicked “Publish”. I shudder to think about what will happen if they get more customers, and bandwidth get even more clogged. This also reminds me of something Shyam Somanadh of Web18 had said to me a year go – that it will take someone like a Reliance to go out and completely break this market open by offering PCs for free. In this case, it’s laptops, and probably lower margin than in case of PCs.
Also, does this mean that Reliance is no longer associated with the One Laptop Per Child project? Last year, RCom had announced a pilot with OLPC in Maharashtra, in a tribal village at Khairat (near Karjat, Maharashtra). The project had planned to cover “more than 25,000 towns and 60,000 villages” by March 2008. So obviously things didn’t go according to plan. Take this current announcement from RCom as, well, just an announcement, and hope for an increase in Internet penetration.
Related: 3G India: BSNL 3G Service Already Operational – 2Mbps Via EVDO for Rs 750/month
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8 Comments until now.
Much Needed step , I agree with shyam that only RCom Could have done this . first they bought Mobile Phones to masses and now Laptop .
wondering what it means for Novatium . Validation of their model or a threat .
1. 36K is still not a small amount compared to 500/- per mobile that revolutionized its penetration.
2. Unless they serve a decent configuration, techie (laptop savvy) population may not go ahead. Which is quite unlikely.
3. Only the casual Laptop dreamers, may go forward but whether do they need internet connection really?
4. Since the offer comes bundled, it will be interesting to see, how many of them actually upgrade to 3G/WiMax services.
Wondering what will happen to the bandwidth after this offering.
Couple of things that were different from what I thought they’d do (then again, it is RCom, so they have to muck up something, else they would not be RCom, no?).
1) It is stupid for them to have done it using Netconnect. If uptake is huge, then they’d wind up (possibly?) with spectrum issues. Maybe, they do have an upgrade path figured out already to 3G/Wimax, but for such subsidized deals the numbers/economics on the deal can go wonky if the cost per subscriber (in terms of hardware, especially) is not fixed and reasonably predictable for their projections
2) It is boneheaded to have picked laptops, maybe it gives them a glamour quotient to work with, but the negatives are too high. Laptops need a lot more care, parts cost a lot more, so does support. They could easily have shaved off a lot of the cost if they’d opted for desktops. Even the cheapest laptop will not come for less than 20k (at street prices), desktops are already below those levels. Bring in volumes and you can shave off another 10% off that price. Spread that over a vast volume of people, it would have saved them a truckload of cash.
3) The network part of the deal works out wonderfully for them. They have fiber running pretty much over a vast part of the country, making the cost of carriage near-zero for them. With FLAG too in their kitty, they should be able to leverage international peering, effectively giving them a huge advantage in terms of IP (the protocol)-related costs.
Can anyone else break into this? I think so. Anyone with deep pockets who can consider the hardware provided and the underlying network as sunken cost for about 3 years and work subscription revenues through those years to reasonable levels can counter this. Should be an interesting space to watch.
I think, 1500 price point is tad high. It’s probably more expensive that buying a low-end laptop on EMI. They are throwing in internet connection, which probably is worth Rs 300 (for customer.) I am not impressed. Three-digit price would have been more interesting.
I agree with Shyam on choice of laptop, but it certainly has its own advantage. First, it can run on battery for more than an hour. Customers need not invest in UPS again. Second, enormous reduction in space means ease of handling at PoS and transportation. Third, probably it makes business sense for them as laptops are replaced and desktops are upgraded. Two-three years is a decent lifetime for a laptop. Fourth, with mobility, many people, like say small salespersons, will start using for work. Or, teens taking it to the school/college.
I hope its not on NetConnect. It’s a surest way of killing this idea in its infancy.
Shashi: the internet connection is costs more than 300. The 1GB connection I use costs 700-1000. It’s probable that they’re selling the connection at cost of spectrum (or marginally above), and the rest is for EMI on the laptop.
The problem – it IS on NetConnect.
Shyam – you’re not taking into account the cost of connecting the last mile in a wireline network.
I think its a great move by REliannce Comm. but when they are launching it and how can i get complete information about it????
If anyone knows please mail me.
C’Ya…….
so what is the status of this move some 150 days on?
laptop prices have fallen.. still around 18000 as teh base.. the rest of the 36K or 18K will go towards connection costs.. over 24 months that comes to about 750 pm..just about what we pay for a 2MB broadband connect.. so the calculation is clear.. there is no major mystery around it.. they are buying laptops from everyone save the one they claimed to have partnered with for a pilot..OLPC.. what went wrong? was it just a hype? I guess Reliance would have never gone for anything that had philanthropy associated with it.. They are businessmen who will do what it takes to get business grow..
how is it possible sir to provide the laptps free and internet connection for 1500