Marching Towards the $25 Computer?

It's a given in the high-tech world -- prices fall. They might fall slower or faster depending on the device, the components, and the product segment, but they generally drop as the devices move into the "commodity" category.

As industry watchers, we all know this trend, and any number of companies forecast this trend every year. Still, though, it's always a bit surprising to read about a low-cost computer selling for $25 in Europe.

Raspberry Pi Model A -- a credit card-sized device that's selling for $10 cheaper than the previous Mobel B -- is getting a bit of a buzz in the tech-geek space, and The New York Times is calling it one of the "the hottest and cheapest little computers in the world right now."

The new Raspberry Pi circuit board is a stripped-down version of the previous model, and comes with 256MB of RAM and one USB port. The idea behind it is to replace expensive computers used in classrooms or schools, and make it easy for hobbyists or teachers to plug in peripherals and test concepts. According to a statement from Premier Farnell, one of distributors selling the product:

The launch of Raspberry Pi last year was seen as a huge opportunity to fill the gap left by the demise of computer programming courses in education, and the increase in ready to use PCs, laptops and tablets. As such, demand for the Model A board is anticipated to be from those making industrial control modules, from roboticists, automation, and significantly, to use the Pi as a very cheap media centre.

Interestingly, one of the devices was sent to the upper atmosphere, 40,000 meters high, to collect weather info, videos, and photos, the NYT reported.

Downside of cheap
Yes, for computing geeks, this is a nifty thing and will give kids a cheap way to learn about a PC's inner workings. But I can't help but think there are other longer-term implications of having stripped-down computers being sold for $25, particularly as it affects convergence of other devices.

Already we see people using tablets and smartphones as on-the-go replacements for laptops, and while laptops are still more efficient workhorses, the overall PC market has been taking some punches. As Gartner's forecasting shows, device spending worldwide will be up this year compared to 2012, rising 6.3 percent year-on-year to $666 billion.

However, that estimate is significantly lower than the $706 billion the firm previously predicted. The drop "reflects a sharp reduction in the forecast growth in spending on PCs and tablets that is only partially offset by marginal increases in forecast growth in spending on mobile phones and printers," according to Gartner.

More specifically, as Richard Gordon, managing vice president at Gartner, notes:

The tablet market has seen greater price competition from android devices as well as smaller, low-priced devices in emerging markets. It is ultimately this shift toward relatively lower-priced tablets that lowers our average selling prices forecast for 2012 through 2016, which in turn is responsible for slowing device spending growth in general, and PC and tablet spending growth in particular.

Not that $25 computers used by kids and hobbyists will do much to shift that worldwide IT spending trend, but it could open the doors to many people globally who still have limited access to computing devices.