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.
AzmatMalik, good (and funny) points! Yes, my hands were a little bit warm. And yes, it's clearly no iPad Mini in form or function, but as a device for a regional demographic, it's hard to argue with.
But to me, there's always a larger force at work in such situations. In this case, we're porting a western invention built with expensive components and incorporating nice margins into an economy with a different price point by costing-out the invention. The disruption, though, like will be not a cheap tablet that's affordable by Indians but by another invention that starts with meeting that country's needs.
This is to 'computers' what Heathkit was to radio etc. At $25 hobbyists and 'inventors' will have a lower cost way of trying out their ideas. It is not a PC in the sense of a laptop, or perhaps even a cheap tablet.
The incessant price reduction does indeed put pressure on the higher end applications, but we still see $90 'laptops' in the same advertisement with $1500 laptops.
BTW the Akash (the $35 item in Brains 'hot little hands') is just that: the throwaway price of the item. It cannot possibly factor in service, support, replacement etc. One has to be very carefull not to fall into these PR 'traps'. Most readers will have heard of microfinance doing magic; few ill have heard that the 'interest' rate is in the vicinity of 50% per year (it is not called interest in certain countries due to the religion-based prohibition on interest). This high rate is 'required' in order to pay the staff needed for disbursement of funds and collection of payments (both are done personally, face-face). This personal contact is a necessary element of the program > societal and community pressure to pay, on time.
(Brian: is it that your hands are 'hot', or the raspberry board)
(Sorry for the digression off topic, but it is important to understand what drives the NGOs to do what they claim they do: Very often to perpetuate their own 'jobs' of management and staff)
A popular adage from my place says" if you dont help them carrying it, one day it would get dumped at your backyard". I think, two factors are driving innovations (1) Consumerization (2) Internet-of -things.
Reaching $25 price point with a display and some input like touch interface is a bit hard right now. Perhaps wait a while till the display becomes cheaper.
I have in my hot little hands a second-generation Akash tablet targeted for the Indian market. It's a nifty piece of engineering and the price point for that market is around $35 (and falling).
On the occasional dark, lonely night, I see this as a death spiral for the industry. But semiconductor designers are not just about leveraging Moore's Law. They're about relentlessly driving more value into their VHDL and Verilog.
In the shorterm, we'll continue to integrate to maintain value while trying, on the back end, to manage design costs to keep the overhead down.
(That I think about on sunny, coffee-fueled mornings).
>>Raspberry Pi looks like an embedded development platform rather than a PC<<
That's exactly it! I have been very critical about it, no OS and other peripherals. How can you buy that and present it as a gift to someone with absolutely zero knowledge of software or hardware? But the fact that, it uses linux OS differentiating it with other embedded devices, and its architecture is similar to that of PC.
Raspberry Pi fits into the picture from a different application perspective.
Raspberry Pi looks like an embedded development platform rather than a PC. You need to buy a separate keyboard and TV to connect to it besides other peripherals. The user also needs to box it up to be able to use it like a computer without having to worry about spilling coffee over it while working! Pi also does not come with an operating system. So the user needs to have a degree of relatively "low level" hardware and software skills to get it up and running.
In my view, this puts Raspberry Pi to the embedded computing league for hobbyists and students. Raspberry Pi is interesting because it managed to squeeze into a niche application area in such a competitive market and managed to turn quite a few heads so far.
Let's distinguish the computation portion from the display portion. Perhaps it will be possible to plug in an upgraded CPU and memory (or multiple CPUs and memory) into a tablet or smartphone the way we plug in a micro SD card.
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