Friday, June 19, 2009

Just In: $139.99 -- Are they outta their mind? WORLD'S CHEAPEST COMPUTER

Unbelievably cheap: Click for details ....

I want to comment on the comments made by Raindog469 in reply to my previous post today (the "$149" post below). Raindog made some good comments, and I want to encourage more of the same.

raindog469 said...

While you've drawn a distinction between primary (new) and secondary (used) markets in the past, I think there's a third market in between those, namely the overstock/liquidation market served by, and others (throw in refurbs as well to further complicate the picture.) I think that for the next decade or so, the only way to get a $16 blisterpack PC like the one in the mockup will be to buy about 10,000 pieces of someone's liquidated inventory, sold at a loss to recoup part of their investment. Even 5" portable DVD players haven't gotten that cheap, except used. does a lot of overstock business and I strongly suspect that they're doing that with these little laptops, though I haven't the faintest idea what Belco's original distribution channels would have been. Products sold this way might not be used (except for refurbs), but they're not really "new", either. Someone has given up on selling them for full price and is now just trying to lose as little as possible.

That said, I think there'll be some seriously cheap PCs available through that channel in a few years. I paid $500 for my first 1-megapixel digital camera in 1999, and now you can get 3-megapixel digital cameras with preview screens in blisterpacks for about $20 when last year's models go on clearance. It looks like the $149 ARM netbook will be fairly common this xmas, and if it follows digital cameras and DVD players, next year everyone will have them as $99 doorbusters. A few more iterations of that, and you might start seeing the previous year's stuff on the Wal-mart clearance racks in May or June for around $50, which by that time will be pretty close to their material cost. But by the time we see a blister pack PC for $16, I think the functionality of a PC will either be irrelevant or incorporated into some other device that doesn't cost much more than that (as low-end cameras were absorbed into phones.)

There's one other possibility that could result in PCs with prices in the low two-digit range. I was at one of the big box stores recently, can't remember which one, and in their clearance section they had something that looked like a mini-laptop for $39 whose entire purpose was to check your email, and nothing else. No idea what it was running under the hood, but it was useless without a $10/month subscription to the manufacturer's email service, which had been shut down. I think we haven't seen the last of the "PeoplePC" style business models (a variation has already turned up with phone carriers distributing netbooks cheaply or for free with 2-year data contracts, but structured as a discount or rebate rather than actual cheap hardware), and it may be that the first sub-$50 laptop is the result of someone subsidizing the hardware that way and then going belly-up. But unless there were a strong support community with easy ways for non-technical users to get rid of the software tying the laptops to services that had gone out of business, that wouldn't be good for either consumers or the cheap-PC movement. So I'm betting on the "last year's model on clearance" phenomenon.

My reply (not a rebuttal, just some additional thoughts) ...

These are good comments that offer hope on several fronts. I would certainly settle for your "last year's model on clearance" scenario -- if that's what it takes to finally get the ball rolling on really cheap laptops.

I have had the same impression, that is somewhat a closeout operation. But as far as the Alpha 400 is concerned, really has't been doing much beyond offering it at a fair everyday price. The company that branded the Alpha 400 -- Belco (aka Bestlink) -- has been offering it at the everyday low price of $149 for some time. Please refer to this site.

I don't see much reason why ARM computers should beat the MIPS machines on price.

I think we shall see mini-laptops on bubblepacks for less than $20 on a standalone basis in a few years, rather than just embedded in something else. Smartphones, laptops, DVD players, and everything else electronic can be made much cheaper if made in very large volumes, as you know.

Certainly laptops are not going away, and I think the cheapest ones should get below $20 in a few years now that the focus of at least some manufacturers is on low price above everything else. These might have less demanding specifications and more flimsy construction than the Alpha 400, however. They might have smaller screens than 7 inches as well.

Finally Moore's Law is working the other way he predicted it would, other than just for higher performance at the higher end. It is at last working for lower price at the bottom end as well. Please see the illustration (click to enlarge it) from Moore's famous 1965 article in "Electronics".

If cellphone service providers decide to subsidize the cheapest PCs, that could achieve the economy of scale to cut the prices drastically in 2010 for MIPS as well as ARM devices.

If Coby Electronics jumped into the price war, that would be a tipping point.

If Walmart is still interested in offering a $100 laptop as Skytone says they were, and if someone can supply one at an appropriate discount to Walmart, that would be a game changer. And if closeout brick-and-mortar stores like Odd Lots and drugstores like CVS jumped in, there could at last be a general awareness of the Alpha 400 and other cheap mini-laptops.

Right now most people aren't even aware that you can get a laptop that's brand new and at an everyday low price of way below $200. I want to make sure that they become aware, whatever it takes. I just visited the local Microcenter store, and they now have no Linux laptops or "netbooks". Apparently people just aren't aware how useful and easy these computers are.

Thanks again, and please let us know what you think. I hope we can convince people they need much cheaper computers than $200.

1 comment:

  1. I guess products sold this way might not be used except for refurbs, but they're not really "new", either.