[The simputer and the core team behind the device. (From left) V Vinay, Ramesh Hariharan, Swami Manohar, and Vijay Chandru. Vinay and Chandru are holding Simputers. Photographs by www.simputer.org and V Vinay]
Towards the end of 2001, when the writers at The New York Times Magazine sat down to write about the year in ideas, there was one innovation that captured their imagination more than Apple’s PowerBook or Microsoft’s Windows XP. “This is computing as it would have looked if Gandhi had invented it, then used Steve Jobs for his ad campaign,” the newspaper wrote. It was referring to the Simputer, a handheld device designed out of Bengaluru.
This was six years before Apple would launch one of its most game changing products, iPhone. iPhone used a 3-axis accelerometer, the first time an accelerometer was incorporated in a phone. One of the basic applications of accelerometers in smartphones is that the screen is always displayed upright, whichever way you turn the phone. The accelerometer is now standard in smartphones. Not many know that the Simputer had an accelerometer in 2004! Not only that, it also had a handwritten annotation feature that was later popularised by the Samsung Galaxy Note launched in 2011.
For all these technological innovations, the Simputer didn’t turn out to be a commercial success, and its story holds a few important lessons for not only entrepreneurs and investors but also for policy makers. Its story from its spectacular launch to eventual fading out of public memory underlines the need for nurturing a capability to design and build from scratch an Indian electronic device for the global market. It also raises questions on whether India has developed expertise in marketing a new category of electronic devices, and if it has the capability in hardware manufacturing.
The Simputer was an easy to use handheld computing device targeted at the bottom of the pyramid semi-literate or illiterate user base. The “apps” envisaged for this segment were providing relevant information on commodity pricing, weather, money transfer, booking appointments with the healthcare centre, etc. The Simputer ran on a robust open source hardware and software platform to keep costs low, and keep it working in rugged environments. It was lightweight, thrifty on power consumption, easy to maintain, tolerant to heat, humidity, dust and vibrations, capable of good screen visibility both outdoor and indoor, and capable of delivering clear audio even in a noisy environment. The advanced applications for the Simputer included telephony, data access, and financial transactions.
While the Simputer was a success in demonstrating that Indians in India could conceptualise, design, develop, and produce a new category handheld device, three critical challenges ensured that it had only a limited commercial success. These were marketing a new technology category both to the bottom and top of the pyramid, paucity of risk funding for entrepreneurs, and absence of sophisticated hardware manufacturing in India.
No fortune at the bottom of the pyramid
The vision for the Simputer was a low-cost device, to help every Indian citizen—especially those at the bottom of the pyramid—irrespective of gender, language, physical handicap, geographical location, caste or creed, literate or illiterate, to access the information superhighway.
Did the focus on the bottom of the pyramid make the Simputer financially unviable? The utopian assumption was that every Indian village would require a Simputer that will be with a trustworthy person like a postman. Every adult will have a smartcard that contains personal information which would be inserted into the Simputer as required and access the various “apps”. The assumption was that the Central and state governments will be major customers of the Simputer to bootstrap their e-governance initiatives. However, this never materialised.
The focus on the bottom of the pyramid was probably ahead of its times. One of the dominant perception problems was the nagging question from the non-urban user segment: Why should we buy an “inferior” device that was not going to be sold in the city?
In hindsight, one of the marketing opportunities was to sell the Simputer board as a low-cost standalone computer. This seems obvious in today’s context of standalone low-cost boards like Arduino and Raspberry Pi. Another marketing opportunity was to develop the software for the Simputer into an open source platform and an alternative to the existing Symbian OS and Palm OS—like Android. These marketing and business models that seem obvious today did not exist a decade and half ago.
There was a lot of visibility for the Simputer among leading media channels across the world. The New York Times Magazine called it the most important innovation in computer technology in 2001. Many other international publications like Time, Wired, Le Monde, The Guardian, BBC, and MIT Technology Review published articles on it. The standard computer science textbook used widely across the world, Computer Organization and Design: The Hardware/Software Interface by David Patterson and John Hennessy, also discussed the Simputer. This international visibility was not marketed enough to garner more funding for the Simputer.
A world without VCs
The four founding members of the Simputer team bootstrapped the project in their lab at the Indian Institute of Science (IISc) in Bengaluru in late 2000. Between 2001 and 2005, the team managed to raise Rs 2.5 crore, mostly from a dozen angel investors of Indian origin. They then raised a loan of Rs 2 crore from the Technology Development Board which was subsequently repaid in full. To put the fund raising in context, the Simputer project was comparable in scope to the iPaq project of Compaq which had a funding of an estimated $50 million.
In the early 2000s angel investors and venture capitalists (VCs) did not come in search of promising startups like they do today. There was no concept of exclusive funding for social impact. Today, there are startup funds exclusively focused on social sector startups. While Rs 4 crore was earmarked for marketing the Simputer by the public sector hardware manufacturing partner, a large part of it was never spent.
The government was the perfect large order customer for the Simputer. Though the Indian government liberally used Simputer in its advertising, there was little real commercial support in terms of an order. A funding of about Rs 50 crore would have seen the Simputer project through. This could have come in the form of a large order—for instance, 50,000 devices for use in e-governance programmes. The order would have been sufficient to prime the supply chain, and help the Simputer survive the initial years.
Make in India
While the marketing and funding challenges are related to the business model, the third is a more fundamental one in terms of India’s capability in hardware manufacturing. The first priority of the Simputer core team of IISc professors was to get the board up—V. Vinay used to write the software and Swami Manohar would burn it into the EPROM (Erasable Programmable Read-Only Memory). Simputer purchased one StrongARM development board from the US—a microprocessor board used for prototyping. While the Simputer team had a commercial partner, things did not work out well between them and they split ways. Subsequently, a hardware manufacturing partner from the public sector was identified.
The first run for the Simputer was fixed at 10,000 units, and the inventory was bought from global suppliers. The hardware manufacturing partner did not budget for design iterations before finishing the first run. Being a public sector enterprise, the partner was bound by a cautious approach which placed financial prudence as paramount. Cost plus pricing was the norm, and planned losses in the first lot as a strategy to drive adoption was not an option at all. Even though solutions were identified for issues like the USB drawing more power when idle, any iterations to modify the hardware design was possible only after the first run.
The Simputer team had to make do with a sub-optimal solution of choosing a multi-national corporation (MNC) operating in India to manufacture the casing. This was a time when Severe Acute Respiratory Syndrome (SARS) hit Asia, and the ever cautious hardware manufacturing partner felt that there was a high likelihood for an order for casings to be quarantined in Taiwan or Hong Kong. And they took the less financially risky approach of using an MNC for manufacturing the casings in India. This proved to be a difficult job for the MNC, and the final product was not up to the mark due to limitations of their manufacturing technology.
Hardware: Where is it headed?
Where do we stand a decade and half after the Simputer project started? The challenges in funding are almost non-existent today. There is a well-developed ecosystem of angel investors and VCs, including those who focus on the social sector. While India has a vibrant supply of product management and marketing professionals including those with international experience in the domain of electronic consumer products, there is still very little experience in marketing a new category of technology products. To a large extent, challenges in marketing a new category of technology, creating an ecosystem, and the ability to change mindsets to accelerate adoption still persist. While global electronics supply chains are highly connected, Indian capabilities in hardware manufacturing are still a challenge. And this challenge is even more pronounced today.
According to a Niti Ayog report, India’s domestic hardware production in 2014-15 was about $32.5 billion, a miniscule 1.5% of global production. India’s domestic consumption of electronics in 2014-15 was about $63.6 billion, and about 50% of the demand is met by imports. Further, various research reports estimate the domestic consumption of electronics at about $400 billion by 2020, of which only $100 billion (about 25%) will be produced in India. To put the $300 billion of estimated electronics imports in perspective, India’s current forex reserves are about $360 billion. India has just embarked on a serious two-pronged strategy for electronics manufacturing that involves import substitution and an export orientation. It has not been an easy journey.
India needs to make rapid progress to overcome these challenges, and encourage many more audacious experiments like the Simputer. Some of them will go on to become commercial successes.
The rationale for reimagining computing devices to break the digital divide has only increased manifold in the recent past. The New York Times Magazine conveyed the message poignantly in its article on the Simputer: “Computation, however, is just a technology. In the hands of the planet’s majority populations, it may look a lot different.”
(The views are personal.)