Wednesday, May 18, 2011

Jayalalithaa creates Rs 350 crore opportunity for laptop makers

CHENNAI: The cadre and supporters of AIADMK were not the only ones cheering when J Jayalalithaa took her oath as chief minister of Tamil Nadu on Monday. Ripples of her victory over rival DMK were also felt in the corporate world where laptop manufacturers, sensing an opportunity in her triumph, were proposing a toast to the mercurial actor-turned-politician.

The reason for their broad grins was Jayalalithaa's campaign pledge to dole out free laptops to students of class XI and XII.

Considering that there are about 1.4 million students in the state eligible for this freebie, laptop-makers are looking at an order valued at between Rs 140 crore and Rs 350 crore from the state government.

"This is obviously a sizeable order, whenever it comes through," says S Rajendran, chief marketing officer of Acer India , a subsidiary of Taiwan's biggest computer maker. As if seeking to challenge competitors, Rajendran says his company has old ties with Tamil Nadu where it supplied laptops at subsidised rates to students in partnership with the government-promoted Electronics Corporation of Tamil Nadu.

Experts say an order of the size of 1.4 million units is unheard of in the computer hardware business. To put the figure in perspective, India sold a total of 2.5 million laptops and notebooks in 2009-10.

"Laptop is a sensitive electronic gadget," says Rothin Bhattacharyya, executive vice-president (marketing) at HCL Infosystems , which offers hardware as well as service support. "We hope the state government will consider factors like service support and energy efficiency before putting out a tender." "The market today is flooded with cheap Chinese laptops, which have poor a shelf-life," he says.

"We hope the government will keep in mind the interests of the local industry."

Industry observers say that despite its populist overtones, the laptop goodie will help in promoting e-literacy in the state.

They point to DMK's handout of free colour TVs to voters in 2006. Although the move cost the state exchequer about Rs 4,000 crore, television ownership in the state shot up from 60% in 2006 to 86% in 2010, according to Chennai-based Hansa Research. Satellite TV penetration rose from 53% to 90% over the period.

"The laptop scheme, if implemented, will surely improve IT penetration and literacy in the state," says Sandeep Nair, president, Manufacturers' Association for Information Technology. "It will also go a long way in creating IT-literate talent."

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