‘If you innovate, prices go down automatically’

Intel, the world's largest computer chip maker, recently launched its low-priced Atom processor to tap lower price-point computers. Sandeep Aurora, director, sales and marketing, Intel South Asia, spoke with DNA about Atom's future in India, the competition, prices and PC penetration in the country. Excerpts:

Prices of processor chips have been on the slide for many years now. Is it because of recession?
Chip prices have fallen over the years and it’s not just last year. Recession might have led to lowering of sales, but not prices. So, what was available to consumers for $1
two years back, is now available for 1 cent. And this is the part that innovation has played. If you innovate, prices go down automatically.

Where is the market for Intel currently? If you look at the company commentary and analyst notes, your company is focusing on the Atom processor aggressively. What are your views?
It is one of the focus areas. We have launched Atom recently. It is for a new category of products like the netbooks, nettops and mobile internet device (MID), which did not exist one-and-half years back. So, the new category will lead to a different kind of momentum and different kind of users. We received a tremendous response from its launch, which can be judged by the number of original equipment manufacturers (OEM) and original design manufacturers (ODM) who have launched different products.

Let’s go back a little bit and you have Celeron, Pentium, Core Duo and Core 2 Quad processors, etc. The simplest thing was the low-cost PC. So anything that became old technology, got pushed down on the price front and turned low-cost PC. There was no fundamental change from the processors point of view.

With Atom, it was a downward development in the CPU, where the intention from the research and development team was to build a low-cost chip for a low-cost device that consumes less power.

The response from the market was overwhelming. What Atom is also doing is bringing new customers with the price point of Rs 15,000-17,000 for a Netbook, who were earlier not thinking about a PC. It is adding new users, which is healthy for the overall IT industry, more so in India where PC penetration is very low which is like 3-4%.

Where do you see the competition in India? AMD has been accusing you of unfair trade practices. What is your take on that?
The competition is healthy. I think they are doing well. You have to talk to them. It is plain and simple. If they do well, then they have good products and they do not do so well when they do not have good products.

I do not want to comment on that. But about trade practices, you can look at the history of Intel. We follow laws of the land to the letter in every country we operate in. We also believe in competing aggressively but at no point will we do anything unlawful.

It is not that the competition’s business has not grown over years. However, the market is the best judge and ultimately the market wants to buy the best priced processors from the best vendor.

Where do you see the future of netbooks?
The current form of netbooks might undergo lot many changes and in the next few months you can see devices which are built for specific industries. For example, someone can launch a product, which is designed differently — like a swivel screen for doctors or medical professionals, where they can add all application software used by these professionals. So you can expect custom-made netbooks in sectors like education, finance and media, etc.

How do you foresee the growth of PC penetration in India?
One important factor that can increase penetration is connectivity. PC without connectivity is just like a box. You have to be connected to the Internet and that broadband connectivity needs to happen in India. Penetration is at a very low level right now. The goal that the IT minister gave was to have 500 million internet users and 100 million broadband connections by 2012. Currently, there are around 70-80 million Internet users and 6-7 million broadband connections in India. I believe, Wimax is a good opportunity to increase broadband connections in the country.