Ericsson To Sell Novatium's Thin Client NetPC Globally; 50,000 Units Sold So Far

The low-cost netPCs by Chennai-based Novatium Solutions Pvt Ltd will find its way into developed markets. The thin clients - which operates on a centrally located server where the customer will have to invest only in the monitor and the keyboard (besides the service) - will now be rebranded and sold by Ericsson in USA and Europe.

Global telecommunications major Ericsson had recently acquired a strategic minority stake in Novatium. "Most of the front running is by Ericsson and they will be selling netPCs under the Ericsson brand name in developed markets," said Alok Singh, CEO & MD of Novatium.

Novatium has already sold 50,000 units of its NetPC thin client range so far in India and abroad, and expects this to grow 5x by next year to reach 250,000 units with the help of Ericsson.

NetPCs is currently being sold in China, India, South Africa, Brazil and in Mauritius with Mauritius Telecom. According to Novatium, of the 50,000 netPCs sold so far, around 4,000 have been sold in Mauritius alone. The company claims the netPC has seen significant traction from developed markets such as US and Europe too and launched the products in Barcelona recently.

Global pricing for the Novatium service has been fixed at $45 per month, which is double the domestic pricing. In India, the company offers it for Rs 400 per month including broadband or Rs 1,500 per annum without the broadband connection.

The company recently launched a new version of its netPC with an international look and feel. The user interface has undergone a redesign by a European consultant hired by Ericsson. The new UI uses widgets as opposed to icons and features an upgraded browser - the Firefox 4.

Two board members from Ericsson - Gowton Achaibar, President, Ericsson India Pvt. Ltd. and Håkan Österberg, Vice President, New Business Development & Innovation Group Function Strategy, Ericsson - have joined Novatium's board which has Ray Stata, Chairman of Analog Devices Inc, Rajesh Jain, MD of Netcore Solutions and Dr Ashok Jhunjhunwala, founder of the TeNet Group that incubated Novatium as well as Krishna Kolluri, General Partner of New Enterprise Associates and Ben Mathias, Vice-President of New Enterprise Associates (India) Pvt Ltd.

Among its products, the Navigator netPC series constitutes 80 percent of all sales for the company currently. Neon netPC, their netbook product, and Navigator+, recently launched products that are focused on SMEs and CNERGY, a USB bootable Pen Drive to access its Nova Computing Service which is also targeted at SMEs, contribute to the rest 20 percent of sales.

CNERGY is aimed at SMEs who buy netPCs in bulk and want to ensure consistent services and software across all their netPCs. It is not sold to consumers.

Novatium was founded in 2004 and the netPC was launched in 2006. However the company states that commercial sales have only started in the past one year. Asked about the delay, Singh said, "Till last year, we were conducting extensive pilots in partnership with Indian telcos. Operators wanted to test out the service and wanted to be sure of its value proposition."

So far the company has partnered with four operators in India - Airtel, BSNL, MTNL and Tata Communications. It is now in discussions with Reliance Communications.

Though the education segment seems an obvious choice as a target market for netPCs, the company shied away from the opportunity so far. It is only now they are in talks with aggregators and telecom operators to reach out to educational institutions.

Instead of ramping up its sales team, it will ride piggyback on the existing distribution networks owned by telcos. "Operators bring feet on the street. Their offerings also compliment what we have so the tie ups are essential," he said.

Operators share the revenue with Novatium, although at the consumer's end there is a single bill that charges him for broadband and the netPC service on a monthly basis.

Adoption of 3G will benefit the company in the near future, Singh said. He expects that the sale of the new netPCs which support 3G as opposed to the old version, which required wired lines, will help it in the next six months.

Broadband Issues

Issues faced by netPC consumers are primarily related to broadband outage. Broadband churn itself is at 20%, he said. This means that 20 of 100 users leave their broadband service provider because of network or service issues. Since netPCs are bundled with these broadband packages, the company is also effected. Novatium is currently experiencing a consequential churn of less than 3 percent due to broadband related issues.

"We cant do much when it comes to the broadband service being offered," Singh said.

A trend the company has noted is the drop in interest for productivity related apps. According to Singh, use of productivity apps has fallen from 3% to 2% of all apps being used by a typical netPc user.

The company is now planning to port its new OS to tablets too.

Novatium might be competing with new managed services firms such as eTechies and iYogi which offer remote online support and automatic upgrades for a monthly subscription fee.

"Contrary to opinions, netPCs are not about affordability but about convenience. Our customers are looking to escape the cycle of updating and upgrading various software and OSs. We welcome the competition," he said.

Another company offering thin clients is the New Delhi based Nivio which is priced at Rs 220 per month for students and Rs 470 for businesses and includes a desktop, storage and Open Office.

In 2007, Novatium raised funding from New Enterprise Associates, a US-based venture capital fund, which was used for expansion within India. It now has a presence in 100 cities. Another recent development at Novatium was the shift in its headquarters from Chennai to New Delhi, to better synchronise with the telecom operators and control pan-India sales.