From Montreal, DataWind Says Aakash Not Main Focus

Christinne Muschi for The New York TimesRaja Singh Tuli, co-chairman and chief technology officer of DataWind, holding a UbiSlate tablet in his office in Montreal, Canada on  Dec. 4.

A somewhat shabby former newspaper office in downtown Montreal seems an improbable place to make components for an ultralow-cost tablet computer for Indian students.

But behind an unmarked door on the ground floor there is indeed a fully functional, if cramped and somewhat makeshift, factory producing touch screens for India's Aakash tablet and its slightly more deluxe commercial counterpart, UBiSlate 7+. Sweeping a hand toward the operation's clean room, Raja Singh Tuli, co-founder of DataWind, boasts that Samsung is the only other tablet maker that produces its own touchscreens.

While that is probably true, it is also indisputable that DataWind and O.L.A. Display, its touchscreen subsidiary, are not Samsung. While Mr. Tuli and his younger brother, Suneet, have captured the world's attention with the Aakash, a visit to the Montreal facility makes it clear that setting up production in India to make the tablet has proved to be a far greater challenge than obtaining the contract for the first 100,000 units.

Indeed when the elder Mr. Tuli used a whiteboard in the plant's “board room” - which features an exceptionally mismatched selection of office chairs and a “Star Wars” poster - to outline the company's plans, he insisted that Aakash is not the main focus of DataWind even if it has become the source of the company's fame. (Read more about the Aakash project and the problems it has faced.)

“I'll tell you the reason why we're here,” Mr. Tuli said, with an orange marker in hand. “It's not to give the Indian government low-cost units. That's not why we're here. We got stuck in it; we're doing our best.”

The company's real goal, according to Mr. Tuli, is “to supply low-cost Internet to the masses in India and Africa.”

But to get there, the Tuli brothers must first meet their commitment to the Indian government, one that is dramatically behind schedule. DataWind is required to supply the government with 100,000 tablets by the end of this month. But the elder Mr. Tuli estimated that it has only shipped 20,000 units to date (Indian Institute of Technology Bombay said last week that only 14,000 had been delivered). While he expects to double that total by the end of the year, he does not anticipate fulfilling the contract until March.

At the same time DataWind must overcome two broad issues surrounding the $60 retail version of its tablet, which comes packaged with unlimited Internet access for $2 a month in India. Not only is the company extraordinarily behind on filling orders for that model - which Mr. Tuli estimates now number 4 million - it now must offset a perception among some Indian consumers that it is an inferior device.

Mr. Tuli said that he was among those at the company and on its board who initially opposed his younger brother's plan to bid on the government contract.

“I can tell you there was a lot of discussion about this at first because we never intended to become a hardware manufacturer,” he said. But ultimately, Mr. Tuli said, that the company's board was persuaded that by removing the wireless modem from the $60 tablet, DataWind could provide a dev ice within the government's price and still make money.

Doing that, however, and assembling the device in India, Mr. Tuli said, has proven to be much harder than DataWind anticipated.

“Listen, it's obviously easier in China just because the whole infrastructure is set up, capital is so much cheaper,” he said. “In India, it can be done but the process is longer. The whole infrastructure for manufacturing just isn't set up.”

Although Mr. Tuli said that DataWind long ago lined up five companies in India to assemble its tablets, the first of them will not start for at least two to three more weeks. In the interim, the company has turned to Chinese manufacturers and even hand-assembled 10,000 tablets for the government at one of its offices in India.

He also cited bureaucratic delays. Mr. Tuli said it was common for the touchscreens from Montreal and other components from China to be held up by Indian customs for a month or longer.

Despite al l of that, Mr. Tuli said that DataWind is making a slim profit from the tablets it has produced for the government. Both Tuli brothers, in separate interviews, insisted that the downtown Montreal touchscreen operation plays a key role in that.

The rise of smartphones and tablets globally, the elder Mr. Tuli said, has allowed Chinese, Korean and Taiwanese manufacturers to charge premium prices for touchscreens, creating an opening in Canada for production.

Christinne Muschi for The New York TimesThe assembly room at the facilities of DataWind in Montreal on Dec. 4.

The small plant in Montreal is divided into two distinct operations. One side turns sheets of glass into eight touchscreen sensors using semiconductor fabrication technologies. Mr. Tuli said that part of the operation employs a unique process, which he declined to detail, that make it a lower-cost producer than even plants in China.

But Mr. Tuli acknowledged that the other side of the plant - where three shifts of eight workers take the glass panels and then assemble them into screens - is not globally competitive because of its labor costs. He plans to move that portion of the operation, which involves considerable manual labor, largely to India.

Even with more Indian production, however, Mr. Tuli acknowledged that DataWind is unlikely to beat the Chinese when it comes to production costs in the long run.

“It is possible that a year or two down the road the Chinese will be able to undercut us,” he said. “We don't claim to have anything special in making low-cost units forever.”

DataWind's operations in Montreal show no signs of extravagance. At another office in the touristy Old Montreal neighborhood where Datawind designs its tablets and develops its software, a test engineer showed off a test rig containing half a dozen prototypes. He had built it out of a Federal Express shipping box.

As for Indian consumers who complain that the touchscreens on their tablets are unresponsive and generally inferior, Mr. Tuli blamed the Indian government. Its contract, he said, required DataWind to use resistive touchpads, an older technology better suited for simple tasks like operating ATM machines. Several months ago, Mr. Tuli said, DataWind switched all of its models to the more sensitive capacitive touch screens, the standard on most tablets and smartphones.

“The fact is, a resistive touch pad is not that responsive,” Mr. Tuli said. “But we did it based on their spec.”
Mr. Tuli declined to comment when asked if agreeing to supply the government had been a mistake in retros pect. Nor would he say whether DataWind intends to bid on future supply contracts.

But he insisted that DataWind is committed to expanding tablet production in India to promote its Internet service. It relies on servers in Canada to strip down and compress Web pages so that they can they can be downloaded within an acceptable amount of time over India's old and very slow wireless network.

“We're not going to give up because of these little issues,” he said.

However, back at the other office, Mr. Tuli did point out an engineer who was translating manuals for companies assembling DataWind tablets in China. And a couple of very crowded desks over, a hardware engineer showed how DataWind's electronic components are designed to snap into standard Chinese tablet cases.

When asked how difficult the Indian experience has been, Mr. Tuli, who speaks at a rapid-fire pace, paused momentarily.

“We're committed to it,” he said, “But always in life i t's tougher than you think it was going to be.”