By Michael Kanellos
Staff Writer, CNET News.com
June 29, 2005 4:00 AM PT

In about three months, a little-known company called Novatium plans to offer a stripped-down home computer for about $70 or $75. That is about half the price of the standard "thin clients" of this kind now sold in India, made possible in part by some novel engineering choices. Adding a monitor doubles the price to $150, but the company will offer used displays to keep the cost down.

"If you want to reach the $100 to $120 price point, you need to use old monitors," said Novatium founder and board member Rajesh Jain, a local entrepreneur who sold the IndiaWorld portal for $115 million in cash in 2000 and has started a host of companies since. "Monitors have a lifetime of seven to eight years."

It is this kind of entrepreneurial thinking that has made Jain the latest visionary to seek out today's Holy Grail of home computing: a desktop that will start to bring the Internet to the more than 5 billion people around the world who aren't on it yet.

The first $100 computer is a fitting icon for a country undergoing major changes in the development of its technology, economy and society. As Indian companies increasingly break away from the limitations of handling outsourced services for Western corporations, innovations are likely to multiply and inspire the rising number of independently minded engineers and executives who are leading the country's technology industry to new frontiers.

Because of thriving exports and low PC penetration, India has become the epicenter for projects on the cutting edge of computing hardware. Advanced Micro Devices has started to sell its Personal Internet Communicator for $235, including monitor, through a broadband partner here. It says a fully equipped $100 personal computer in three years isn't out of the question.

The innovative spirit that pervades the industry is producing a variety of new approaches toward affordable computing. Tata Consultancy Services is tinkering with "domain computers" that reduce costs by just handling fixed functions such as bill payment or word processing, said Nagaraj Ijari, a senior executive in the company's operations in Bangalore.

About 200 miles away in high-tech center Chennai, formerly known as Madras, Professor Ashok Jhunjhunwala of the Indian Institute of Technology has developed a $1,000 automatic teller machine that can also serve as an Internet kiosk for villages. He has also built a wireless data system that has been exported to Brazil, Iran, Fiji and Nigeria.

Creating a product that cuts costs without reducing functions isn't easy, as exemplified by the Simputer, a handheld computer designed for the masses. And many products face formidable logistical and infrastructural obstacles.

Professor Jitendra Shah, from the Centre for the Development of Advanced Computing, is examining ways to reduce electricity usage by setting up solar-powered computing terminals that tap into battery-powered PCs acting as servers.

"We are looking at ways to take advantage of unconventional sources of power. Practically in every village you will find a truck or car battery that you can use when the regular power grid fails you," said Ketan Sampat, president of Intel India. "You also want to design something that is more tolerant of dust."

Living in a material world
The key to success for the $100 computer lies in the sum of its parts. Even though the industry has seen continuous price declines for components--including metal, plastic and other raw materials--many executives believe that manufacturing a full-fledged PC for even less than $200 is probably still impractical.

"We are not able to fix the monitor and hard-drive problem," said P.R. Lakshamanan, senior vice president of Zenith Computers, one of India's largest local PC makers.

With these realities in mind, some companies are adjusting their price goals. Xenitis, for example, has come out with PCs that cost just under