UP govt approves Rs 2,800-cr laptop scheme

Personal Computer (PC) manufacturing giant Hewlett-Packard (HP) has bagged the contract from the Uttar Pradesh government to supply 1.5 million laptops.

The laptops’ price at Rs 19,058 per unit will be provided to students who have passed XII standard during the 2011-12 academic year.

HP was competing with PC makers such as HCL Infosystems and global majors Acer, and Lenovo for the contract. HCL, Lenovo and Acer had quoted a price of Rs 21,983, Rs 23,919 and Rs 25,199 respectively.

A DIGITISED MOVE

• 1.5 million Laptops, priced at Rs 19,058 a unit, to be supplied by HP to students who have passed XII standard in 2011-12
   
• Rs 2,400 crore and Rs 400 crore Break-up for laptops and tablets under the UP govt Budget, respectively
   
• 10.8 million Units of notebook and desktop computers were sold in the country in 2011-12
   
• Stiff competition To be seen among PC makers, which have been witnessing slower consumer demand, with such govt projects

The Cabinet meeting chaired by Chief Minister Akhilesh Yadav here approved the proposal to issue a Letter of Intent (LoI) to HP India Sales Private Limited for the bulk supply. HP declined to comment on the development.

The total supply is worth Rs 2,858 crore. The state had already made a provision of almost Rs 2,800 crore for giving laptops and tablets to students passing class XII and X.

The delivery of laptops would be under a strict schedule, as mentioned in the bidding terms. The laptop would comprise 14-inch screen, 2-GB memory, 500-GB hard disk, one-year warranty and support three languages viz. English, Hindi and Urdu. Under the original bidding terms outlined by project consultant KPMG, the vendor was required to provide almost 1.8 million laptops, complete with backpacks within 210 (7 months) days of the award of contract.

HP follows Chinese PC maker Lenovo, which bagged a similar project from the Tamil Nadu government last year. This also allowed Lenovo to emerge as one of the largest PC manufacturers in India. This contract might help HP, as it has been losing market share.

Analysts predict such government projects will see stiff competition among PC makers, which have been witnessing slower consumer demand globally and in India. According to the Manufacturers’ Association for Information Technology , only 10.8 million units of notebook and desktop computers were sold in the country in 2011-12 — about 8.5 per cent less than what the industry body had projected earlier.

“For HP, which has been hit by much negative news, this is about gaining market share based on volume growth. These kind of deals help you leapfrog your market share. What will be seen is the margin levels that HP is playing,” said Sumanta Mukherjee, lead analyst for computing devices at CyberMedia Research.

Last year, the Tamil Nadu government had awarded a contract to six vendors for supply of 914,000 laptops under the first phase of its free laptop programme to students. However, some of the vendors who were shortlisted for the project subsequently expressed inability to supply within the stipulated date and at the quoted price, citing supply bottlenecks.

In the second phase, Electronics Corporation of Tamil Nadu Ltd (ELCOT), the implementing agency of the government’s free laptop programme had floated a tender for supply of 724,000 additional units of laptops. The process for short-listing of vendors for the second phase is underway.

The laptops offered in the first phase of the TN government project approximately cost Rs 16,500 per unit, as these were having basic configurations.

More to come
The UP government has also floated a separate tender to procure 2.6 million units of tablet PCs which will be distributed to class-X students, in the first phase.

The break-up for laptops and tablets under the UP government budget was roughly Rs 2,400 crore and Rs 400 crore, respectively. Since the cost would overshoot the allocation, the government would need to provide extra funds for the tablets, wherein, two million students are eligible. The bidding process is on for tablets.

The laptops would be given to students, who had enrolled themselves for higher education. It includes pupils passing through the madrassah education system.

(Additional inputs from Piyali Mandal)