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November 3, 2005 4:00 AM PST

Brazil's bumpy road to the low-cost PC

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A more conventional PC architecture was tried next, but that caused the price to balloon. The first Popular PCs came out in 2002 with a price tag of around $600, higher than even the promises of a $500 box. The national government changed hands in 2002, leaving the program stranded.

"The government can't change a lot of things. Worse, many projects are left behind at every change of administration," saddling the private sector with the burden of popularizing computers, said Gilberto Galan, the Latin America representative for the Computing Technology Industry Association, or CompTIA.

Giving manufacturers a break
In January 2003, Lula became president, and within a year was championing computers for the poor. The first program was called Connected PC, which, before it actually got off the ground, morphed into Computer for Everyone.

Luiz Inacio Lula da Silva
Brazil President
Luiz Inacio Lula
da Silva
Instead of trying to avoid import duties by manufacturing components domestically, the program gave participating manufacturers a tax break. Manufacturers essentially got a 9.25 percent reduction on PIS and Confins, two obligatory taxes, for qualifying PCs costing less than $1,000. The cost reduction is supposed to be passed on to consumers--the PCs come with a sticker announcing that 10 percent was lopped off the list price thanks to Computer for Everyone.

Additionally, consumers could buy these PCs on installment plans, paying, say, $25 a month for 24 months for a $600 PC. Internet service wasn't bundled in the price, but was supposed to be available for $4 a month. Supporters cautiously applauded the program.

Software talks get heated
"Yes, technology innovation demands a lot more, but reducing PIS and Confins taxes is a very reasonable start to advance," Ronald Martin Dauscha, president of the National Association of Research, Development and Engineering, said in an open letter to President Lula that was also signed by Luiz Fernandes Madi, president of the Brazilian Association of Technology Research Institutions.

The first problem? Only a few manufacturers applied for government approval, which came out as a "temporary provision" that the national senate had not initially endorsed. The senate recently gave its approval, so more manufacturers may apply.

Then there's the matter of pricing. The PCs still cost around $600, more than most Brazilians can afford. The $4 monthly ISP rate has proved difficult to implement because of charges associated with telephone access.

The last eight months of struggle between industry and government on Computer for Everyone also involved heated, and as yet unresolved, discussions about which kind of software should be bundled.

To obtain the tax cut, Lula initially stated that manufacturers and stores had to provide the computer with a Linux distribution--in Portuguese and user-friendly--and a whole set of free software applications, such as an office suite.

Heavily supported by Sergio Amadeu, who was until recently president of the National Institute of Information Technology, the proposal brought counterproposals from Microsoft. The Redmond, Wash.-based behemoth also began to promote Windows XP Starter Edition for Brazil.

It's not clear which way users would trend. While some say Linux does the job, others argue that, as in much of Asia, pirated versions of Windows would capture the day.

Those issues could still be in up in the air the next time a cheap PC program emerges, skeptics say.

"We have some marvelous approaches from private companies and civil associations," said Goncalves, the Webmaster in Rio de Janeiro, "but they just can't provide enough access to those who need it."

CNET News.com's Michael Kanellos contributed to this report.

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Add a Comment (Log in or register) 10 comments
Got and extra 2 grand?
by Klar November 3, 2005 4:49 AM PST
I am currently in Brazil (though from the US), and purchased a
PC here last year. I paid over US$500 for a bare-bones PC with
XP, and some other software. Its frustrating to people who live
here to afford computers. To a middle-class family, even, this
price is like plopping down US$2000 for something.
There is plenty of free internet access as well, but the phone is
charged by the minute here, so to stay on the internet for very
long is not practical. DSL is also available, but out of reach for
most people cost-wise.
As an example of how the tarrif system works here, I was
looking at a digital camera the other day; the price was double
the MSRP for the US (presumably) because of the import taxes.
Oh, and that copy of WXP? I found out it was pirated recently.
Reply to this comment
"DSL is also available...
by Captain_Spock November 3, 2005 6:28 AM PST
... but out of reach for most people cost-wise". Haven't the Brazillians heard of Cable and Wireless Internet Technologies that can also be employed to enhance and enable their internet experiences! The introduction of "competing" technologies would certainly force the cost of internet "connectivity" southwards and make the experiences of the Brazillians more affordable.... don't you think!
View reply
Brazillian State Agencies...
by Captain_Spock November 3, 2005 8:05 AM PST
... and the Brazillian business communities in general should also get on board the Open Document Standards IT (Information Technology) Train like the possible formation of 'OpenDocument Foundation'; see link to CNET News.com article ( http://news.com.com/2102-1013_3-5926010.html?tag=st.util.print that would allow for the adoption of OpenDocument Computing Standards to which the overall Brazillian economy will not be subjected to "lock-ins" by large multi-national computer software companies like SAP and Microsoft!
Reply to this comment
cheap pcs for third world contrys
by linuxuser. November 3, 2005 2:09 PM PST
i think your going about this all wrong why not collect all the used corpration computers all over the world and send them to these contrys where they cant afford new ones !!! and have internet over the power lines ??????
Reply to this comment
why take the leftovers
by Deven Shah November 4, 2005 8:37 PM PST
a second hand usable PC in developed nation would still cost
around USD 200 and have all the maintenance and spare
unavailability/incompatibility headaches. And if you take the ones
the corporations discard they would not be able to use even most
of the basic software at decent functional levels. Its the government
attitude that needs a paradigm shift, if they really mean " computer
for everyone".
Governments need do'ers
by Deven Shah November 4, 2005 8:33 PM PST
like us in india, brazil needs their politicians to take action
rather than just keep creating hype and getting on the news
daily.
Fortunately for us we had some of our key politicians who did
rather than talked. They started the rumblings in the late
eighties and it took us 15 years to reach here. Here where now a
basic usable PC is available for just under 350USD. Cheaper
browser PC's are available for just under USD 250. If the
government is serious just reduce the taxes and import duties to
zero overnight. I am sure the brazilian economy could survive
the little that they would lose from this. In time, i.e 3 - 5 years
the seeding and mass movement would happen and then they
could relook at the taxes. Once the PC's start moving in fast at
the prices above, access to the net at competitive rates/speeds
would automatically follow. Ford built the first car and the world
got higher quality gasoline. Then one would be able to really say
the revolution has begun.
Reply to this comment
"Brazil's bumpy road....
by Captain_Spock November 4, 2005 9:44 PM PST
... to the low-cost PCs" could become smooth as a result of activities and follow-up actions ( which should include a sound Regional Information Technology (IT) Policy) now being undertaken by the "Initiative for Integration of Regional Infrastructure of South America (IIRSA)"; see link:
http://www.stabroeknews.com/index.pl/article_local_news?id=35207398
Reply to this comment
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