It was probably 5 years back, when I was thinking of buying a new laptop. If you have been born in 80s you would have experienced most of all tech revolution unfolding before your eyes. So like in 90s when IT revolution had picked up (Infy had IPO sometime in 1994 or 1995 I think) people were getting hooked on to idea of automation and tech, corporate had gone on major capex drive to computerise their system as much as possible. And then internet came in public domain and college kids got hooked and started demanding PC (personal computer). If you went to market you had two options, branded and non-branded which was called assembled in local lingo. Branded was very expensive, to give you idea I got my first PC with config of Intel Celeron (Pentium 2 was in thing and expensive), 10 or 15 GB hard drive with RAM of around 150-200MB, an colour monitor, key board and mouse and all major software windows, office, adobe & acrobat and few games – all for Rs30-35,000/-, this was around 1999-2000. These days one can get better deal on flipkart or any other online store for around ~Rs20-25,000. Mine was assembled and not branded, hence comparatively it was cheaper compared to brand at that point of time.
Fast forward to 2009-10 and I was thinking of buying new system and thought to go for assembled as it would be cheaper. However, I found that branded laptop was almost equal or slightly expensive compared to assembled plus it came with warranty and all original software. Choice was clear, I opted for branded (Dell). Dell was started my Michael Dell in his college dorm, where he assembled and sold PC to buyer (assembled…just like Indian) he was eliminating middle man in selling PC to customer. He could sell cheaper as he had no middle man to share commission and also pass on cost benefit to attract customers. Beauty was he scaled this model on global level, tie up with key supplier of components, buy in bulk get raw material cheap and let customer design (config) his PC and sell it.
I wonder how soon before this model is replicated in cell/mobile phones. In some way it already is, xiaomi and one plus one/two, don’t manufacture but rather design and get manufacturing done from third party vendor and sell it through online stores only and no offline – marketing & promotion is probably done jointly. However no TV ads, no need for distributor or retailer and logistics company, number of activity that organisation do is considerable cut down. But how long before third party vendor or a new vendor decides to directly offer customer ability to design their phone based on catalogue they already have?