Shares of DataWind (DataWind Stock Quote, Chart, News: TSX:DW) are up sharply today after announcing it has inked a deal with one of India’s major telecommunication providers to bundle some of its famously cheap hardware with an internet service package.
“This agreement is a major milestone for DataWind; it moves us closer to our goal of bringing the next billion people on-line,” said CEO Suneet Singh Tuli. “Through this agreement, we will now be able to bundle reliable nationwide Internet service with virtually every device we ship through all of our Indian sales channels. Our customers will be able to use our low-cost Internet browsing solution, essentially anywhere in India.”
The company says it will provide more detail on the deal in late February.
A recent TSX IPO, DataWind has gained notoriety for its bargain priced tablets. In 2013, the company released its UbiSlate 7Ci, a seven-inch tablet with 512MB of RAM, 4GB of flash memory, Wi-Fi, and a 1GHz processor, in the US for $37.99. But Haywood analyst Massimo Voci says investors thinking the company is a mere hardware play are missing the point.
Voci says the real opportunity for DataWind is in the company using its compression technology to provide internet access to the millions of people who do not currently have it, beginning in the Indian market, where there are an estimated one-billion people without internet access.
The company says its goal is in “bridging the digital divide for the digitally disenfranchised”.
Voci, who launched coverage of DataWind in October with a “Buy” rating, explains that DataWind’s Internet Delivery Platform (IDP) offloads processing from the device to a cloud server, then compresses the data before delivering back to the device. He points out that this opens the door to internet access on existing 2G networks. The company’s browser does not reproduce web audio or video, but provides a basic connectivity that is currently lacking. The company says its acceleration technology, which is protected by at least 18 patents, reduces bandwidth consumption by 20 times on average for basic internet browsing.
At press time, shares of DataWind were up 20.1% to $2.27.