Aakash was able to overcome all this and reach the customer carrying the tag of “cheapest tablet.” But how?  According to Suneet Tuli, CEO of Datawind, who spoke to Mashable about strategy the company follows to bring the tablets at amazing lower costs, “the Micromax Funbook, which has approximately same specifications as that of Aakash 2, costs around Rs 6,500 or about $120, which is about twice the prize of their device. The reason  is that Datawind assembles the tablet in India upon importing parts from South Korea, china and U.S., which is cheaper than importing completely assembled devices.” Then the company markets the products online or by couriers, saving the commission on distributers and retailers. 

In China, it’s a similar story, says Jay Goldberg, a financial analyst. Functional 7-inch tablets can be had at Shenzhen malls devoted to electronics for as little as $45. That’s because the supply chains required to build these devices are located in the city and in nearby provinces.

Many of China’s cheap tablet manufacturers hit on the idea accidentally, says Goldberg, and it all started with the manufacturing cell phones which were cheap too. 

“Not quite 10 years ago, Mediatek of Taiwan entered the cell phone market,” says Goldberg. MediaTek Inc, a fabless semiconductor company, designing and selling components for wireless communication and other electronic gadgets, found contract manufacturers in mainland China that had machines to put chips on circuit boards, and they were mostly doing this as subcontractors, churning out parts for larger electronics companies with recognizable brands.

Later the company figured out it could save money by handing these manufacturers both the chips required to build a phone and a complete blueprint for assembling them into basic phones. That transformed thousands of small manufacturers from subcontractors into factories for completed products. This same strategy led to development of cheaper Smartphones and tablets too.