There are the software costs, which are classic fixed costs with zero marginal costs. A profit-seeking business such as Microsoft would have charge way above marginal cost.
(It’s possible that one could talk Microsoft into donating software either as an act of charity or as an entry-level hook in future consumers)

Likewise, any hardware design costs are also fixed with zero marginal costs.

Open source with volunteer labor would reduce the fixed costs of software and design to zero. Even if some paid software or design labor is needed, a charitable donation could pay for this fixed cost.

There is a tradeoff between economics of scale – having one company be a monopoly, just one $100 computer – and the benefits of competition (more products with competition, and in the business sector usually lower prices).

It’s possible that some of the fixed costs of the manufacturing plant(s) could be covered by donations, but this seems less likely and there is actual depreciation of physical plants.

I don’t know enough about the industry to know how much variable manufacturing costs scale from say 100,000 to a million to 5 million units.

Contrary to some of the above suggestions that business is always better than charity or government, all a charity program has to do is get the marginal costs to $100 while a profit-seeking business would have to get the total costs plus profit to $100.

Of course the computer one can build for $100 or $1000 does change over time and is dynamic. But I think the goal is to build a computer say with half the capabilities as the very basic commercial $400 laptop for a quarter of the price (and functional in extreme environments).

And because of decreasing returns, a computer with half the features/speed/memory, like the one we all had 4 years ago, was more than half as useful as the computer we use today – and infinitely better than no computer.

Of course for the very poor, there may be other options such as sharing standard PCs or spending the money on printed books, teachers or food.

SG

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http://www.xencasino.com

I hope that the low-cost laptops are successful in the classroom because you’re right on them being more beneficial to students.

I also hope that Indian mobile service providers learn a thing or two about what is happening with the telcos here in the States.

Maybe Google’s Android project will break into India. That would be awesome.

And again to your distinction – providing for the masses (ie consumers who will pay), yes I totally agree but in the classrooms, I disagree. We’re not talking sophisticated iphones here – if most don’t even have voicemail I’ll bet they’re not learning how to read, write long essays, do math, surf the web, program, and so on. Even most of the IT workers I work with don’t have voicemail and they certainly don’t surf the web using their phones (which students can do in the classroom on their laptops).

I agree with you on Indian telecom utilities. When I was there I, ironically, had a wireless Internet connection with Reliance. I had to call them almost everyday.

As for your comment, “It just seems greedy no matter how they spin it for corporations to push OLPC out.” I think this is an unfortunate positive side effect of innovative nonprofit efforts.

They prove to for-profit companies that there is a demand and market for a certain product or service. Kind of like Grameen Bank showing commercial banking that microfinance is viable.

Back to my point: Governments providing laptops to its citizens is not a viable business model. That is why cheap and reliable mobile phones with Internet connectivity will stick and laptops won’t.

But you do distinguish between personal (consumer) and educational (classroom) settings, which OLPC is squaring in on the educational giving the computers to the children in the classrooms. It just seems greedy no matter how they spin it for corporations to push OLPC out. If the business case model is much better for the end user (the nation buying and the children using) then that’s a valid argument, but OLCP is still doing a humanitarian effort. If nothing else they’ve certainly brought this endeavor to the lips of many who’d never otherwise think about it.

The children using these computers are learning and hopefully learning to better themselves in the long run. Plus, they’re really excited to use them.

(Peter I totally disagree with you that they’re not adding value.) http://www.ours...s.org/find.html listen to those and tell me they don’t get anything from this while learning something along the way.

They are too expensive, even when developing countries governments and US companies are subsidizing them. School sewers are just more important than school servers, period.

However, I reiterate that mobile phones with Internet connectivity are showing major stickiness in both urban and rural areas of developing countries. That is the future of light computing.

However, I don’t think laptops are going to stick in this BOP (bottom of the pyramid) market. This market is going to jump laptops and go straight to mobile phones.

I blogged earlier that laptops don’t work well for daily BOP use. Mobile phones will. And mobile phones with Internet connectivity have shown stickiness in rural, low-income African markets already.

Its bad. really bad. Slow, complicated, not useful. The idea that this green crap would add value to anyone’s life is absurd.

I like my OLPC laptop, but I there are so many things about the product itself and the experience of buying and using one that would be so much better if there was a profit-motivated company behind it.

The OLPC staff are really humanitarian at heart and really want to do this to get the poorest children into technology. There have been arguments about “why do kids who don’t have enough to eat want computers?” You’d be surprised at how well the kids adapt and love their computers. The stories from the children who have them are really moving.

The kids are the ones who are losing while the governments and corporations squabble.

I’m sure St. Negroponte is steamed again that someone else has the nerve to market to the people he markets to too. The last thing poor people need is options, they need a self-proclaimed savior that can tell them all what to buy.

BTW Kudos to Intel for actually working on more products for the third-world instead of capitulating to that windbag’s disingenuous indignation. And kudos to this lady as well.