Amid all the rancor between One Laptop Per Child (OLPC) and Intel, which joined the not-for-profit project and then left it last Friday, a new for-profit startup has been spun off from OLPC to commercialize the technology inside the little green laptop designed for children in poor nations. Mary Lou Jepsen, the chief technology officer of OLPC (and a former Intel manager), has left to start Pixel Qi. The idea is to license some of the core technologies inside the OLPC—sunlight-readable screens, a low-power OS, and other sub-systems—to other manufacturers of laptops, cell phones, and digital cameras. That way, these components can reach the manufacturing scale necessary to bring their price down. At the same time, Pixel Qi will make its components available to OLPC “at cost.”
Jepsen explains her low-power, low-cost, green approach to computer design here and states that one of Pixel Qi’s goals is the creation of a $75 laptop. Some of you will recall that the original goal of OLPC was to create a $100 laptop, but that price was later hiked up to $176 and then $188 (if you want to donate a laptop on the OLPC site, it costs $200, with shipping). It seems a bit premature to announce a $75 laptop when we are still waiting for the $100 one. But it is not inconceivable that we will get there in 12 to 18 months.
The bigger issue here is that OLPC is having trouble getting to the scale it needs. Instead of the three million orders OLPC once boasted it would have by the end of 2007, it ended up selling only 162,000 (most of those through a “Give One. Get One” program aimed at socially-conscious consumers in the U.S.). Failing to get to scale as a not-for-profit entity, it appears to be trying the for-profit route with Pixel Qi, who’s stated goal is “leveraging a larger market for new technologies, beyond just OLPC: prices for next-generation hardware can be brought down by allowing multiple uses of the key technology advances.” It is not a bad strategy if Jepsen can find any takers for her technology.
But it makes you wonder whether OLPC would have been better off going the for-profit route from the beginning.
Update: Jepsen just sent me the following note, explaining why she is taking the for-profit route. Excerpt:
I can leverage the economies of scale this way to drive next generation laptops to lower cost and even longer battery life. It’s not
just kids in the developing world that want low-cost long-battery-life sunlight-readable laptops, everyone does. Making more of something reduces the cost of it.In addition, people want the sunlight-readable screen I invented in cellphones and conventional laptops. Pixel Qi is also doing that.
I’m fresh from CES where 99% of the new products shown just seem like derivative copycats with high price tags. Steve Jobs leads and everyone else follows. But the iPhone and the iPod simply redefined the high end of consumer phones and MP3 players. Only the rich billion or so people in the world can afford these products.
That leaves 5.5 billion people that aren’t being served, although 2B of them now have cellphones. It’s widely predicted that half of all
Africans will have cellphones by 2010. Africans (and everyone else too) would also like affordable laptops. It’s hard to surf the web on a phone, it’s hard to write a paper by clicking out keys on your Blackberry.The best way I can help OLPC achieve it’s goals is by driving the cost of computers and their components down. While there is a new set of low-cost laptops emerging, really they’re Dells on a diet: nice machines but.. they’re not machines people will fall in love with, machines people will line up to buy.
There are literally billions of people not addressed by these products and it’s not just the price. What we’ve shown, with the One Laptop per Child hardware development I led, is that you can develop products for these billions of people. Products that are just as exciting in their own way: they’re new designs, not just stripped-down versions of standardized, undifferentiated, aging designs. They’re designed for a new set of use situations - not just air-conditioned offices but indoors and outdoors, hot and cold, off-the-grid, in challenging environments, for example - and they’re lower power, and they’re more environmentally friendly than anything else - and - a key lesson from Apple: they are devices people are proud to own and proud to use.
Jepsen is obviously on a mission here that she strongly believes in, and that’s half the battle.
If it would have been marketed as a for profit product it would have ended up on linuxdevices.com and nobody would have wanted one. The reason it sold was because people got the impression that they were getting a product that wasn’t for them but aimed at the 3rd world. That’s the only reason they bought it.
The issue with the OLPC isn’t just scale. It’s been failing from the start. Don’t sell to individuals, drop the crank, raise the price, push back the date, raise the price, lower the expectations, sell to individuals, blame everyone else, etc. etc. etc. Negroponte was actually claiming early on that the world laptop manufacturing infrastructure was going to have to find a way to ramp up to meet demand for this garbage, that he’d be using a significant proportion of worldwide capacity. And yet, again and again, he gets a pass. He’s a joke.
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.
@User why do you say they “got the impression” - buyers ARE getting a product that is going to the third world. The solutions to their problems are not as simplified as this article makes them out to be. The setbacks of OLPC have a lot to do with third world government ineptitude and fraud as well as corporations seeing dollar signs to compete.
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.
The key, as Michael suggests, is that this is FOR PROFIT. That fact will make such a big difference.
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.
If you think the OLPC project is disappointing, try using one.
Its bad. really bad. Slow, complicated, not useful. The idea that this green crap would add value to anyone’s life is absurd.
Commercial competition is great for this space.
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.
I might add to my comment #6 above that low-cost laptops will have an extremely hard time sticking in the lower brackets of the socio-economic spectrum.
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.
Andrew, just read your blog on this and one thing you don’t mention is that the majority of poor Indians are buying cell phones because they’re cheap and relatively reliable, which can’t be said about most of Indian utilties! Most of them don’t even have voicemail because they can’t afford it. (I have been to India many times and I work with a team of Indian developers and am fascinated by that country, but am obviously no means any expert). Would many of them like laptops? Sure but they can’t afford them/ use them (electricity, dirtiness of the enivronment ruining the motherboard etc). Would they like free laptops from the government (in the classrooms)? I would be willing to bet yes. $100 is still a lot for an average Indian consumer to spend.
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.ourstories.org/find.html listen to those and tell me they don’t get anything from this while learning something along the way.
@ antje #8
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.
Andrew- interesting point about innovative non-profit side effects, not sure they’re all positive though.
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).
@antje #10
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.
Had so much potential. The future is a combination of this cheap laptop and some form of free power ( ie free power in teh form of the wind up radio like but for a laptop ).
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http://www.xencasino.com
Hi,
First, I don’t think a $75 laptop is possible. Second, if the business is not-for-profit and money would be invested in creating tehnology that should reach the poorest of all in all parts fo the world, including India then who cares what the price point is? Let us work on creating the lowest that technology can afford today and a year from now that will drop as well and as the market economics work with higher volume you see lower prices, that system just works. As far as funds to fund these types of activities are concerned there is billions of dollars of Philanthrophy money that is floating around and people are in general good and philanthropic, if they can afford too and they will fund these activities.
Somebody mentioned about Grameen bank, if you follow what is happening with Grameen bank, especially currently in India, the new businesses are under-cuting the larger banking business models. We all knew this for a while. Microsoft charged us $200 per OS license and gave us crap to deal with it, Linux came along and reduced that pain. Microsoft lost some market share and are regaining by increasing the quality, better features and customers are still paying similar amounts (some discounts probably) and now have a better software that they can live with and actually like it.
This is world economics 101. Let us just get the lowest cost laptop whether it is $75, $100 or $125. It don’t matter. Lets get it out their!
SG
Flip side of this is to consider how much electronic waste will be generated if laptops become as cheap and as ubiquitous as plastic bags and a pair of shoes. Another business opportunity might be generated from recycling those child laptop…..
Perhaps with my economics education, I am imposing my own economics-centric view of the world on these projects, but these projects should scale.
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.