Sunday, June 04, 2006
OLPC and the Bottom Line
There's a lot of talk and attention directed lately at MIT's "One Laptop Per Child" (OLPC) program. It's a development effort headed by Nicholas Negroponte, designed to make low-cost, durable computers available for education, especially in the developing world. They've shipped their first prototype, and are understandably excited. They are trying to take on a lot of problems: durable hardware and power supplies that can tolerate sand, heat and variable electric current; fully functional, low-cost software; instructional designs that leverage what we know of student learning in effectively addressing the learning difficulties of impoverished children. They've got a wiki that covers a lot of this, in fascinating detail.
It is an exciting project. The idea that low-cost computers might be available for use by almost everyone on the planet could be revolutionary. It is promising in the way that a lot of the theories of Univeristy of Michigan economist CK Prahalad's theories are promising. If successful, you'd be elevating a generation of poor people whose predecessors had been written off by their nations. And just imagine what all that underutilized talent might do for society.
I could be wrong about this, but I don't think it will go down because of Negroponte and MIT. A lot of this is a little, well, insular. It's an academic project, and has all the breathless intensity of academic projects: great on paper, but less so in practice. The truth of the matter is that businesses are already hunting this underserved demographic assiduously. There is an article in the latest Businessweek that discusses how companies like Intel are busy building low-cost laptops for use by students. And I'm really excited by Microsoft's latest "Pay-As-You-Go" software and financing plan that they've been deploying in developing countries.
Computer hardware and software manufacturers are not going to let a non-profit research project compromise their bottom line. Any truly full-function, cheap PC would do exactly that. Before you know it, the machines would go from emerging markets to developed markets. Everyone would buy a $100 PC if it were as good as the $1600 Dell I’m typing on right now. Those companies know this, and will deploy their own cheap computers (and compensatory for-fee services--think cell phone manufacturers) before long. It's dogma in the computer industry that if your margins are going to be hit, you take the hit and keep the market share. So believe me, Dell, Microsoft and the rest are already hunting that low-end market. And if they aren't, some aggressive entrepreneur is. And will get there before Negroponte.
The economics of this are already at play in the US educational market: hardware and software manufacturers could in theory offer their products at an educational discount and put a laptop in the hands of every American student. They don’t because they want the families of those children (or state governments) to buy them at retail prices.
Those prices are going down, and will continue to do so. In the next two years, the largest single hardware part expense of a laptop (the LCD screen) will finally become cost effective. At that point $100 laptops will be manufactured by Dell, and eMachines, and Lenovo, and any other manufacturer interested in trading price point for volume sales. And $100 laptops will be within the grasp of everyone.
They’ll be fully functional: capable of email, IM, multimedia presentation, etc. And that’s the big difference between them and project like OLPC. The OLPC and other academic initiatives figure that poor people will be happy with dial-up connectivity and limited PC functionality.
But they won’t. Even people who don’t have computers know that they’re capable of magical things. They want in on the magic. All of it.
I’ve spent the last 14 months in some of the worst schools in the United States teaching children from the poorest families in the nation on fully functional Dell laptops. They loved it. They learned from it. And most importantly, they wanted it.
Almost all the children I served asked for the laptops at the end of the program. We couldn’t afford to give them the machines. But I wished I could have, and someday someone will.
My guess is that wish is more likely to be fulfilled by Microsoft than MIT.