The OLPC Pot Calling the Intel Kettle Black

   
   
   
   
   
intel vs olpc
OLPC XO or Intel Classmate PC
Reading the discussions about One Laptop Per Child on 60 Minutes, and the accusations by Nicholas Negroponte that Intel is engaging in "shameless" practices to sell their Classmate PC to his paticiapting countries I am surprised that out of all the different aspects of the two programs, the Classmate price has become a central aspect of the debate.

Christopher Blizzard, a OLPC developer, feels that 60 Minutes missed the main issue of why Intel's Classmate pricing is dangerous:

By hiding the true costs of their laptops they are undermining the ability for a huge number of children to receive low cost laptops. Are they really going to dispense laptops at a $100-200 loss each to a billion kids? I think that’s the important question.
Then Charbax, the man behind the excellent OLPC.TV expands on the Classmate price point:
The cost of the Classmate is closer to $400. Though Intel is offering only to OLPC launch states in maximum bunches of 10 thousand units at $180 each. Thus Intel is taking a $220 loss per laptop. Intel will only sell at that price in relatively low volumes, you can be sure Intel won’t commit to deliver a million laptops per country at that price.
To expand on Charbax's speculation, I do wonder what is the "true cost" of a Classmate PC and invite a post analyzing it on OLPC News. I also agree with Charbax that the Classmate PC is more a lower spec conventional laptop instead of the computing revolution of the OLPC XO. But I cannot help but be surprised that no one sees the irony in a XO vs PC price comparison.

negroponte 60 minutes
Nicholas Negroponte on 60 Minutes

Less we forget, Nicholas Negroponte was the first to make price, not educational functionality or usage, central to the one-to-one computers for education debate with his initial title for this project; the "$100 laptop."

Next, Negroponte has consistently made that price point a central aspect of his marketing campaign to sell OLPC XO computers even when acknowledging that that true cost of his hardware is $130, $140, $150, $176 dollars per computer.

In addition, One Laptop Per Child's original mission encouraged other low-cost laptop competitors:

OLPC is not at heart a technology program and the XO is not a product in any conventional sense of the word. We are non-profit: constructionism is our goal; XO is our means of getting there. It is a very cool, even revolutionary machine, and we are very proud of it. But we would also be delighted if someone built something better, and at a lower price.
To now bemoan other low-cost competitors, especially if they might use misleading price points in marketing their product is pretty cheeky. In fact it's the OLPC pot calling the Intel kettle black.

So OLPC, stop your bitching about price or competition and concentrate on your strengths: your clock-stopping hot technology and, one day, a comprehensive implementation plan. While you do, let Leslie Stahl's comments ring in your ears:

He says he's confident he'll get his orders even though he's about to face even more competition as other companies are working on low-cost laptops. That will result in more kids getting them which is, after all, what Negroponte said he wanted in the first place.
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11 Comments

Wayan,
your arguments are only valid if you can be pretty sure that all competing computer education projects really intend to eventually include dozens of millions of kids. The long term commitment and sustainability is a precondition for those projects to qualify as real competitors for mass education of of kids over decades. Everything else is only short term noise about launch.

The cost estimates of every single component of the OLPC has always been totally public on the http://wiki.laptop.org

While Intel is absolutely not releasing any real information about their costs.

Intel wants to impose the Classmate and then they want it to relatively fail. Cause Intel does not want the concept of the max $3 profit low cost computers to prevail on any market be it in the developping or in the developped countries. At least not in 2007, if Intel can dragg it another few years with the expensive bloatware, then that's more than $5 billion dollars in profit a year which are not at least threatened.

Cause you can be sure Intel's board of investors are looking at the OLPC and asking why the hell someone can make such a cheap computer that works on the Internet and runs all the software most users need and that doesn't involve Intel even a bit.

good post, Wayan.

Also, I think it has always been question of up to $150 for the first generation, the reason for the latest $26 price increase is because it was chosen to upgrade to the latest Geode processor that is quite a bit more powerfull especially playing multimedia files at full screen and consumes even less power (1W versus 3W) which is very important and to double the ram and flash memory among some other factors as the price of nickel used for the battery which has gone up.

OLPC is credibly trying to establish their project for the long term. Whether it is realistic that it will be sustainable considering the intransparency about the implementation is the critical point for OLPC.

However with Intel even the long term intentions are dubious not to speak about their implementation.

The target countries act wisely not to hurry with orders and double check everything and renegociate with the projects. They are definitely smart enough not to consider only the short term sales pitch but also the long term sustainability, probability of education success and long term TCO.

As the Silicon Valley phrase goes, "welcome to the NFL, Dr. Negroponte" (for our international readers, the NFL is a league which plays a brutal sport with almost no sportsmanship).

Intel is not being a spoiler here with a goal of destroying the XO and abandoning the market - they know there's a huge market and they want to find their way into it.

Intel has established four laboratories in the developing world, and the Classmate is probably a research machine that makes possible educational research and development for these labs. They are spending lots of money on the research, so why not on the research machine?

Production designs will come later, informed not only by the XO but also by Intel's experience and research results. In the computer industry the race is almost never to the first, but it goes to those who learn from the early adopters and who come to market with products that have a serious infrastructure behind them.

Negroponte may feel that it's terribly unfair that Intel and maybe others are moving in on the turf that he has staked out. Too bad - he never had a guarantee of anything. If he weren't dazzled by visions of huge shipments and payments he would realize that he can't win playing the game of the dinosaurs - he will have to stay ahead of them and find a way to survive while being nimble.

Lee, I hope you are right. But the available information we have so far indicates in the opposite direction.

Wayan,

There is zero evidence that Intel is in it for the long term. If they sell their Classmates at $200 below cost a piece, even Intel cannot deliver 100 Million laptops.

After all the wrangling about the educational shortcommings of the OLPC project and the XO, it is rather suprising that competition from a side that has made NO educational effort AT ALL is hailed. Especially as this second party has no commitment to deliver to the children in need.

So, let's summarize:
On the one hand we have an open project that has successfully developed hardware especially for children in developing countries. It also made a great effort to develop and tailor an operating system to the educational and security needs of children. This laptop plus software will be delivered at a starting price of $175, which is expected to drop to near $100 in volume.

On the other hand we have a company that produces a stripped down, rugged standard bussiness laptop. This closed project has worked with no consideration of the needs of children in developing countries. No software, educational or not is delivered, receipients have to buy their own. There is very limited attention to children's security. These laptops are dumped in small quantities at an unsustainable price of $180 on the doorsteps of schools.

Now the first, open project is derided as an obvious failure. The second, closed project is hailed as the saviour of the poor children in the world. I exagerate, but not that much.
How am I to understand this?

Downsides of the Classmate:
- At $180, Intel cannot deliver 100 or even 10 million laptops
- XP on the internet is positively dangerous for children
- The Classmate is a standard computer with a real market value, that too is dangerous for children
- There is almost no relevant educational software delivered for the Classmate
- The Classmate consumes way too much power for schools and children in favellas and shanti towns
- The Classmate WiFi is not useful outside school
- Intel has no deployment program in place. They just dump the laptops in the schools
- Intel has no localization program in place. This means that the Classmate will only be available for major languages.

If delivered with RH and sugar, I don't see it have any benefits over the XO.

Winter

Hmmmm....

You should consider that this may be getting OLPC lots of air time...

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William

OLPC's current crisis has nothing to do with Intel, Elvis or Global Warming.

It has to do with the lack of orders. As simple as that.

The real question is: how come nobody is willing to "embrace" the project with their wallet?

"OLPC's current crisis has nothing to do with Intel, Elvis or Global Warming."

Classically, dumping is considered as market manipulation.

Both the USA and the EU consider it of such grave economical importance that they have special rules for it in each and any trade treaty they sign.

I am quite sure Intel themselves have invoked the anti-dumping rules against their competitors from abroad.

Under these rules, this is dumping and if Intel were a Brazilian or Nepalese company trying to sell Classmates in the USA or EU, they would be banned to sell ANYthing there.

The question now is indeed, does Intel dumping money on potential clients of the OLPC project prevent a fair decission on the real cost-effectiveness of the OLPC project.

Negroponte has told us before that Intel has worked on ALL potential clients of the OLPC. And Intel have reserved $1B to push the Classmate (but only as long as the OLPC exists).

So, does Intel's involvement help countries making a rational and informed decision or not?

Rob

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