No OLPC Retail Sales? I'm Still Not Convinced

   
   
   
   
   

At the IADB seminar on ICT in the classroom, I asked Nicholas Negroponte why not sell the XO laptop -- at or near cost -- to anyone who wanted one?

This gets beyond the hassle of having to convince bureaucrats of the value of the laptop without running pilot programs and delaying the eventual adoption. It (hopefully) creates some side markets in support, software development for non-educational uses of the laptop like rural healthcare, and could enable educational uses without going through the schools themselves, even.

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Granted, there are some concerns. OLPC has thus far maintained a clarity of focus by working towards their mission of universal access, rather than having to worry (like Intel and Microsoft) about capturing an emerging market.

Working at the ministry level potentially could reduce the transaction costs of each "deal," but more importantly, it guarantees some level of equitable distribution of the laptops, ensuring not just those with money will get access.

And this equity is important - for a education project within a school; you have to have all the students with laptops, or you by definition don't have a 1:1 program and you don't have a good shared computing setup either. Lack of computer saturation also opens it up to higher risk for theft.

Negroponte responded with two reasons why OLPC was not interested in essentially individual sales:

  • The laptops are designed to be used in a group, and a certain density is required for their collaborative network
  • OLPC would have to become a laptop company, dealing with support, and it's simply not qualified to do so.

Sorry, I'm still not seeing it.

Density and Collaboration

Network Effect

Mobile phones are useless without a group -- if you are the only person with a mobile, their utility is greatly reduced (sure, you can still call landlines -- and you can still email people who check their email at the cybercafe). Phones are the emblematic example of Metcalfe's network effect, but diffused through markets and Base of the Pyramid - style sustainable development projects as opposed to huge top-down deployments.

Opening up individual laptop sales would increase the diffusion of laptops through potentially thousands of smaller deployments funded by NGOs, private entities or even individual schools and their communities. If the goal is a huge install base of OLPC laptops, large agencies and governments is only one path out of many which should be pursued.

Mission-driven or Profit-driven?

As for OLPC not wanting to become a laptop company, I can understand that -- I wouldn't have any specific desire to start worrying about the logistics and shipping of individual sales, state and international taxes and the like, either, not to mention post-sales support and warranty services.

I think you simply don't offer any specific support (besides, when was the last time -- barring hardware failure under warranty -- that you got good support from anyone but Apple?), continue the current practice of enabling the community to provide some support, and find a partner to outsource the rest of the pain.

There is a huge community between the laptop.org wiki and support gang, OLPCNews' Forums, and the various local(ish) OLPC groups like OLPC LC DC and the OLE folks down in Austin, not to mention the Alabama XO project. There are semi-regional hubs which will troubleshoot and repair your XO for small fees. The community support and other volunteer support options (probably) couldn't themselves handle a massive influx of new OLPC XO users; so you encourage a partner or a new start-up to offer support packages and perhaps even offer warranties. The existing community support groups could also charge a fee for optional "support packages" to pay for part of their time and/or hire some frontline troubleshooters.

In short, I think support and warranty management could handle itself. For sales, also, I'm sure OLPC doesn't want to run a phone bank for people placing orders. So that's a rub; how do you sell laptops without, well, dealing with the sales process? Certainly some retailer could manage that, but at what markup? Selling computers (and support packages) is hardly a new science, so perhaps a socially conscious enterprise could handle both without much markup in the process; but it's a gamble.

Regardless, at the potential demand level for light, rugged, versatile and cute laptops, both within and outside of the global education market, I simply have a hard time believing that there wouldn't be someone willing to be a low-cost storefront for the XO, but still perform better than Brightstar.

So it's doable, without tacking too much onto the core price of the laptop. With sufficient buyer-beware stickers and a few options for support packages (plus a basic user manual), you have the laptop available. Thanks to the past few years of G1G1, I don't think it will be a huge seller in the US (unless they shipped XO 1.5s); and I wouldn't expect to see it on the shelves at Best Buy. I think NGOs, people doing all sorts of field work from Peace Corps volunteers to doctors and scientists, an naturally schools looking for affordable and reliable computing options would start buying them in small batches.

This diverse community brings not only density of laptop deployments, but encourages infrastructure development, highlights innovative new uses for the XO outside of education, and could start creating partnerships in communities working together to buy XOs for a variety of reasons.

  • Shopkeepers could do record-keeping at night and sell cybercafe services during the day.
  • Artisans could photograph their work and post it on Etsy or VOIP and email with potential buyers.
  • Activists could combine the XO with FrontlineSMS to communicate with their peers and supporters
  • the list is infintely long for what can be done with this little laptop.

Some might say the lackluster performance of the 2008-2009 G1G1 program is
evidence that there's no demand left for the XO. There are at least two other factors at play there - the price of the XO is doubled for the G1G1 program, to fund the donation of a laptop, and that price simply doesn't compete against the netbook market, created by the XO, which
is selling their systems without a 100% markup.

Secondly, the market for G1G1 is saturated - first, developers and strong OLPC-related communities have grants of hardware or bought their XO during the first G1G1 -- and by providence of the design, the hardware is still doing quite well. An XO selling closer to its actual cost could still make some sales, but the real market for OLPC XOs at cost is global, not just the segmented markets of rich EU/US citizens paying double the cost or government ministries buying huge lots of laptops.

The XO unleashed could be the Apple ][ and IBM PC jr. for this generation - the entry computer into vast playing field. And while both Apple and IBM pursued the education markets for mindshare, they weren't turning away "retail" customers.

Am I off base? Would retail sales of the XO undermine the mission or overwhelm the nonprofit's ability to focus on their mission?


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16 Comments

I have always said they should sell to everyone. Besides the reasons you mentioned, the increased sales they would get by opening up the market should improve their "economy of scale" to bring costs down (remember back when they would "only" sell in batches of a million? Wasn't economy of scale given as a justification?), and increase revenue that could be used for R&D and to hire people to manage all that distribution.

But for some reason they are deliberately limiting their own resources: minimizing the size of their staff so that they don't have a fraction of the manpower they need; denying easy revenue streams such as selling batches of a few dozen; and seeming to ignore the OLPC community, wasting a lot of goodwill and willing volunteers.

I was hoping one of these days OLPC news would figure out why this is the case and put up an article about it. I'd rather not rely on Irv's cranky theories on the subject.

"I think NGOs, people doing all sorts of field work from Peace Corps volunteers to doctors and scientists, an naturally schools looking for affordable and reliable computing options would start buying them in small batches."

As a PC vol in Mexico getting started with OLPC software develepment as a side project, I can agree with that statement. I want one and I can imagine many vols in many countries being interested in doing pilot projects.

"...developers and strong OLPC-related communities have grants of hardware or bought their XO during the first G1G1..."

Unfortunately, I'm late to the game and am having to spin up with an emulator or SoS.

NGO and small pilot orders are still taken care by OLPC. A retail outlet is not going to add much to that but I would agree that OLPC hardware should be for sale.
However, developing a retail or even wholesale _business_ in/for any part of the world is not a simple process. For one you need some capital but more important you have to know the job. All indications are that OLPC would be totally inadequate or that. It is up to the business sector to try such an endeavor.
The really important question that I would like to know the answer for is: Did anyone asked recently OLPC for the right to bing their products to the market and if yes, what was OLPC's response.
If nobody asked, it indicates that nobody sees a consumer interest on the XO and its sales as an opportunity, and that we are just fooling ourselves...

What? Small orders are fulfilled by OLPC? I'd like to see proof of that. From everything I've seen or heard, unless you're buying 1000's of XO's, your better off going to eBay instead of OLPC.

Does OLPC have a limited view of "children of the world"? To me the phrase should include children in the USA. I don't pretend to know what is going on inside the power structure of OLPC but the constant admonition that this is an education project not a computer project ignores the practical side of it.
All of my grandchildren use computers in the classroom. One uses an Acer netbook. They are geeks in comparison with their parents or grandparents. My point is that to adopt the OLPC approach, at present, ignores whatever students should know to get along in the modern world independent of where they live. I think it is commendable that teams have been organized for schools in Mongolia, Uruguay, Rwanda, and so on. But I remember a similar project some fifty years ago called the new math (original version) that attempted to do away with rote, boring drill work, replacing it with a broad understanding of mathematical concepts. It did not go well!

You make some good arguments, Jon. However, what matters is not whether olpc starts selling publically, but whether the general public has access to xo-like computers. And pretty soon they will.

The xo software technology is open source. ARM laptops will be on sale by many companies early next year, and Jepson is pushing the idea of cheap computers for the masses.

Most important, there are tens if not hundreds of millions of developing world parents who are very unhappy with their country's poor-to-nonexistent educational opportunities for their offspring. They would love to buy a cheap, networked laptop loaded with educational software. There is a market here, and so its safe to predict that in a year or two we will be seeing these sorts of machines on sale all over the developing world.

I think that the criticism is off-base. If the XO was opened up to individual sales, then it requires hiring a lot of people for support. Providing support for an installation of 100's or 1000's of units and interfacing with a single contact person is far different than handling phone calls from 1000's of individuals.

Secondly, the XO remains incomplete. Power management is still not complete. I've been out of the loop for a long time so I don't know if the "show me the source code" button has been implemented or if the stylus areas on either side of the touchpad are active yet.

Us G1G1 participants (particularly the first round) bought into the "vision" of what OLPC was attempting to do. We were far more forgiving, patient, and extended a lot of grace to a non-profit organization. Individual consumers will not be so charitable.

If there is any consideration to making the XO available to consumers, then there needs to be an alternative to Sugar. PuppyLinux runs surprisingly well on it and would make a fine base offering.

wait, you managed to get puppy linux working on the XO? :)

@sracer - I realize that support could be a huge millstone, which is why I went to some trouble to map out some support using the existing communities and non-1CC support gangs that wouldn't suck too many valuable resources away.

XO 1.5 comes with a dual-boot, giving you access to a normal redhat linux desktop environment, so that's a huge boon to making them straight-up marketable.

Jon, I believe there is an additional reason why OLPC doesnt want to sell openly or in developed countries, though they will never confess it.
When they go to developing countries they probably say to governments "hey, we are offering this exciting, new, absolutely original device NO ONE in the developed world can buy!"
I suspect this because in my years of advising government everytime I suggest an old, solid, trusted solution to their needs (telecommunications, hardware or software) they would rather go to new, untested, expensive solutions "We dont want to use OLD technologies like that! we want the best, the newest, better than what the Swiss have!"
So I believe this is part of OLPCs strategy, remaining "exclusive" to appeal to governments. At least, that is my theory.

@Roxana : It certainly would be an attractive marketing pitch. Better than the alternative pitch of "this is a cheap ass laptop that no one in the US will even buy because there are seemingly better options at comparable prices"

Unfortunately they brought that branding problem on themselves with the unshakeable "$100 laptop" phrase

It's simple: the sheer number of returns would soon bankrupt Nicholies & Co.

That would be valuable user feedback...

Most of the problems in the article had to do with corruption and horrible implementation.

If they think screens crack easily because kids forget the laptop is their backpacks and drop them, they should try the cheaper netbooks!

It was especially telling when a technology teacher was wondering why they would implement a laptop project without a curriculum:

Joanne Stephens, executive director of instructional technology for the Birmingham City Schools, who describes her job as "helping teachers integrate technology into the curriculum," addresses one of the most disturbing facts about the XO program: "We don't have a unified curriculum. I don't know the philosophy behind why they handed them out before having the curriculum in place."

At our school in Zanzibar we are trying to set up a classroom equipped with XOs. We have bought 3 on eBay for more than USD500 each and we believe in all the OLPC goals except individual ownership which we believe is beyond us.
We would dearly like to be able to buy the XOs for a more reasonable price and equip our classroom.

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