Smaller Could be Bigger for OLPC Deployments

   
   
   
   
   

Via Morgan Collett we learn that OLPC is discontinuing it's "small" deployment support of 100-1000 XO laptop purchases:


Deployments should be any scale
Unfortunately, as some of you might have heard "Change the World" aka "Give a School" aka "Give 100, Give 1000" will cease to exist. We are just waiting for the info to be taken off the main website (any second now). We are doing this in an effort to refocus back to large-scale deployments that create change in a major way. We WILL honor all requests that we have received prior to the info being taken off the website.

As I commented last night, this is ridiculous - why can't OLPC perform remotely as well as every other computer manufacturer on the planet? Especially with a first-mover product with (for now) unmatched features.

I want 1-laptop deployments, 5-laptop deployments, and 10-laptop deployments. I really hope there's a good reason why that's not as easy as it seems.

Here's a business plan for selling laptops, the profits (if any) can go back into (re-)hiring and paying programmers, continuing R&D for the next generation OLPC XO-2, deployment personnel, and any excess could be offered as grants to create low-cost pilot projects or backstop community/peer support groups by defraying shipping costs and providing free parts.

  • Sell 1 laptop for $300 - on par with the lower-end EeePCs. Anyone can buy one. Great.
  • Sell 10 laptops for $275 each, 100 for around $250, and so on , scaling down the per-unit price as the bulk purchase goes up. Kinda like the original plan to achieve massive scale, just taken down by a few powers of 10.
  • Sell support/installation services - separately. Make it clear that this is a needed service (which could be undertaken by independent contractors), and that there's monetary value connected to it.

Clearly there are higher (per-unit) costs in small deployments, which is why you decouple the hardware from the support - if a school has some dedicated teachers who want to use a handful of XOs in a specific setting, they can do so without official support beyond the wiki and the XO community.

This decoupling step requires OLPC to change two unstated but fundamental beliefs - that the laptop does, in fact need on-the-ground deployment support to be successful, and that that expertise can come from people who aren't part of OLPC. Letting a school purchase 10 XOs without a "support plan" means losing "control" of such smaller deployments, which OLPC seems reluctant to do, to put it mildly.

Regardless, if OLPC truly wants the XO to thrive as a device, and by extension, as a successful educational tool for the developing world, it cannot expect (or want) to puppetmaster each and every deployment with its already-strapped team.

If this sounds familiar, it's because I've been calling for commercialization for a long time. Christoph also has an innovative approach on changing OLPC into a partially for-profit organization, by focusing on education instead of the technology,and other suggestions for OLPC remodeling, not to mention exciting news about the successes for the now-independent SugarLabs.

Most non-profits scrabble for anything they can monetize and roll back into funding operations, while OLPC seems to be sitting on gold and refusing to sell it. I feel like I must be missing something as to the why, and I'm hoping that it's not just pure stubbornness.

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This new spin has hit a lot of us hard, but I wonder if this could be the reason why. Perhaps, they have removed small time deployments to speed up the large ones (the ones they want to focus on most)?




http://blog.laptop.org/2009/02/05/q-a-from-xo-camp/

"*Is the production of XO-1s at risk if the sales stop? Do you have a plan
to sustain the demand for XO-1s in this atmosphere of uncertainty?*


OLPC itself is independent of sales. At the moment, there is a back order
of 500,000 laptops. At the current rate of production, which is 50,000 per
month, the world could stop and there is 10 months of life in the supply
chain. Yes, there is a global economic slow down, but we do not expect sales
to totally stop. Rwanda just ordered 100,000 laptops. Give the focus of
OLPC's mission, many of our sales are to entities where funding is a concern
even in the best economic times."

Author wrote:

"Here's a business plan for selling laptops...

....Sell 1 laptop for $300....

....Sell 10 laptops for $275 each..."


Not feasible. Once the OLPC goes "full retail", it will have to play by the same rules that Dell, Intel, Asus and everyone else play. Wich means that they will need to offer tech support, replacement parts availability, distribution channels, return policy, etc. etc.

Once you facto in the amount every one of those people involved with the operation will make, plus the standard operatiing//production costs, the price will be well over $400. At that point, people will buy something else.

That's the reason Negroponte has never tried to sell the laptop to regular folks in the USA (the G1G1 Programs were a desperation move directed at geeks./supporters and a little test of potential public interest. It turned out badly).

@Irv - I think OLPC can get away with not playing by Dell's rules. They will have to have some distribution channel and be able to do something witn returns, which adds some overhead (I'm operating with the presumption that the cost per XO to OLPC is at or under $200, so we have $100/XO built in to play with.

Tech support coats extra. Send a small index card with links to the wiki and the community-created documentation.

Replacement parts and warranty-style service are both a bit more tricky, but make it optional and add the price there; e.g. "you can return your XO for a total replacement in the first 30 days free of all charge, and you can buy a warranty for service/repair beyond that."

Still a better deal than G1G1 donors got (at least the first time around!).

I don't the target market for this is not "regular folks" - it's geeks of various flavors, travelers, and schools / other small project types.

"I think OLPC can get away with not playing by Dell's rules."

How's that so?

"They will have to have some distribution channel and be able to do something witn returns, which adds some overhead (I'm operating with the presumption that the cost per XO to OLPC is at or under $200, so we have $100/XO built in to play with."

"Some overhead"? Are you kidding me? A serious retail operation to sell the numbers that would justify the idea is a huge undertaking, in terms of initial capital and long-term investement on human and financial resources.

"Tech support coats extra. Send a small index card with links to the wiki and the community-created documentation."

Do you really think that the average joe (geeks passed on the offer this last December, remember?) will go for this "offer"?


"Replacement parts and warranty-style service are both a bit more tricky, but make it optional and add the price there; e.g. "you can return your XO for a total replacement in the first 30 days free of all charge, and you can buy a warranty for service/repair beyond that."


Why should people go into this convoluted, one-sided arrangement when they can get standard support and warranty from a mainstream operation like Dell?


"Still a better deal than G1G1 donors got (at least the first time around!)."

:-)

"I don't the target market for this is not "regular folks" - it's geeks of various flavors, travelers, and schools / other small project types."

Travelers, schools and "small project types" are regular folks. They have no reason to buy (on the terms you outline) and geeks spoke with their checkbook this past December. Remember?


Sorry, man, but you seem to be working under the assumption that people are knocking on Negroponte, desperate to buy the XO. That's not the case, so it makes sense to think that, if anythying, his offer needs a lot of "sweetening" to have a chance against the competition. You're pushing in the wrong direction...

@Irvin:
"Do you really think that the average joe (geeks passed on the offer this last December, remember?) will go for this "offer"?"

The Apple I started with less. You can still buy DIY electronic kits.

But your premises are false from the start. You always claim that only a laptop that caters to Joe Sixpack has a right to exist. Other products should not be allowed to be sold. That is NOT what a free market is about.

@Irvin:
"Why should people go into this convoluted, one-sided arrangement when they can get standard support and warranty from a mainstream operation like Dell?"

Because they want an XO? Like people want to jump through hoops for a Mac, iPhone, or mainframe. According to your logic, people should be banned from buying Apple products because they could also buy from Dell at a lower price.

If there are people who want an XO, the OLPC has a right to sell it. The fact that there are others who also sell these products is not an argument to shut down the OLPC. This is called a "free-market economy".

@Irvin:
"That's not the case, so it makes sense to think that, if anythying, his offer needs a lot of "sweetening" to have a chance against the competition."

With a back-log of 500,000 you seem to be completely wrong.

Somehow, you always make it seem that selling XOs is somehow a crime on a par with selling toxic waste.

However, it is still perfectly legal for Negroponte to sell XOs any way he likes. Just as it is legal for people to be NOT technically challenged and actually buy a product they like and understand.

Winter

As alweays, Winter, you seem to overlook the basic point I'm trying to make, in your desperation to cover the sky with one finger:

Yes, Negroponte has every right to sell the XO. That's not his problem. The problem is that nobody seems to want it in the numbers that would justify "going retail".

@Irv - I think we're inherently disagreeing about the "retail" market.

G1G1 2008 was a flop for at least three reasons -- the netbook market is maturing, the honeymoon is over - many of the geeks bought in 07, and the economy ain't that great. Why pay $400 when you can get a more normal and more powerful HP (and now Dell) netbook for the same, or an ASUS for less?

That's not to say that there's not still a "market" for OLPC XOs in small numbers, if the price is right.

As for overhead, (and this is not a rhetorical question) - what went on with G1G1? People paid $400, got one laptop, and presumably donated $200 to "give one" laptop which also cost $200 -- that doesn't leave much space for overhead there, either. Was Amazon donating its services this past year?

The market that I see is not going to be expecting to find an XO at walmart or best buy; it's educators and schools, community organizations, youth-focused groups, development organizations, and other people with specific needs that the XO provides.

Jon Camfield asks:

"As for overhead, (and this is not a rhetorical question) - what went on with G1G1? People paid $400, got one laptop, and presumably donated $200 to "give one" laptop which also cost $200 -- that doesn't leave much space for overhead there, either. Was Amazon donating its services this past year?"

Very interesting question, Jon.

I provided the answer in a previous thread (the one dealing with OLPC layoffs).

It seems that the money people were "donating" when purchasing an XO was NOT being spent on another XO being given to a poor child somewhere in the world. According to Negroponte himself, the money was going to be used for operating expenses (including whatever cost they incurred in this short-lived retail experiment).

The "smocking gun" is contained in this paragraph:

>>>
"During the 2008 holiday season, the program sold only about 12,500 laptops and generated a mere $2.5 million - a 93 percent decline from the year before. "That was a real shocker," said Negroponte, adding that it forced the foundation to slash its $12 million annual budget. "We will reduce ourselves to running at closer to $5 million," he said

>>>

http://www.boston.com/business/technology/articles/2009/01/09/fund_loss_staggers_group_giving_laptops_to_poor_children/?page=full

Think about this one.

@irv - I was aware of that, I just keep hoping someone will come forth and disprove it.

I totally agree with this article, Jon. Any idea if OLPC might read it?

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    I have one question to sir?

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    -1 why XO Tablet children play OK but when h …

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    -1 why XO Tablet children play OK but when h …

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    At what address to s …

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    Bonjour,
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