The Wall Street Journal had an interesting front-page story recently about Nicholas Negroponte’s One Laptop Per Child (OLPC) project. This project isn’t about laptops, you understand — it’s about education. But mostly, it’s about laptops. Building little green-and-white machines called “XO” that look like toys, to be sold for $100 to kids in poor countries. Problem is, the XO isn’t turning out to be very popular. So who do we blame? Microsoft, of course! And Intel!
With a subheadline one might expect from a newspaper that engages in left-wing editorialising, rather than hard business reporting, the Wall Street Journal agrees with him: “How a Computer for the Poor Got Stomped by Tech Giants”.
How, you may ask? Well, by supplying computers for the poor themselves. This, you see, is a bad thing. It appears to be less about computers for the poor than it is about who gets to wear the halo. Can’t have corporate profiteers nick Nick’s halo, now can we?
Mr. Negroponte’s ambitious plan has been derailed, in part, by the power of his idea. For-profit companies threatened by the projected $100 price tag set off at a sprint to develop their own dirt-cheap machines, plunging Mr. Negroponte into unexpected competition against well-known brands such as Intel Corp. and Microsoft Corp.’s Windows operating system.
Negroponte does say he thinks it’s a good idea for people to sell cheap laptops:
“I’m not good at selling laptops,” Mr. Negroponte has told colleagues. “I’m good at selling ideas.”
“From my point of view, if the world were to have 30 million” laptops made by competitors “in the hands of children at the end of next year, that to me would be a great success,” he said in a recent interview. “My goal is not selling laptops. OLPC is not in the laptop business. It’s in the education business.”
Good thing too, because as the article makes clear, Negroponte’s laptop actually costs $188, and prospective customers are balking, turning to alternatives such as Intel’s Classmate, which doesn’t cost much more, is backed by a large company, and comes with Microsoft Windows. Other companies are also eyeing the huge untapped markets in the developing world.
“The Intel machine is a lot better than the OLPC,” says Mohamed Bani, who chairs Libya’s technical advisory committee but doesn’t have the final say on buying laptops. “I don’t want my country to be a junkyard for these machines.” Libya has decided buy at least 150,000 Intel Classmates. The future of the One Laptop program there is now uncertain.
… Nigeria, for example, so far has failed to honor a pledge by its former president to purchase one million laptops. That’s partly because they no longer cost $100 apiece, says Tomi Davies, a Nigerian-born technology entrepreneur who helped Mr. Negroponte set up talks with Nigerian officials.
… The higher price also has made the laptop vulnerable to competition from sellers of more traditional, Windows-based machines. For many education ministries, “it’s a no-brainer you go with Microsoft,” says Mr. Davies.
But that doesn’t stop him from complaining about the competition from alternatives such as Intel’s Classmate laptop:
Mr. Negroponte says he communicated this month with Intel’s chief executive, Paul Otellini, and demanded that Intel stop selling the Classmate. Intel, which says there is room in the market for many machines, has refused, according to a spokeswoman.
… “We can’t compete,” complains Ayo Kusamotu, One Laptop’s attorney in Nigeria. “The minute we started getting some traction, they [Intel] intensified their effort.” Nigeria recently agreed to purchase 17,000 Intel Classmates.
In May, Mr. Negroponte appeared on CBS’s “60 Minutes” and blasted Intel, suggesting it was trying to drive his nonprofit out of business. Intel’s Mr. Barrett called that idea “crazy.” Two months later, Intel announced it was joining One Laptop’s board. The agreement included a “nondisparagement” clause, under which Intel and One Laptop promised not to criticize each other, according to Mr. Negroponte.
He claims, disingenuously, that the competition actually raises prices by not permitting his projects to achieve the anticipated economies of scale. What I’m seeing is that even his higher price point of $188 is sufficient to drive the prices charged by other producers down.
I’d think, if the purpose of the OLPC project is not to sell laptops, but to promote education, Negroponte would be delighted that so many private companies have picked up on his idea and realised that they can, indeed, provide cheap computers to developing-country customers. After all, a non-profit surely exists to serve a public purpose, not to compete against the private sector.
He may well dispute the arguments by customers about why the competing machines are better, and he may well have a point. I’d recommend open source software for educational computers myself. If he’s unable to deliver on his promises, when private companies can, the market is no longer failing. If he’s unable to convince prospective buyers, on price, performance or features, bitching in the press about competition strikes me as a desparate act to retain control of the market. Why try to shut up companies that are merely trying to promote their own products, unless you don’t think your own product can win on merit? Such tactics are hardly consistent with the supposedly altruistic motives of a non-profit organisation.
He’d gain a lot more respect from me if he’d stopped at declaring victory: “See? I told you it could be done!” But sadly, his slip is showing, and he just has to go on to reinforce the canard that non-profits are good and for-profits are bad. All he does is show that academics and non-profits are pathologically prejudiced against the power of free enterprise. Even when the empirical evidence in the market contradicts them.