Silicon Insider: The $100 Laptop Failure

By far, the most successful programs I've seen in Africa have been run by church missionaries, because they start from the individual soul and work their way up. And the most successful implementation of technology that I've seen in places like Zambia and Botswana, are the guys in shacks along the highway who rent time by the minute on their cheap cell phones.

And that brings me to what was my third concern about the $100 laptop project. I am a great believer in charity, and I think that the comparatively high levels of charitable contributions and non-profit volunteerism in the United States versus other nations, is one of our greatest attributes. That said, when charity competes with market capitalism, the former is almost always shown to be less efficient, less customer satisfaction-oriented and less innovative.

No doubt, when Negroponte and the XO team first looked at the laptop market in 2004 or so, the yawning gap between a standard $800 laptop and a $100 specialty machine for poor Third World kids seemed profound, and underscored the pressing need for such a low-cost machine.

What they didn't count on, apparently, was Moore's Law — the idea that tech power will double every couple of years — and this is one of those vital factors that the Media Lab seems to regularly overlook. That $800 laptop of 2004 is now selling for $300 at Wal-Mart. And if you read last week's column about declining computer usage in Japan, it looks like we are in for a protracted PC price war in which computers, as they turn into true commodities, start getting price bombed to stoke dwindling demand.

It doesn't seem unlikely to me that, by the end of this decade, we will be seeing fairly powerful laptop computers being sold for under $200 — the equivalent of razors all but given away to help sell razor blades — just to move software and wireless contracts.

That, in turn, will make laptops all but disposable products, cast off after a year or so of use, to be replaced by the newest model — meaning that ubiquitous, slightly used laptops will probably cost fifty bucks or less. And when the price gets that low, and demand collapses in the developed world, where will all of those used computers go? In containers, by the millions, to the developing world. There, they will join a billion smart cell phones that will be given away to sell wireless services.

Meanwhile, the $100 XO laptop has now drifted up in price to $188, making it not that much different from retail laptops, which don't have the compromised performance.

Sure, the cheapo retail boxes won't have some of the clever features of the XO, but if you are kid in Lusaka who wants a computer, not just for school, but gaming and selling handicrafts on eBay, which one will you buy — especially when service for the XO is still in doubt, and the other machine is a Dell?

The XO folks — officially the One Laptop per Child Foundation — are trying to overcome this new price obstacle by making it immaterial. This is being done two ways. One is to offer — in the U.S. and Canada — a 2-for-1, "Give one, get one" program: you buy two XOs for $400, and one gets donated to a worthy recipient in the developing world, and you get to keep the other and take a $200 donation credit on your taxes.

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