As Laptop Begins Production, OLPC Faces Competition

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In 2007, the One Laptop Per Child foundation began production of the XO laptop (pictured). The laptop faced challenges in the market from for-profit competition, including Intel’s Classmate PC. The XO, well-known as the “$100 laptop,” was priced at $188 by October 2007.
Arthur Petron—The Tech

The One Laptop Per Child foundation had a momentous year in 2007 as it prepared for beginning production of its long-awaited XO laptop in November. The nonprofit also faced new challenges from for-profit competition: OLPC formed an uneasy relationship with Intel, who announced a competing low-price laptop. In early January 2008, however, the relationship dissolved.

Faced with a lower-than-expected commitment rate from countries it had signed contracts with, One Laptop Per Child offered to sell consumers an XO laptop in exchange for a $399 donation. Since $399 is more than the cost of a laptop — originally billed as the “$100 laptop,” but priced at $188 in October — the donation would also pay for an XO to be distributed to one of the nations designated a Least Developed Country by the United Nations.

OLPC and Intel: business relationship on the rocks

A strained relationship between Intel and OLPC characterized 2007. When he found that Intel was aggressively marketing their $350 Classmate PC as an alternative to OLPC’s XO in key developing countries, Nicholas Negroponte ’66, founder and chairman of OLPC and co-founder of the MIT Media Lab, said on a May 20, 2007 “60 Minutes” feature that “Intel has hurt the [OLPC] mission enormously.” Pressured by Negroponte’s remarks, Intel joined the OLPC board on July 13, 2007. William A. Swope SM ’76, general manager of Intel’s Corporate Affairs Group and architect of the deal, said that “from any perspective, it would be impossible to ignore the timing” of the deal.

But the terms of the relationship were never completely clear. Intel continued to aggressively push the Classmate PC in the same countries eyed by OLPC. Swope told The Tech in October 2007 that Intel was preparing a proposal to put Intel chips in the next version of the OLPC’s XO laptop, but that they had not lost their focus on the Classmate PC.

Walter R. Bender SM ’80, president of OLPC Software and Content, said that Intel was “dragging their feet” on several different proposed collaborations. “They [Intel] don’t tell me,” said Bender. “Nothing new there.”

Bender said that Intel and OLPC had entered into a “mutual nondisparagement agreement” with respect to their marketing of the Classmate PC and the XO.

Negroponte told The Boston Globe in early January 2008 that Intel had been “put on probation” for their continued attacks on the XO.

The situation came to a boil when, according to Negroponte’s comments to the Globe, Intel’s top executive in Peru tried to poach the Peru business from OLPC after OLPC had publicly finalized a deal. Negroponte claimed that Intel’s executive contacted the Peruvian vice minister with the information that, since Intel was on the OLPC board, Intel had inside information that choosing the XO would lead to the program’s failure. Negroponte also told The Boston Globe that Intel was using similar tactics in Mongolia.

Bender said that “since Intel contributed nothing to OLPC, the termination was not significant.”

Give 1 Get 1 program solicits donations, sells laptops

Facing challenges in selling XO laptops to governments, OLPC capitalized on first-world consumers’ interest in September 2007 by announcing a “Give 1 Get 1” program. The program accepted orders from Nov. 12, 2007 to Dec. 31, 2007.

Bender said that the program was a success; over 84,000 pairs of laptops were sold during the promotion. He said that many of the laptops donated are now being rolled out in Mongolia.

About one fourth of the donors had still not received their laptops as of Jan. 28, 2008, Bender said. Individual donors have complained on the OLPC wiki about errors in foundation’s order system, ranging from inaccurately recorded shipping addresses to completely lost orders.

Bender said of these complaints that “the problem was more miscommunication than anything else.” He said that OLPC failed to communicate to G1G1 customers that some XOs would be sent out in January 2008 because of production shortages. But he said that OLPC was working to remedy the problems, and that he hoped the rest of the laptops would be sent to donors in early February.

OLPC continues to expand sales

Bender said that OLPC has sold laptop solutions to the governments of Peru and Uruguay, and laptops from the Give 1 Get 1 program are being sent to Mongolia. He said that OLPC is preparing laptop solutions in Mexico, Haiti, and Afghanistan. “We sold a contract for more than we can [currently] produce,” said Bender. About 250,000 laptops have been produced so far, and “we’re scrambling to keep production up,” said Bender.

2007 was also characterized by an increased commercialization of the low-cost laptop sector that OLPC created. Intel aggressively marketed the Classmate PC around the world. Mary Lou Jepsen, OLPC’s founding chief technology officer, left the foundation on Dec. 31, 2007 to start Pixel Qi, a for-profit company aiming to commercialize some of her OLPC inventions, like the XO’s innovative display.

Bender said that the commercialization of the technologies invented at OLPC is “completely orthogonal” to the goals of OLPC.

“OLPC is going to continue to do what we’re doing, which is addressing the needs of an underserved population,” Bender said.