A reality check for OLTP

Competition from commercial vendors and lacklustre demand may sideline the One Laptop Per Child Program, a non-profit group launched two years ago to provide notebook PCs for school children at US$100 each.

While Intel Corp. is successfully selling its Classmate PC to governments and educators in the developing world, OLPC’s distribution and support model are not appropriate for a venture of this kind, critics said. Both have led to its stumbling, as its target customers, governments, reduce orders or withdraw from commitments to order the laptops.

“OLPC has no marketing leverage or muscle to put enough talent on the ground, country by country, to bring in orders, or to provide service and support. At this stage, it’s somewhat difficult to anticipate OLPC will prove to be a wonderful catalyst to a wonderful idea,” said John Quelch, senior associate dean and professor of business administration at Harvard Business School.

The lofty concept of Nicholas Negroponte, OLPC’s founder and chairman, to give a US$100 laptop to kids in developing countries has suffered partly because of the organization’s inability to connect with specific governmental and educational needs. Without the volume orders it had hoped for, economies of scale in manufacturing have been elusive.

In 2005, before showing the computer in Tunis, Negroponte said, “I’ve told the governments that our price will float and go down over time,” adding that “$100 is still too expensive.”

But by the time the laptop reached production in November, its price had jumped from $100 to $200.

Negroponte had initially hoped that mass production in quantities of 5 million to 15 million would begin about a year ago, and that by the end of 2007, 100 million to 150 million laptops would be produced. However, current plans call for production of only about 300,000 laptops this year, reaching 1 million by the end of next year.

The production delays and rising costs have resulted in governments and educators either withdrawing or reviewing original commitments to order XO laptops. Carlos Slim Helu, a billionaire in Mexico who pledged to purchase 250,000 XOs, reduced his order to 50,000. Thailand and Brazil, which expressed interest as early adopters of XOs, have backed away. Argentina, which committed to 1 million XOs in 2006, hasn’t officially placed its order yet, according to OLPC’s wiki.

The numbers are significantly lower than the one-million-unit minimum that Negroponte, in 2005, called the “entry ticket” for governments wishing to participate in the program.

Nigeria, which last year committed to buying 1 million XOs for $100 each, is now reviewing the order with OLPC, said Tomi Davies, who supplies XO laptops to Nigeria’s primary schools.

“I understand this commitment is currently under review by the Federal Government of Nigeria due to the price change and potential conflict in educational priorities,” Davies wrote in an e-mail.

Nigeria recently committed to purchasing 150,000 Classmate PCs loaded with Windows from Intel, said Agnes Kwan, an Intel spokeswoman.

Intel PCs loaded with Windows are preferable to open-source XO laptops, as familiarity with the Windows platform helps secondary-school students join the workforce earlier, which benefits the country’s economy, Davies said. XO laptops are part of a pilot test at a government-run primary school in Abuja, Nigeria.

Intel also bested OLPC in Libya, with the country withdrawing its order of 1.2 million XO laptops, opting for Intel’s classroom PC instead. Intel has already inked deals to supply Classmate PC laptops in Pakistan, Mexico and Brazil. OLPC has substantial orders only from Uruguay and Peru.

Earlier this year, Negroponte publicly said that Intel’s Classmate efforts hurt his project, given the well-funded nature of the chipmaker’s initiative. The two organizations buried the hatchet by signing a collaboration agreement that put Intel on OLPC’s board, but Intel continued to distribute its Classmate PCs through its for-profit “World Ahead” effort.

Meanwhile, as the cost of the XO have increased, companies such as Asus and Everex have developed competitive low-cost PCs, which governments may also find attractive as XO alternatives.

“OLPC did not fully appreciate the adoption barriers when they targeted government agencies as their principal target audience,” Quelch said. The government procurement processes are complex, and there is a trade-off between investments in teachers and technology by governments, which OLPC didn’t realize, Quelch said.

Even U.S. customers that purchased laptops through the Give 1 Get 1 program have grumbled, with OLPC providing little or no communication about laptops — either the ones they donated or the ones shipped to them.

“XO laptops just appear on doorsteps without even an e-mail to tell us when or how they will arrive.” said Wayan Vota, an OLPC observer and donor who runs the Web site OLPC News. “OLPC is lucky we are so committed to their cause — we sure wouldn’t put up with this treatment from Apple or Dell.”

If OLPC had issues distributing laptops in a developed country such as the U.S., it doesn’t bode well for XO distribution in developing countries, Vota said. Officials from Brightstar, the distributor of XO laptops for OLPC, were unavailable for comment.

Despite OLPC’s identity as a nonprofit educational organization, its focus has been predominantly on the hardware it has pioneered, said Anders Mogensen, co-founder of Seismonaut, which carried out an assessment of an OLPC pilot project in a government-run primary school in Abuja, Nigeria, for the Danish government. “If OLPC is about education, the focus should be around the activity and education results. So far the conversation has been around the hardware and technology,” Mogensen said.

OLPC’s casual approach to matching its offering to Nigeria’s educational agenda is causing it to lose ground against Intel, which has successfully integrated its Classmate PCs in secondary schools, Mogensen said. Nigeria follows a strict curriculum for students based on specific study material, and Intel is working with the government and schools to integrate Classmate PCs into curricula. OLPC has yet to clarify its plans to support curricula, Mogensen said.

OLPC in Nigeria is primarily involved in promoting the idea of the laptop rather than working with the government to develop a structure to implement the curricula, Mogensen said.

Until OLPC improves its teacher-training infrastructure, it could face barriers in countries such as Nigeria, where a rigid education system puts teachers in full command over students. “The teacher loses authority when kids in primary school know more about PCs than they do,” Mogensen said. That is unacceptable in Nigeria, he said.

OLPC needs to have a stronger program to help teachers adapt to alternative teaching methodologies, said Novica Nakov, president of Free Software Macedonia, who evaluated a classroom that incorporated OLPC’s XO laptops.

The organization may also be out of touch with localization issues that, left unaddressed, could discourage broad adoption. For example, despite the fact that Macedonian uses Cyrillic characters, the XO laptops supplied to the classroom used Latin-character keyboards, Nakov said.


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