FT.com / Companies / IT - The race for the $100 laptop

FT.com / Companies / IT - The race for the $100 laptop

The race for the $100 laptop
By Kathrin Hille in Taipei

Published: April 9 2007 03:00 | Last updated: April 9 2007 03:00

When a team of education and technology experts from the Massachusetts Institute of Technology said in 2004 they were going to overcome the digital divide by making a $100 (£51) laptop for the poor children of the world, they were ridiculed.

Technology executives said such an extreme drop in cost would be "impossible". Even those who saw the team as visionaries thought the "one laptop per child" (OLPC) project had no future beyond charity.

Three years later, OLPC appears to be changing the computer industry, although not in the way its founders imagined. The sector has discovered the marketing power of the poor and has increasingly come to believe that the vast majority of the world's population that does not already possess a computer will be one of the main drivers of future growth.

"Currently the semiconductor population is limited to the 800m people at the top of the pyramid," says Cynthia Chyn, a researcher at the Institute for Information Industry, a Taiwanese government-funded think-tank. "The industry is in search of a PC for the next billion."

Over the past year, global hardware and software companies have announced initiatives aimed at this group. Intel, one of OLPC's fiercest critics, has developed low-cost computers aimed atstudents in third-worldcountries, including the "Classmate" PC and the "Eduwise" laptop.

Its rival AMD has pledged to get half the world's population online by 2015 with a device called the Personal Internet Communicator. Microsoft is supporting the establishment of kiosks in villages in developing countries, where residents would share a computer and just pay for usage.

Analysts see some of these moves as no more than public relations campaigns, defensive attempts to make sure that the respective company's brand or technology has a foot in the door once these countries turn into real markets.

But recently companies have started taking steps that are neither charitynor PR: Dell, the world's number two computer company, launched a desktop computer in China last month that sells for as little as $336, more than 60 per cent below the price tag of its previously cheapest machine.

Quanta Computer, the world's largest contract manufacturer of notebook computers, says next year it will start making laptops that will sell for only $200. It is also making the OLPC, the first shipments of which are due to be made this -summer.

Most of these moves have been made possible because the OLPC project forced a group of companies to develop a laptop with the goal of making it as cheap as possible.

This turned out to be far easier than critics had suggested. Costs were cut by using a cheaper form of liquid crystal display, leaving out the hard disk and running the machine on open-source software rather than Microsoft Windows.

"Not all people need to have as heavily loaded PCs as they have today," says Michael Wang, Quanta's president.

Intel's founder Gordon Moore observed that the number of transistors on an integrated circuit doubles roughly every two years, driving the technology industry to produce ever more powerful devices.

Now, though, computer makers will have to use the most advanced technology to produce "older", simpler specifications, argues Jeremy Wang, Asia-Pacific executive director of the Fabless Semiconductor Association.

Mr Wang of Quanta predicts that many different laptops will appear on the market with price tags between $600 and $200 - the lowest price for a laptop so far. "There will be many different combinations [of software and hardware components] for different segments," he says. Quanta has transformed its OLPC project team into a new business unit. "Their task is to create a market," he says.

Copyright The Financial Times Limited 2007