I’m Still Not Convinced

At the IADB seminar on ICT in the classroom, I asked Nicholas Negroponte why not sell the XO laptop – at or near cost – to anyone who wanted one? This gets beyond the hassle of having to convince bureaucrats of the value of the laptop without running pilot programs and delaying the eventual adoption. It (hopefully) creates some side markets in support, software development for non-educational uses of the laptop like rural healthcare, and could enable educational uses without going through the schools themselves, even.

Granted, there are some concerns. OLPC has thus far maintained a clarity of focus by working towards their mission of universal access, rather than having to worry (like Intel and Microsoft) about capturing an emerging market. Working at the ministry level potentially could reduce the transaction costs of each “deal,” but more importantly, it guarantees some level of equitable distribution of the laptops, ensuring not just those with money will get access.

And this equity is important - for a education project within a school; you have to have all the students with laptops, or you by definition don’t have a 1:1 program and you don’t have a good shared computing setup either. Lack of computer saturation also opens it up to higher risk for theft. Negroponte responded with two reasons why OLPC was not interested in essentially individual sales:

• The laptops are designed to be used in a group, and a certain density is required for their collaborative network
• OLPC would have to become a laptop company, dealing with support, and it's simply not qualified to do so.

Sorry, I’m still not seeing it.

Density and Collaboration

Visual depiction of the network effect

Mobile phones are useless without a group – if you are the only person with a mobile, their utility is greatly reduced (sure, you can still call landlines – and you can still email people who check their email at the cybercafe). Phones are the emblematic example of Metcalfe’s network effect, but diffused through markets and Base of the Pyramid - style sustainable development projects as opposed to huge top-down deployments.

Opening up individual laptop sales would increase the diffusion of laptops through potentially thousands of smaller deployments funded by NGOs, private entities or even individual schools and their communities. If the goal is a huge install base of OLPC laptops, large agencies and governments is only one path out of many which should be pursued.

Mission-driven or Profit-driven?

As for OLPC not wanting to become a laptop company, I can understand that – I wouldn’t have any specific desire to start worrying about the logistics and shipping of individual sales, state and international taxes and the like, either, not to mention post-sales support and warranty services.

I think you simply don’t offer any specific support (besides, when was the last time – barring hardware failure under warranty – that you got good support from anyone but Apple?), continue the current practice of enabling the community to provide some support, and find a partner to outsource the rest of the pain.

There is a huge community between the laptop.org wiki and support gang, OLPCNews’ Forums, and the various local(ish) OLPC groups like OLPC LC DC and the OLE folks down in Austin, not to mention the Alabama XO project. There are semi-regional hubs which will troubleshoot and repair your XO for small fees. The community support and other volunteer support options (probably) couldn’t themselves handle a massive influx of new OLPC XO users; so you encourage a partner or a new start-up to offer support packages and perhaps even offer warranties. The existing community support groups could also charge a fee for optional “support packages” to pay for part of their time and/or hire some frontline troubleshooters.

In short, I think support and warranty management could handle itself. For sales, also, I’m sure OLPC doesn’t want to run a phone bank for people placing orders. So that’s a rub; how do you sell laptops without, well, dealing with the sales process? Certainly some retailer could manage that, but at what markup? Selling computers (and support packages) is hardly a new science, so perhaps a socially conscious enterprise could handle both without much markup in the process; but it’s a gamble. Regardless, at the potential demand level for light, rugged, versatile and cute laptops, both within and outside of the global education market, I simply have a hard time believing that there wouldn’t be someone willing to be a low-cost storefront for the XO, but still perform better than Brightstar.

So it’s doable, without tacking too much onto the core price of the laptop. With sufficient buyer-beware stickers and a few options for support packages (plus a basic user manual), you have the laptop available. Thanks to the past few years of G1G1, I don’t think it will be a huge seller in the US (unless they shipped XO 1.5s); and I wouldn’t expect to see it on the shelves at Best Buy. I think NGOs, people doing all sorts of field work from Peace Corps volunteers to doctors and scientists, an naturally schools looking for affordable and reliable computing options would start buying them in small batches.

This diverse community brings not only density of laptop deployments, but encourages infrastructure development, highlights innovative new uses for the XO outside of education, and could start creating partnerships in communities working together to buy XOs for a variety of reasons. Shopkeepers could do record-keeping at night and sell cybercafe services during the day. Artisans could photograph their work and post it on Etsy or VOIP and email with potential buyers. Activists could combine the XO with FrontlineSMS to communicate with their peers and supporters</a> – the list is infintely long for what can be done with this little laptop.

Some might say the lackluster performance of the 2008-2009 G1G1 program is evidence that there’s no demand left for the XO. There are at least two other factors at play there - the price of the XO is doubled for the G1G1 program, to fund the donation of a laptop, and that price simply doesn’t compete against the netbook market, created by the XO, which is selling their systems without a 100% markup. Secondly, the market for G1G1 is saturated - first, developers and strong OLPC-related communities have grants of hardware or bought their XO during the first G1G1 – and by providence of the design, the hardware is still doing quite well. An XO selling closer to its actual cost could still make some sales, but the real market for OLPC XOs at cost is global, not just the segmented markets of rich EU/US citizens paying double the cost or government ministries buying huge lots of laptops.

The XO unleashed could be the Apple ][ and IBM PC jr. for this generation - the entry computer into vast playing field. And while both Apple and IBM pursued the education markets for mindshare, they weren’t turning away “retail” customers.

Am I off base? Would retail sales of the XO undermine the mission or overwhelm the nonprofit’s ability to focus on their mission?