It is David vs. Goliath. It is corporate America vs. small business. It is the ongoing struggle between One Laptop per Child (OLPC) and Intel. Massachusetts Institute of Technology (MIT) professor Nicholas Negroponte founded OLPC as a non-profit organization in the hopes of expanding educational opportunities through the spread of personal computers to children in the world's poorest countries. Running operations out of its small MIT headquarters, OLPC managed to create a cheap, durable and effective computer, the XO-1. The goal was to distribute this computer to as many underprivileged children in the world as possible. Initially, the product proved to be a global success as orders were placed from Uruguay to Ghana. Seizing on OLPC success and an untapped market for sales, Intel introduced its own netbook. Its Classmate PC has become OLPC's largest competitor in these poorer countries and can now be considered the industry leader.
Anyone examining the OLPC computer would have to be pretty impressed. For a mere $188, the computer proves ideal in meeting the needs of poorer children living in rugged regions. The designers built the XO-1 with this difficult environment in mind. The XO-1 is immune to water, dust and being dropped. In addition, the computer is equipped with a solar panel to recharge the battery. However, it is what is on the XO-1 that makes it an optimal computer for children. The computer has a wireless connection to the Internet, which can provide students with instant access to knowledge previously unimagined. The XO-1 also has a built-in camera, which allows users to communicate with students from other countries and continents. Finally, the computer can hold thousands of e-books that, in conjunction with teachers, can be used to expand students' educational curricula.
With such captivating features, the XO-1 appeared to be a perfect fit for poorer countries attempting to enhance the education of their young ones. After its release in the beginning of 2006, sales for the laptop soared. In 2007 and early 2008, orders for the computer were placed from Uruguay, Peru, Rwanda, Ethiopia, Mongolia, Afghanistan and Cambodia. However, OLPC success was halted with the introduction of Intel's Classmate to the world market. Recently, Intel has completed deals with Nigeria, Libya, Pakistan, Brazil and Mexico — all countries in which OLPC was heavily invested. Many of the governments that opted for the Classmate cited their desire to deal with a name brand like Intel, as opposed to the less well-established OLPC.
The competition between the two companies can politely be referred to as intense. Intel places a strong marketing effort not only in countries in which OLPC is campaigning, but also in countries that have signed agreements with OLPC. As a result, many OLPC projects were delayed or later negated. In 2007, Libya reneged on an earlier deal with OLPC to purchase 1.2 million computers and instead opted to purchase a pilot program of 150,000 Classmates. In addition, there were numerous instances in which Intel would engage in predatory pricing. While the Classmate is more expensive, Intel would be involved in aggressive pricing up front that would not hold in the long run. This tactic would allow Intel to hold an advantage over the Cambridge firm and thus seize a particular market.
While the two products are rivals in an ever-expanding market, Intel and OLPC have not always been in competition with each other. In 2007, Intel joined the OLPC board in the hopes of collaborating to distribute computers to the world's poorest children. Both parties promised not to criticize the other's product. However, tensions resumed as OLPC discovered Intel's continued effort to derail OLPC. Intel resigned from OLPC in 2008 and cited its desire to expand its Classmate marketing campaign. The president of OLPC, Chuck Kane, summarized the situation: "The two entities could not work together. Intel was more driven by sales, and in this market it is hard to control sales. On the other hand, OLPC was not receiving the development help that it wanted from Intel. As a result, the deal fell through."
Who cares who makes the computers as long as everyone gets one? Kane could not agree more, but he cautions, "It matters only if [children] are getting the computer that will not break down." There have been many head-to-head matchups between the two computers. OLPC confidently notes that its computer is simply a better fit for the organization's objective. The XO-1 is rugged and the Classmate simply is not. The price of the Classmate is 35 percent higher than that of the XO-1. In addition, the Classmate uses a processor chip that requires a fan to prevent the product from overheating. As a result, the Classmate requires significantly more energy to run than the XO-1. Finally, the fan also provides an opening for dust or moisture that could destroy the machine relatively quickly. Kane simply notes, "In a developing world the machine would not last."
OLPC is not by any means going quietly into the night in the face of stiff competition. The company just completed the distribution of the XO-1 to 415,000 elementary schools in Uruguay. In addition, OLPC recently inked deals with Rwanda for 120,000 computers and Peru for 294,000 computers. In just three short years, OLPC has managed to sell over a million computers to some 31 countries. Kane proudly notes, "Indeed if a company would build a netbook that would have our qualities of low power and ruggedness, we would love to be out of the hardware business. We would love to have someone providing that machine at the right price point." Yet it remains clear to Kane and his company that the XO-1 is still the only product suitable for meeting the needs of early childhood education in poorer countries.
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Michael Bendetson is a sophomore majoring in political science.
