Welcome Nicholas, to the world of unintended consequences

When the IBM PC was introduced to the public, in 1981, it sold for around $2500. By 2000, the cost was down to around $1500, and today, you can get a decent PC for under $500.

Several years ago, Steve Balmer hinted at the possibility of a $100 PC geared specifically for the developing world but nobody took the comment too seriously -- even after the introduction of Windows XP Starter Edition. After all, the cost of shipping a $100 PC could easily exceed $100 -- and besides, who would want such a lame device -- running a lame version of Windows XP?

Not surprisingly, none of the big name OEMs took up the gauntlet. After all, with world-wide demand for high-end PCs exceeding production, why bother with a low-end, low-margin machine -- even if it would attract more customers.

Then, in late 2005, Nicholas Negroponte announced his One Laptop Per Child initiative. His goal? To provide each and every child in the third world with a laptop computer. This computer would be rugged for harsh environments, would have mesh-networking capabilities (for reaching the Internet), and would possess human-powered recharging capability.

His vision was that third world governments would incur the costs of the network infrastructure to support Internet access for these devices. Over time, his not-for-profit organization would expand that vision to include electronic textbooks preloaded onto these laptops.

His goal was to reduce the cost of this device to $100 apiece -- making it easily affordable to third world governments -- who would be responsible for delivering these devices to their school children. He would accomplish this feat by selling them on a not-for-profit basis and by producing these devices in the hundreds of millions! (In effect, doubling the world's production of personal computers.)

At these volumes, what OEM could resist even a small piece of the pie? Negroponte quickly lined up a group of second-tire vendors to help develop the device -- which would rely on the latest in computer technology to meet his goals for ruggedness and low-energy consumption.

Recognizing the potential and low-cost of open-source software Negroponte looked to Linux as his OS of choice. He even went so far as to suggest that choosing to use commercial software would be immoral!

Guess what? By ignoring those first-tier vendors, who suddenly realized that OLPC might actually gain a foothold (not only in the third world but in cash-strapped American schools as well), Dr. Negroponte has created competition!

While Dr. Negroponte has not given up on a $100 device, he has settled on $175 as a starting point for his OLPC device (called the XO). But he still needs buyers.

In response to AMD's involvement in the XO, Intel has introduced the "Classmate" to sell in the same sub-$200 market. And Microsoft, who was unceremoniously dismissed out of hand by Dr. Negroponte, is offering third world governments extremely aggressive licensing for Windows XP as well as subsidies to help these governments to acquire refurbished desktop PCs at sub-$100 price-points! Granted, a refurbished desktop PC is not a low-powered high-tech laptop but the price is right!

To be sure, Nicholas Negroponte is somewhat miffed -- in fact he is downright defensive -- about these interlopers into a market which nobody wanted just a few short years ago -- until he brought it to their attention. But didn't he bring this on himself? Now we read that OLPC spawns another non-OLPC in the form of a $189 ASUS laptop.

If in the end the goal is to bring the Internet, and all it has to offer, to the world's poorest children in order to enhance their educational opportunities -- does it really matter who makes the computers?

Yes! According to Nicholas Negroponte -- who's quick to claim that Intel is trying to put his OLPC out of business before he even gets started!

In the end, competition breeds innovation while driving prices down. What Nicholas Negroponte has accomplished is remarkable and, no matter what the outcome, the children of the third world stand to benefit from the competition for their hearts and minds.

Does it matter so much that Intel and ASUS and Microsoft stand to benefit financially, as long as these students get access to the educational opportunities they deserve?

Put in your two cents. Does Nicholas Negroponte have a right to be indignant?