The $100 laptop: What are the odds?

Being the skeptic that I am, and having read, re-read, and re-read AGAIN David Berlind's article "Move over Microsoft, Dell. The $100 PC cometh. From MIT", I have to wonder if Nicholas Negroponte's vision is just that -- a grand vision of One Laptop per Child (the name of his not-for-profit organization), or if it is no more than an unattainable dream based more upon his faith in his fellow man than upon the realities of the twenty-first century. If it is the latter, well -- that would be unfortunate indeed.

If it is the former, it could be a nightmare for Bill Gates -- or it could be an irresistible opportunity to once again come from behind to totally dominate a world market. (Remember, Gates was a 20-something -- and the inventor of CP/M was not at home -- when IBM came-a-calling. With the help of IBM, Gates all but took over the PC marketplace. Then the word processing marketplace, then the spreadsheet marketplace, and on and on.)

Should Bill Gates view this vision as a threat? Oh, yes! But he should have had the same view of the ODF initiative adopted by Massachusetts. Somehow, he seems to have missed that one -- at least for now. Don't count him out just yet.

What is the goal? To put laptops in the hands of each of the third world's children --hundreds of millions of them.

How? By developing a high-tech sub-$100 laptop and selling it (en masse) to third world governments.

This high-tech device would run at such low power levels as to make hand-cranking it for power a viable option. (Important if you live in the jungle and have no electricity.) It would utilize a stripped-down version of Linux and be rugged enough to survive conditions most of us would find intolerable. Mr. Negroponte, the director of MIT's Media Lab, has managed to attract three big-time corporate sponsors-- AMD, RedHat, and Google. This collaboration alone should have gotten Microsoft's attention by now.

I would like to dispel a myth -- that a $100 PC is impossible. I am quite confident that, given the incentive, most any OEM can sell a $100 PC today. Don't believe me? Well, as recently as two years ago, I was running Windows XP on an aging laptop (Pentium II 366MHz, 128MB, 6GB HD, 800x600 TFT, Wi-Fi card) and doing just fine. No, it wasn't pretty. But, it was no slower -- and considerably more stable -- than the copy of Windows 98se that came with the system. My point? That today, such a lame system could easily be sold for under $100 -- should any vendor wish to do so -- especially at the volumes being proposed by Mr. Negroponte.

Would it be as high-tech or robust as MIT's $100 laptop? No, not by any means. So how can I compare the two, you ask? Because Mr. Negroponte's laptop is not really a $100 laptop. His claim is that it will cost $100 to produce in large volumes. (Presumably including shipping costs to the governments buying the laptops.) However, I expect that, collectively, MIT, AMD, RedHat, and Google will end up spending tens (if not hundreds) of millions of dollars before the first production laptop ships to the third world.

If you have spent any time at all in industry, you've heard of the old joke "We'll take a loss and make it up on volume." That's exactly what Mr. Negroponte and his sponsors are gambling on. Is it a safe gamble? I don't know.

Mr. Negroponte is counting in shipping 150 MILLION units a year by 2007. I would be surprised if any OEM has ever shipped even 10 million of any single model of any PC -- ever -- let alone 150 million. To be sure, shipping this many Linux laptops in a single year would swamp anything Microsoft (or any other IT vendor) has ever done single-handedly. Are you listening Bill?

The scale of Mr. Negroponte's vision is so grand that his sponsors would be foolish not to tap into it even if only 1% of that volume is ever attained. Still, like Microsoft, Mr. Negroponte's sponsors are obligated to their stockholders -- they too are in it for the money. The opportunity to rub Bill Gates' face in the mud is only gravy.

What exactly is Mr. Negroponte dependent upon to make his vision a reality?

The cooperation of foreign governments. Mr Negroponte has already lined up quite a few -- the most notable being China, with 220 million school children. This is a market that even Microsoft cannot ignore. Still, will China agree to distribute those machine only to school children? Will it resist the temptation to pass these computers out to the 'haves' instead of the 'have-nots'? Aside from language, will China insist on a different software configuration than Cambodia, or Brazil? Would China really accept a 'stripped-down' (some might say 'crippled') Linux software configuration?

A suitable consumer-friendly Linux platform. Developing such a platform is certainly within the capabilities of RedHat; but, to date, no Linux platform has made significant inroads into the consumer space. (At least not in the United States.) Still, it would be a huge blow for Microsoft if 220 million Chinese schoolchildren were to be brought up on Linux, now wouldn't it? I don't think Microsoft will let that happen.

A robust network infrastructure. The $100 PC will include peer-to-peer wireless networking and Mr. Negroponte assures us that third-world governments are moving forward to put in place robust wireless infrastructure. Certainly governments such as China's are quite capable of providing satellite-based networks throughout their countries, but how fast can cash-strapped third-world governments provide satellite downlinks and other suitable wireless infrastructure for jungle villages without electricity? Will the $100 PC be capable of direct-to-satellite communications? Will these services be provided for free? If both these questions can be answered YES, then fine but, if not... Without access to the Internet, small mesh networks between schoolchildren will be of limited value. Google's interest in this project may quickly wane if that network infrastructure is not in place.

Production capacity. Can Mr. Negroponte find sufficient production capacity to produce 150 million high-tech laptops per year, starting in 2007? Worldwide PC shipments for 2004 were 177.5 million units so Mr. Negroponte is talking about increasing worldwide production of PCs by as much as 85% over 2004 in the next two years. Either there is great deal of excess production capacity available or Mr. Negroponte and his sponsors are going to have to build some. Has this been factored into the cost of that $100 PC?

And at home ... that Linux does not falter in the courts. Sure, it's a long shot but ... If SCO prevails in court to the extent that any significant portion of Linux is found to be infringing on SCO intellectual property rights -- or worse that the GPL itself falters as a viable licensing mechanism, Mr. Negroponte's entire project may collapse around him. This is a very unlikely outcome but it cannot be dismissed entirely.

Based upon David's article, the technical challenges of producing a fully functional human-powered wireless laptop computer have been met and Mr. Negroponte has identified a customer base of staggering proportions. But the challenges of delivering this many PCs on an annual basis make this a daunting task.

As for Microsoft ...

Neither Mr. Negroponte nor David Berlind should count them out just yet. I believe it was last year that Steve Ballmer first brought up the magical $100 PC price-point for the third world and he indicated that Microsoft was considering a stripped-down "Starter Edition" of Windows. Just a couple of weeks ago, the line-up of planned Vista editions was announced and included (Guess what?) a "Starter Edition" which might just might fit the bill as a third world Linux killer.

Can Microsoft ignore the OLPC initiative started by Mr. Negroponte and his sponsors? No, absolutely not. Why? Because they cannot afford to have such a large portion of worldwide PC sales going to Linux.

While I am skeptical that this project will ever get any farther than it has already (which, from a technical standpoint, is quite a lot) -- meeting just one percent of its target goal, the project will have been worthwhile for all parties concerned. If Mr. Negroponte can meet ten percent of his target goals, he will have accomplished more than most men hope for in a lifetime.