With Peru sale, is OLPC on the right track?
The order had been expected for some time but Peru had delayed signing on the dotted line, probably because there were questions about OLPC's ability to actually produce the machines. With production up and running in China, the XO is a reality.
Nicholas Negroponte hailed the contract as "momentum." Negroponte has essentially failed in his original strategy of getting governments to pony up for millions of the machines. Uruguay beat Peru as the first country to buy from OLPC.
Mexican billionaire Carlos Slim - a longtime friend of Negroponte's also signed up to buy 50,000 XOs for Mexican children. "He's an old friend, and he's been involved in this from the beginning," Negroponte said.
While the G1G1 program is a success, with $2 million in sales a day, that still only works out to 190,000 laptops sold through the program, with just about half of those destined for the developing world. Since Negroponte's vision only works when there are millions of the machines deployed, that is really small potatoes. For the vision to work, either governments or serious funders need to step up to the plate.
With the price of a "$100 laptop" now running $188, an XO is not a slam-dunk better deal than a machine being touted by Intel, the Classmate. Taiwanese maker Asus offers the Eee PC. Some governments have started talking shoot-out to make their decisions, but Negroponte balked at that.
Unwilling to put a nonprofit effort in price-features shootouts with commercial players with far deeper pockets to keep prices low and sustain losses, Negroponte has no choice but to keep the drumbeat going for government purchases. The Peru deal is a step in the right direction, but it was a deal he had to close.
"I remain generally skeptical, but that's some good news," said analyst Roger Kay. "If you were a budding computer company, you'd be happy to sell 300,000 or so units in your first season."
Still, the real test of the government strategy will be how long it takes the next deal to close.