The $100 Laptop Controversy

At next week's Consumer Electronics Show in Las Vegas, the semiconductor giant Intel was planning to demonstrate a prototype of the celebrated One Laptop Per Child "XO" computer that runs not with the original AMD microprocessor but its own chip. It was supposed to be proof of the cooperation forged between Intel and OLPC, two entities that, until last spring, had been engaged in a war of snipes. It was an unseemly fight, especially since it slowed the progress of a noble cause: empowering children in poor countries by giving them access to technology. The dispute was supposed to have been resolved last July when Intel joined the nonprofit OLPC's board and agreed to supply its own chips in some future versions. But now Intel has broken with OLPC, and once again, One Laptop's founder, Nicholas Negroponte, is charging that the chip giant is messing with his charitable efforts for its own corporate ends.

The main point of contention revolves around Intel's continued support of Classmate, the company's own low-cost computer for kids in struggling countries. Negroponte says that Intel's aggressive marketing of its Classmate included badmouthing the XO. "We had a nondisparagement agreement," says Negroponte. "I was not allowed to say [negative] things about Intel, and they were not to disparage OLPC. But instance after instance, they violated it. It became untenable." Asked for examples, he says that after OLPC concluded a deal to sell 270,000 laptops to Peru, Intel officials went to government officials and warned them that his XOs wouldn't work. Since Intel was on the OLPC board, such charges carried more credibility than a normal competitor's, says Negroponte. After complaining to Intel CEO Paul Otellini, Negroponte says the disparagement didn't stop. Negroponte told Intel that it would have to cease producing the Classmate (though it could license the platform to other manufacturers if it wished) if it wanted to stay in the OLPC program. Instead, Intel decided to bail, as Negroponte found out this week when Intel told The Wall Street Journal about its decision. "I heard it in a taxi cab," he says.

From Intel's viewpoint, the dispute boils down to "a philosophical impasse," says spokesman Chuck Mulloy. The company, he says, strongly believes in the concept of low-cost computers for Third World kids, but also feels that there should be multiple vendors to serve this marketplace of more than a billion potential users. "They wanted us to focus exclusively on the OLPC platform," says Mulloy. Such an approach, he says, was not only undesirable but was also impossible for Intel, which could not break commitments with other manufacturers, software developers, and governments buying into the Classmate. As for breaking the disparagement clause, he says, "We're confident that we were in compliance with the contract."

Assigning blame depends on whom you believe. Negroponte charges that "it certainly feels like [Intel] didn't enter into the agreement in good faith." Intel, through its spokesperson Mulloy, says, "We disagree. We have acted in good faith."

The harm to OLPC, says Negroponte, was that working with Intel drained its limited resources and distracted his organization from its mission. "We spent a lot of effort trying to make this work," he says. This is just one of a series of setbacks suffered by OLPC since Negroponte, at the 2005 World Economic Forum in Davos, captured the world's imagination with the promise of a hundred-dollar laptop. Though OLPC is finally shipping the green-and-white XO (not at the $100 cost, but with a price tag of $188), some countries have canceled their million-unit purchase plans. Negroponte, who originally wasn't planning to sell the unit to Americans, changed course this fall with a "Give 1 Get 1" program. (More than 80,000 people paid $400 each to buy a laptop for themselves and one for a needy kid.)

Negroponte is in this for the long haul, and his main asset is the XO itself. I have played with both the OLPC's XO and Intel's Classmate, and I think that for the purpose of seeding developing countries with new technology, there is no comparison. The XO, built from scratch to directly address the unique challenges that such a device faces, is infinitely more imaginative, easier to use and forward-looking than the Classmate, which costs more and runs Windows. ("Intel's own people tell us Classmate is a dog," says Negroponte, obviously no longer committed to his nondisparagement clause.) While the Classmate does come with specialized network software for classroom situations, the XO is brimming with innovations, from its rugged industrial design and stunning works-in-sunlight screen to its low power consumption and powerful Wi-Fi antenna. As with any new device--particularly one created by an entity with little manufacturing experience--there are snags. But it's a breakthrough device that deserves to make its global mark.

But I can come up with a scenario that may lead Intel to regret its departure. What if OLPC were to license its impressive technology to commercial manufacturers who would build models with consumer-friendly modifications (like full-size keyboards) and sold these babies in America for $250 or so? What if Google, an OLPC board member whose software works beautifully on the XO, were to get involved, helping subsidize the effort in exchange for carrying its programs? What if Amazon were to take advantage of the XO's ability to swivel its screen into an e-book form factor and allow the laptop to connect to the Amazon store in the same way its Kindle reader does? And Facebook, and MySpace, and other sites make their own customized applications? If an offshoot of the XO were to become the next big thing, Intel's rival AMD would wind up as the crucial chip supplier for a new breed of computer. Could something like this happen?

"We are going to explore 'OLPC America'--starting yesterday," says Negroponte.

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